Are you concerned about merging assets with your spouse?
Before marrying, couples may choose to enter into an agreement that sets out the financial obligations of each spouse over the course of the marriage, as well as the allocation of property and division of income in the event of divorce. Both spouses-to-be can come together to determine how they will handle debts, assets, incomes, and all range of financial questions. The agreement that comes out of this process takes effect upon the couple’s marriage.
Prenuptial agreements or “prenups” present a set of advantages and challenge in the context of divorce, so you should know your rights whether you intend to enter into one or have one and are seeking or involved in a divorce. The use of prenups is on the rise: A survey of the American Academy of Matrimonial Lawyers found that sixty-three percent of divorce attorneys surveyed noted an increase in the use of prenups in recent history, with couples citing “the protection of separate property” as their primary reason for entering into these agreements.
Should you sign a prenuptial agreement?
Prenups can be a touchy topic. If you or your soon-to-be spouse have significant property holdings or substantial income, this otherwise seemingly unromantic agreement can preserve those interests should you enter into divorce. Rather than considering all pre-marital assets and interests an inextricably intertwined tangle, a prenup can define “separate property” using the same finite legal structures as a property deed or a business contract. A number of important pre-marital considerations can help you determine whether a prenup is right for you. Keep in mind, these agreements can help determine more than just how your currents interests are affected, they can reach inheritances, property not yet obtained, and accounts you build throughout the marriage. Founding partner Dror Bikel discusses these considerations in his guide to prenuptial and postnuptial agreements.
Many couples wonder whether a prenup is importantly only to celebrities and billionaires. Keep in mind, New York family law has mechanisms in place that allocate “marital property” and divide finances, but if you and your spouse wish to take those matters into your own hands and out of the potential hands of a court, a prenup could be your best shot.
While a prenup can be especially attractive to couples wanting to take matters into their own hands, it is worth knowing the effects of this important agreement on a potential divorce. When making complex legal considerations involving complex financial situations, you should call upon the decades of experience at Bikel & Schanfield.
How will a prenuptial agreement impact divorce proceedings?
If divorce is on the horizon, and you and your spouse signed a prenuptial agreement, the work ahead may be less burdensome. Depending on the terms of the prenup, you may have defined what will be considered “separate” vs. “marital” property in the divorce.
Beyond just designation/allocation of property, the prenup can serve to identify debt that pre-existed the marriage, aptly titled pre-marital debt, and designate that it stays with the spouse who incurred the debt in the first place (or in some instances allocate that debt).
Another key piece to know when deciding the terms of a prenup, or analyzing the prenup’s effects on your divorce, is how the prenup sets out the maintenance obligations during the marriage and resulting from a divorce. If you have a prenup, chances are “maintenance”—namely the costs to paid by one spouse for the other spouse’s expenses following a divorce (think a new rental apartment, moving fees, living expenses). The advice of experienced attorneys like those at Bikel & Schanfield on the terms of your prenup can help you understand the rights and obligations created thereunder.
Note that prenuptial agreements can resolve plenty of questions, but child custody—whether or not the child was before your marriage—cannot be determined by a prenup. The child’s specific circumstances and needs must and will be considered by the family law court at the time of divorce.
What if my prenup is unfair or invalid?
A well-devised prenup can help a couple proceed through their otherwise messy divorce, but we recognize the existence of—and have experience with—lopsided, problematic, or questionable prenups.
New York recognizes the “strong public policy favoring individuals ordering and deciding their own interests through contractual agreements.” Van Kipnis v. Van Kipnis, 11 N.Y.3d 573 (2008). A spouse who considers him- or herself disadvantaged by a prenup may argue against its validity in the divorce proceedings. While courts can find prenups persuasive as to the outcome of the proceeding, a judge can also be pushed to determine the prenup’s validity. The judge will focus on, among other things, whether the prenup was signed in accordance with New York law and whether it was prepared in accordance with the standards required for such a binding legal document.
These criteria are part of a laundry list that a court can review if a prenup is challenged. In that situation, having competent counsel like Bikel & Schanfield on your side can make all the difference. If you suspect that your spouse will issue a challenge to your prenup, or if you intend to challenge one yourself, then enlisting the assistance of experienced attorneys to guide you through that process can result in a favorable outcome.
The validity of a prenup can depend on:
- Questions of fraud and concealment, such as when a spouse has intentionally hidden income sources or assets
- The couples’ failure to comply with basic contractual standards when entering into the prenup, such as failing to put the agreement in writing or failing to mutually sign the agreement
- Wholly unfair terms that place one spouse at a significant disadvantage, this usually arises in the context of one-sided alimony terms that leave one spouse with no income
- Whether one spouse entering into the prenup did so under duress, which is defined by New York law and looks to whether any unlawful threat or coercion was used by one spouse to induce the other into signing the agreement
While prenuptial agreement invalidation is the exception rather than the rule, the advice of Bikel & Schanfield can guide you through the complicated process of determining whether and when to challenge a prenup, or how to react if your prenup is challenged. Know that most of these issues—fraud, duress, unconscionability—are examined on a case-by-case basis and “case law seems to hold that no one factor, by itself, will warrant the setting aside of a prenuptial agreement,” but “the existence of many factors may establish the invalidity of a [prenup].” A.N. v. E.N, 2012 N.Y. Slip Op. 51839.
How the NY prenup agreement lawyers at Bikel & Schanfield will help you.
A prenuptial agreement is not necessarily the final word. In a divorce, you must be prepared for anything. New York law dictates the rules governing prenups, and a whole host of factors affect how your prenup affects your rights, and what factors may lead to its potential invalidation. Preparing for all eventualities can be the difference between a scarring proceeding or a favorable decision. Tap into Bikel & Schanfield’s decades of experience today and protect your interests.
Founding partner Dror Bikel, known as New York’s leading divorce trial lawyer, and his team of experienced NYC matrimonial lawyers have drafted and evaluated hundreds of complex prenup and postnup agreements.
Bikel & Schanfield represents New York City’s well-known and high-net-worth families, including Wall Street’s biggest players, celebrities, political figures, and top executives. Our unmatched courtroom experience allows us to secure positive outcomes in NY’s most high-stakes divorces.
If you are considering signing a prenup or concerned about how your prenup will affect your divorce, contact Bikel & Schanfield today. We can help.