Entering into a prenuptial or post-nuptial agreement is one of the best ways that couples can protect assets and ownership of businesses, investments and other property that predates the marriage. It is important for every couple to sit down and discuss the practicality of a prenuptial agreement, especially those that are remarrying, have substantial assets and/or anticipate a family inheritance or is a beneficiary of a trust.
If there is a big gap or difference between the couple’s income, then there is be a legitimate concern about spousal support. Once you get married, as the higher income earner or spouse with more assets, it will be your responsibility to be responsible for the financial well being of your spouse. The responsibility can have significant implications on your wealth and financial future if your assets are not protected in a prenuptial agreement.
Can I Have a ‘No Alimony’ Clause in My New York Prenup?
A couple may sign a prenuptial agreement that states that neither party will be obligated to pay the other alimony, spousal support, maintenance in the event of a divorce or dissolution of the marriage. This is a common practice where one spouse has a greater amount of wealth, assets, and property than the other spouse and does not wish to be taken advantage.
No one anticipates that their spouse is marrying them for “their money.’ This, however, sometimes is a factor and individuals can be emotionally and financially defrauded in those circumstances. Particularly if they married without an iron clad, valid prenuptial agreement in place.
An agreement between spouses or prospective spouses are closely scrutinized, and may be set aside if one party can show that it is unconscionable, or the result of fraud, or where it is shown to be manifestly unfair to that party because of overreaching on the part of the other spouse.
A court may deem a Prenup unconscionable if it is one that no person in his or her right mind would enter into on the one hand, and no honest and fair person would accept on the other. That the inequality between the parties is so strong and clear that it shocks the conscience and amazes the judgment of any person with common sense. So even if you enter into a Prenup that states both parties will waive spousal support in the event of a dissolution or divorce, that portion of the prenup may be found to be invalid and unenforceable if it would result in the risk of one party becoming a public charge.
Even if the Prenup was valid at the time it was executed, even if he prenup may not have been unconscionable when the parties entered into it, it still may have become unconscionable at the time an action for divorce starts or when a final judgment of divorce would be entered.
What If My Partner Will Not Sign a Prenup Agreement?
As an experienced legal team who has assisted hundreds of clients in divorce proceedings, we can share some practical advice about having a productive conversation regarding a prenuptial agreement in New York. Your spouse may have some misconceptions about what the prenuptial agreement entails, and the legal protections that it can provide them with.
A prenuptial agreement is like a seat belt in a car. You wear it, and you may never actually need it. But if a collision happens, you will be glad you were wearing one. Marriages are the same way. Many couples who have executed and signed legal prenuptial agreements are hopeful that they will never exercise the conditions of the prenup in that they will have a happy marriage.
A prenup will detail what happens if the marriage dissolves, or even in the event of the death of one party while still married, such as:
- The distribution of assets purchased and debts incurred during marriage, or in the event that one spouse dies. This includes allocation of life insurance benefits and annuities.
- A list of assets that predate the matrimonial relationship. For instance, if you owned property or stocks before your marriage, they can be protected from being equitably distributed or ‘split up’ as common assets during a divorce proceeding. Note that the principal investments are protected, but earnings or profits that increased on investments during the course of the marriage may be considered shared assets unless specifically deemed separate assets in the prenup.
- The ability for each spouse to buy, rent or lease, transfer or control property that is held separately by the spouse or what is considered shared assets.
- Business ownership or the right to manage a family owned business. For instance, if each spouse contributed funds to start the business, and one spouse contributed a higher amount of capital, that spouse may be entitled to a greater share of the proceeds of sale, if the business is liquidated during divorce proceedings. A prenuptial can also designate ownership of the business, or the first-right to purchase the business interest of the other partner.
- The right to alimony or support. This is particularly important in marriages where one spouse may work and the other may have no income, or a significantly lower income.
- Responsibility for student loans.
The listed items are the basics that are generally covered in a prenuptial agreement. However, the couple can add other items that provide protection and legal direction regarding issues of personal importance. Those items can include limiting asset distribution depending on a minimum length or term of marriage, sentimental property or objects and intellectual property.
What can you do if your future spouse refuses to sign a prenuptial agreement? It is up to you to use your discretion and consider the financial risks you may be taking, to marry your partner without one. Talk to a professional and experienced matrimonial attorney about how to keep your separate property separate so that a divorce will not force you to share premarital assets.
What If My Partner and I Grew and Built a Business Together?
Intellectual property is another important aspect that can be included in a New York prenuptial agreement. If you and your spouse are entrepreneurs, proof of concept and the growth of the business can result in a long legal battle, without a premarital or post-nuptial agreement that defines ownership.
Did your spouse help you run the business? Did they help you come up with the idea and provide funds to launch the business? These are questions that will help determine equitable division of property and assets, including a business owned by married partners.
Creating a prenuptial agreement is a cost-effective way to protect your assets, as you are preparing to start a new chapter in life with your partner.
Contact our legal team at Weisman Law Group and schedule a free consultation.
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