Articles Posted in Prenuptial and Postnuptial Agreements

Recently, I was interviewed on the WORTHY podcast ‘Divorce – and other things you can handle!’ to address the stigma around prenups and how a pragmatic approach can be the foundation for long-lasting romance. Listen to the podcast, and get my tips on how prenups and conscious coupling can create healthier marriages: https://www.worthy.com/blog/podcast/episodes/season-2/10-conscious-coupling-with-andrea-vacca/

In this podcast and in earlier blogs, I’ve discussed that millennials are waiting longer to get married, that they have typically accumulated substantial financial assets before marriage and have probably been negatively impacted by divorce at some point in their lives. This has resulted in a shift towards what I call “conscious coupling.” More so than earlier generations, millennials are likely to see the value of a prenuptial agreement to help avoid arguments, or even worse, having a judge make financial and business decisions for them. Two qualified attorneys or a single mediator will help the couple discuss all the issues and ask all the questions that they may not have known to ask themselves.  Not only will this type of conversation lead to an agreement that helps both parties feel secure, but it will also help to build the communication skills they will need if they want to develop a long and happy marriage.

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When same-sex marriage became legal, same-sex divorce also became legal. Divorce among same-sex couples is lower than the average but that is mainly because LGBTQ couples in long-term relationships were the first to marry when same-sex marriage was legalized. As more marriages occur, the statistics on divorce in the LGBTQ community are expected to approach the numbers of divorce in the general population. And many of these couples will have children, which means they will need to make difficult child custody, child support and parenting decisions. That’s not different from most divorces. What is different is that the issues that arise when same-sex parents divorce can be much more complicated.

The US Supreme Court landmark decision on Obergefell v. Hodges on June 26, 2015 ruled that there is a fundamental right to marry and required all 50 states and the District of Columbia to both license and recognize same-sex marriages under the 14th amendment. However, the courts are not equipped to deal with modern, complicated family relationships – and laws don’t reflect today’s family. When a married LGBTQ couple or unmarried same-sex partners share children, the parents need to be pro-active in protecting their parental rights and the rights of their children. Whether the couple stays married or separates, protecting the legal rights of both parents and the child should be their first priority.

  • Non-biological parents need legal authority to make healthcare decisions, even in an emergency situation.

Recent headlines announced that Amazon CEO Jeff Bezos’ 25-year marriage is ending. He and his wife are the wealthiest couple in the world with a net worth of approximately $137 billion, and reportedly never signed a prenup. It’s also reported that when pop star Justin Bieber married model Hailey Baldwin in New York City last fall, they decided to forgo a prenuptial agreement as well. He’s reportedly worth more than $265 million, while her net worth is several million dollars.

We understand Jeff and Mackenzie Bezos are planning to divorce in a non-adversarial and collaborative manner, which is great news for them personally, as well as their four children. If Justin and Hailey ever divorce, we certainly hope they take the same route.

High net worth individuals, not just celebrities, often have complicated assets to value and distribute in the event of their divorces, including, businesses, complicated deferred compensation packages, private investments, assets held in trust, artworks, and more. By entering into a prenuptial agreement before marriage, couples have a contractual opportunity to discuss their assets and finances before the wedding and determine what will happen in the case of death or divorce.

Over the past few years, my law and mediation practice has seen a significant increase in requests for prenuptial agreements. A recent New York Times article The Rise of the Millennial Prenup cites the following contributing factors for the increase: millennials are marrying later, they are bringing more assets to the marriage and more women are in the workforce. According to an AAML survey (American Academy of Matrimonial Lawyers), 51% of divorce attorneys are seeing prenuptial agreements on the rise in the millennial generation, with the most cited issues:

• 78% protection of separate property

• 74% alimony/spousal maintenance

If you signed a prenuptial agreement before you got married, and believe there is any chance you and your spouse may divorce in the future, the Tax Cuts and Jobs Act that was signed into law on December 22, 2017 could seriously affect the deal you bargained for.

One major change that occurred when that law was passed was that spousal support, which is also known as alimony or spousal maintenance, will no longer be tax deductible after 2018 to the spouse who is paying it, and will no longer need to be claimed as income by the person receiving it. Under the new law, a separation agreement must be signed within the calendar year of 2018, or there needs to be a judgment of divorce signed in 2018 directing that spousal support will be considered tax deductible in future years.

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The prenup was hell, but in the end it was almost as if that document became a repository for our anxieties, holding on to them so we didn’t have to.

~Abby Mims

The above quote comes from an article in The New York Times titled “Prenup Is a Four-Letter Word.” In the article, the author Abby Mims writes about her experience being asked to sign a prenuptial agreement. She and her fiancé had been together for a number of years and already had a child when they decided to marry — but the fiancé wanted a prenup.

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I recently presented a workshop entitled “Collaborating in the Face of Financial Betrayal” at the International Academy of Collaborative Professionals 18th Annual Networking and Educational Forum, alongside my colleagues, Certified Divorce Financial Analyst, Ivy Menchel and Divorce Coach, Abby Rosmarin.

While this workshop was geared to the divorce professionals in the room, there are many lessons that anyone who has dealt with financial betrayal in his or her own marriage — and is contemplating divorce — should understand.

To start, we defined financial betrayal as the keeping of financial secrets in an intimate relationship. Financial secrets are different from other secrets because of the enormous ramifications that often result from them for many years to come.

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As we get older we’re supposed to get wiser. In fact, I would rank increased wisdom at the very top of the benefits of aging. So why do so many people enter their second or even third marriages ignoring what they know? The statistics prove these marriages are more likely to end in divorce than first marriages.

If you’ve been divorced before, you know what you don’t want from a future divorce: You don’t want the process to take forever and be expensive. You don’t want to have little control over the process. You don’t want to end up hating your ex-spouse. A thoughtfully negotiated prenuptial agreement can help you avoid all of this by making it clear what financial expectations each spouse has during the marriage and what the outcome will be if the marriage ends.

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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.

Vacca Law & Mediation

60 E 42nd St #1420
New York, NY 10165
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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