Articles Posted in Prenuptial and Postnuptial Agreements

 

This is a continuation of my previous post that explored what a “simple” prenuptial agreement looks like and when a more complex agreement may be needed. In this post we move beyond the basics of separate property and marital property to explore four more specific areas that a prenup can help clarify and solidify: distribution of marital property, real estate, spousal support, and estate rights.

Distribution of Marital Property

In New York State an asset earned during the marriage is considered marital property to be divided equitably. Keep in mind that “equitable” does not necessarily mean “equal.” Much litigation has ensued over how assets are to be divided. Prenups can be helpful because it allows a couple to make this determination at the beginning of the marriage. Many couples simply agree in their prenup that all marital assets will be divided equally. Others agree that those assets will be divided according to another set percentage. While still others agree that the division of the marital assets will change according to the length of marriage or other conditions.  

Real Estate

Real estate is often a big issue in many prenups because of the many ways that separate property and marital property are combined to purchase and/or maintain real estate. For example, a couple may purchase a home during the marriage (which is assumed to be marital property), with one or both spouses contributing a significant sum of his or her premarital money to the down payment. In this situation, the prenuptial agreement should make it clear that a spouse who makes a down payment will be entitled to a credit for that investment and what that credit will be. But will it be a dollar-for-dollar return on that investment, or will it be based on the increase in value of the home?

Some other questions I will ask about real estate include:

  • If you own your home prior to your marriage and you plan to live there as a married couple, will the mortgage and other carrying costs be paid from marital property or separate property?
  • If the marriage ends, how soon afterwards will the non-titled spouse need to vacate the home? Will the time frame be different if the couple has had children?
  • What will happen to the home if there is a divorce? Will it be sold?  How will the proceeds be divided? Will one person have the right to buy out the other?

Spousal Support

Prenups often address spousal support in one of these 3 ways:

  1. Both parties waive spousal support under all circumstances; or
  2. Spousal support is waived unless there are children and one of the spouses has stopped working to care for them; or
  3. The couple agrees in advance that specific spousal support amounts will be paid based on the length of the marriage, or the amount of assets being divided or some other terms.

Prenups become less “simple” as we move down that list.

Estate Rights

Your prenup can also specify how you will share property after one spouse dies. The simplest prenups just reiterate the law, which in New York means that a surviving spouse will receive his or her “elective share” of the other spouse’s assets. More complex prenups will specifically state that the deceased spouse’s separate property will not be shared upon death — or they may have a different scheme if the couple has children or if the death occurs while the couple is still married but has already decided to divorce.

A prenup is the perfect way to avoid having a judge make all of these decisions for you if your marriage ends with a divorce or there is a death. A qualified attorney will go through all the issues and ask all the questions that you might not ask yourself (or your future spouse), so that you can make sure the prenup protects both of you. It is what I call “conscious coupling,” and I consider it a sign of a strong marriage to come; it shows that you have foresight, are able to communicate with each other, and can deal with uncomfortable topics—the perfect practice for marriage.

To get started with a lawyer who has many years of experience drafting successful prenuptial agreements, and who will ask the questions you do not know to ask, contact us today.

Andrea Vacca

570 Lexington Avenue, Suite 1600
New York, NY 10022
avacca@vaccalaw.com

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It’s wedding season, and in addition to checking the typical wedding-related tasks off the to-do list, many soon-to-be newlyweds are reaching out to lawyers like me to draft prenuptial agreements. And one of the most common things they tell me is: “We just need a simple prenup.”

For the people who truly want a “simple” prenup, I have good news: You may not actually need one. A simple prenup may simply mean that you will be signing up to do exactly what the law dictates for divorcing spouses. So what does the law mandate?

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Over the past few years, my law and mediation practices have seen a significant increase in requests for prenuptial agreements.  

My clients, whether they come from extensive family wealth, are self-made entrepreneurs, or young professionals just starting out in their careers, come to me with the best of intentions. They love their fiance and look forward to a long and happy marriage.  But sometimes their approach to the prenuptial agreement gets in their own way. The first thing to realize is that a prenuptial agreement, and the negotiations leading up to it, are often harbingers of what the future marriage will bring. Acrimonious prenup negotiations have a tendency to lead to acrimonious marriages, with long-term resentment and unhappiness.

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Before marriage was made available to every American, same-sex couples struggled with issues that married couples could take for granted – like hospital visitation rights, after-death services and inheritance rights.

In order to achieve that same peace of mind that married couples enjoy, gays and lesbians came up with some brilliant solutions to bridge the dire straits in which they found themselves. In New York City, the government began a Domestic Partnership registry which granted hospital visitation, health insurance coverage and the inheritance of rent-controlled apartments, among other things. But because those provisions only applied to government-run agencies, lesbians and gays took matters into their own hands to protect themselves and their partners in the private sector through the use of wills, healthcare proxies and burial instructions. Continue reading

I recently read an article on The New York Times wellness blog by Tara Parker-Pope called ‘The Decisive Marriage.’ In it, Parker-Pope explores the research gathered through The National Marriage Project and asks how does being decisive – or not – affect a marriage? Though it is not mentioned in the article, I thought some of the points would be especially helpful for people considering a prenuptial agreement. Parker-Pope writes:

Couples should make active decisions about their relationships and major life events. Showing intent in some form — from planning the first date, to living together, to the wedding and beyond — can help improve the quality of a marriage over all.

Prenuptial agreements are, by definition, a written agreement reflecting the intentions of the parties regarding their marital rights and obligations. By looking together toward the future, prenuptial agreements can help the couple to purposefully plan for this important, next stage of their relationship. Questions can be discussed and answered such as:

  • How will property be divided upon death or divorce?
  • Will spousal support be paid? If so, under what conditions?
  • How will household expenses be paid during the marriage?
  • Will having children result in different financial terms?

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Gwyneth Paltrow and Chris Martin have made the news lately with their “conscious uncoupling” – a new term for a mindful divorce that is an excellent example for separating couples to learn from.

Like most people, I had never heard of this term until it was talked about in the media. As it turns out, whether I knew the term for it or not, the philosophy behind conscious uncoupling is exactly why I encourage my clients to use the collaborative law process or mediation when they are ending their marriages. It is also the reason why I use these non-adversarial processes to help couples enter into prenuptial agreements; it’s what I call conscious coupling.

Conscious coupling – as opposed to Paltrow’s and Martin’s uncoupling – is best embodied in a well thought-out and fair prenuptial agreement. Instead of focusing on keeping as much of a party’s income and assets out of the hands of the other spouse in the event of divorce, a prenuptial agreement that is entered into consciously will focus more on:

On June 26, 2013, the United States Supreme Court declared parts of the Defense of Marriage Act (DOMA) unconstitutional. The decision, a huge civil rights victory for the gay community, will require federal law to recognize same-sex marriages the same way they recognize heterosexual marriages. This will grant same-sex spouses (at least in states that recognize same-sex marriage, such as New York) countless benefits that had previously been denied them under the statute. Now, same sex couples will be able to file joint income tax returns, enjoy spousal and survival status under Social Security, inheritance and estate laws, and be entitled to COBRA and other health insurance benefits. Effects on immigration have been among the most dramatic and immediate, as American citizens can now apply for permanent resident visas, or green cards, for their foreign-born same-sex spouses. Couples began receiving notification of approval for green cards as early as June 28.

As matrimonial attorneys, we are excited about this decision, not only because of the impact it will have on the same-sex couples that are married or contemplating getting married in New York, but also because of the ways in which it will affect the practice of matrimonial law. Previously, any agreement between same-sex couples, whether prenuptial or separation, required drafting around the federal benefits to which married heterosexual couples are automatically entitled with no way to compensate for the omission. Granting same-sex spouses the same federal rights as their heterosexual counterparts allows not just for more equality but also more uniformity under the law.

We applaud the Supreme Court for recognizing this and look forward to further advancements in same-sex rights.

Historically, it has been notoriously difficult to get a prenuptial agreement thrown out in New York. This is because there is strong public policy in favor of allowing individuals the freedom to enter into their own contracts. Often, when prenuptial agreements are overturned by the court, it is due to a defect on the face of the document, not on the terms of the contract itself. It is for this reason that we highly advise our clients to completely understand what they are signing when entering into these agreements.

A Nassau County woman, Elizabeth Petrakis, has recently succeeded in convincing a unanimous panel of the Appellate Division, Second Department that her prenuptial agreement should be set aside on the basis of fraudulent inducement. (Read the opinion here.) She claimed that her husband purposefully lied to her so that she would sign an agreement that he knew she wouldn’t have signed if he told her the truth. Ms. Petrakis claimed that just 4 days before their wedding, her husband convinced her to sign a prenuptial agreement that would provide him with all of the assets in the event of divorce by promising her that he would “tear it up” when they had children. Her husband, Peter Petrakis, claimed that he never made that promise. After a trial that lasted 13 days over the course of 9 months, the trial judge determined that he believed the wife’s testimony over the husband’s and he set aside the prenuptial agreement. The Appellate Division has now upheld that decision.

I agree with other attorneys who are concerned that this case could lead to dangerous precedent.

In previous blog posts we discussed the reasons why postnuptial agreements are becoming more popular and how to ensure that your postnuptial agreement is enforceable under New York law. If you’ve decided that a postnuptial agreement is something that you want to pursue, it is important to be adequately prepared for the negotiation process. These are some suggested steps that you should take before you begin:

• Write Down Your Own Goals And Concerns – It is easy to become overwhelmed by all of the questions you will have and to get distracted by all the issues that you may want to resolve. Likewise, it is easy to lose sight of the big picture and, due to the nature of the agreement, become overwhelmed by emotion. Taking time before negotiations begin to write down your long-term goals and concerns will help you maintain your focus on ensuring the best possible outcome for you and your spouse. It will also aid the negotiation process. By articulating a defined goal rather than becoming attached to a specific formula or percentage, both spouses are more likely to use creativity in finding a solution.

• Become Familiar With Your Assets And Liabilities – You cannot enter an agreement concerning your financial future without understanding your current financial circumstances. Familiarize yourself not just with your current property, debts, salary, and investments, but also what you and your spouse’s potential earning capacity may be, any anticipated increase in asset values or liabilities, and any expected inheritance or trust payouts. You may find it helpful to consult with a financial advisor who has experience working with clients who are negotiating postnuptial agreements.