Prenuptial Agreements: Premarital Advice from a Divorce Lawyer

Anytime a friend announces his or her engagement I become “that friend.” That lawyer friend who offers unsolicited advice about the way New York’s Domestic Relations Laws work. Regardless of whether it’s the strongest couple I know or the cracks in the pavement are already evident, I feel the obligation to launch into what the contract of marriage really means. 

Yes, talking about marriage laws is a bit of a taboo. It insights thoughts of divorce and rightly so. After all, these laws won’t affect a couple unless they are experiencing difficulties. But, would you open up a business without looking into the tax laws? Would you purchase a rental property without looking in the landlord tenant laws? Of course not. It’s not pessimistic to look into the laws that affect your major decisions. In fact, it’s insane not knowing what you are getting yourself into. So, why avoid knowing how marriage affects you financially and legally? 

Even those brave and intelligent friends willing to hear my spiel are still not initially sold that prenuptial agreements pertain to them. Most of the time I hear, “But, we don’t have anything. What would I be protecting?” There’s a common misconception that prenuptial agreements, or what most call “prenups,” only pertain to people with money or assets. This could not be further from the truth. Yes, a prenuptial agreement can protect assets acquired before the marriage, but in reality it’s the money and assets made during the marriage that really need protecting. While you may not have money at the time of marriage, doesn’t everyone hope to have financial success in the future? 

Plain and simple, the moment that two people are married all monies earned and used to purchase or acquire assets are considered marital property. Anything considered marital property is subject to “equitable distribution” in the event of a divorce. This means your husband or wife will be entitled to half. This includes earnings from employment, contributions toward pensions and retirement benefits, perks, investments, property and more. 

Knowing the way all of this works is half the battle. After all, many people come to learn these laws and have no problem operating under them. Many couples intend to operate their marriage as the economic partnership New York State recognizes and are prepared to divide their assets equally in the unfortunate event of a divorce. However, others are shocked and unhappy to learn that New York’s laws essentially force couples to combine earnings and assets. Those couples may intend to keep their finances separate, each paying their own bills, maintaining their own bank accounts and making their own investments. Without a prenup, those people would be heavily impacted in the event of divorce. 

Example. 

Partner A comes into the marriage earning $40K a year. Partner B is in school and earning $20K. They own no homes and have nothing more to show than student loan debt. Ten years later Partner A is earning $75,000 a year, Partner B is earning $250,000 a year. Partner A has $10,000 in savings, $50K in retirement assets and $5,000 in credit card debt. Partner B has $200K in savings and the marital residence was purchased in her name. 

Without a prenuptial agreement, the house would be owned equally regardless of the title on the deed. The Court could only force a sale if the parties cannot agree to another arrangement. Partner A’s $10K would be split, as would Partner B’s $200K. Partner A’s retirement assets would be divided in half, as would her credit card debt. Because Partner B earned significantly more than Partner A, Partner A would be entitled to maintenance (spousal support) and potentially even legal fees. 

Does this seem fair to you? If so, great. You do not need a prenup. 

But let’s change the facts up a bit. What if Partner A saved every penny she made, while partner B spent every dime she made. On top of it, let’s say Partner B is the one with credit card debt because she has a serious shopping addiction. Is it still fair? 

What About Protecting Assets and Money Accrued Prior to the Marriage? 

In New York State, property, assets and money made or acquired before a marriage are considered separate property, which means they should not be divided in the event of a divorce. This is true on a basic level, but can also use some basic protections. Whereas the date of purchase on a house can be easily proven, balances on bank accounts and retirement assets can become more complex. Financial records are generally only preserved for a certain number of years, so if you do not have the documentary proof at the time of a divorce those assets can get sweeped up into the marital pot. Clearing laying out the pre-marital assets in a prenuptial agreement will eliminate the need to spend time and money preserving and protecting those assets later on. 

So, How Can Knowing the Domestic Relations Laws in New York Help You? 

First, speaking to an attorney can help facilitate important conversations between you and your future spouse. It can help out financial issues on the table, like what debts each spouse has and how both foresee paying marital expenses. For many, this process can be eye-opening and even therapeutic. 

Second, if you do not agree with New York’s Domestic Relations Laws you can do something about it. If you know that you want to keep bank accounts or debts separate you can provide for that in a prenuptial agreement. You and your future spouse can sign an agreement that categorizes assets the way you wish. It may say “assets held in one person’s name are considered their separate property and assets held in joint name are considered marital property.” You can protect retirement assets, homes and the possibility of maintenance (spousal support) and legal fees with one simple document.  

Third, if you find yourself in an unhappy relationship, you do not have to fear a conversation with an attorney. You will already have a good idea of what the choice to divorce your partner means to your financial situation. It’s never fun to find out this information too late. 

Last, if you do choose to enter into a prenuptial agreement, you have the closest thing to a legal insurance policy. It eliminates the need to fight financial battles in the courtroom at a time when there is little to no goodwill between the parties. Instead, those issues are ironed out at a time when there is still love between husband and wife. Oftentimes, couples with prenuptial agreements become excellent candidates for uncontested divorces, which mean that they can file for divorce without ever needing to see a judge and fight over assets. 

If you consider a prenuptial agreement in New York, be sure to have it drafted and signed well in advance of your wedding date and that each party have an attorney of his or her choosing. This will help make the terms of that agreement are enforceable if necessary.

If you are getting married and want more information on the laws in New York or are considering a prenuptial agreement, schedule your free consultation today with Danielle Montalto-Bly, Esq. hassle-free through her online calendar.