Prenuptial Agreement: An agreement made by a couple before marriage, usually concerning the ownership of assets should the marriage fail.
2009 marked a 40-year low for divorce rates in the United States, a symptom of the economic recession. Since then, rates have increased yearly, highlighting causality between financial stability and the ability to leave the relative security of an unhappy marriage. (source)
Over the past 5 years, 73% of American Academy of Matrimonial Lawyers (AAML) reported that requests for prenuptial agreements have increased. (source)
Having the conversation about a prenup is the first step to understanding if your marriage is financially compatible. Many people’s first reaction to having a prenup brought into conversation is that their spouse has no faith in the marriage. The ability to have a practical discussion about future financial security is one indicator of a compatible partnership. This is the ideal time to create plans and goals for future and calculating the path to get there.
I’m Not Wealthy
Prenups are not only to cover existing assets, but also future accumulated wealth. The agreement can cover any number of complications including one spouse being a business owner, one spouse agreeing to stay home to raise children, children from a previous marriage, real estate, and more.
Reasons to Sign
1. Children from a prior marriage – An individual entering a second marriage will often have major financial pre-existing commitments to children and possibly a former spouse.
2. People are marrying late in life after accumulation of assets – With fewer years to work, it is advisable to secure one’s assets against the possibility of a failed marriage and potential financial loss.
3. Did you know? In New York all assets are presumed to be marital and therefore presumed to be divisible in a divorce. In a prenup one can eliminate these presumptions, creating a contract that typically states that certain property shall remain one’s property. The burden of proving that property is separate (in NY property owned prior to the marriage) is eliminated, bringing greater certainty and eliminating potentially costly litigation.
4. Couples can use prenups to affirmatively plan for each other as well.
Who Needs a Prenup?
- Second marriages
- Business owners
- People with assets
- People with expectation of inheritance
- Those entering marriage who already have children
No matter how long you’ve been married, a couple can always opt to create a postnuptial agreement. These contracts are usually created to set a household budget, settle financial turmoil in the marriage, or remove a newly acquired asset from any possible divorce proceedings (such as inherited real estate or a business venture.
When it comes to creating an agreement with your future spouse, the earlier you start the discussion, the better. If you are interested in learning more about prenuptial agreements, contact Jones Morrison LLP today at (914) 472-2300.