What is a Prenuptial Agreement?
"Prenuptial agreements are binding contracts entered into prior to the marriage. These premarital contracts are designed to protect the parties in the event that the marriage is not a successful one. In recent years, these contracts have become more popular, especially in New York City. The underlying principle of a prenuptial agreement is that the couple should make decisions regarding division of property while the marriage is strong. In this way, they can make decisions in the cold light of day, when the parties can be rational about the outcomes, rather than during the emotional turmoil of the demise of the marriage. For many coupes, the fairness of the prenuptial agreement is not a huge concern. Instead, the focus is on whether or not the terms of the agreement will be adhered to and enforced.
While this is understandable, it is important to keep in mind that we are all at different places in our lives when we decide to enter marriage. Unlike a business partnership, in which the parties typically have similar incomes, economic states, and sophistication, marriage often brings together individuals that are in vastly different socio-economic environments. When a relationship begins, the disparate financial backgrounds of the parties may not even be apparent. However, if the parties stay together long enough for a marriage to be contemplated, often some of these differences will become apparent. By the time the parties marry, they may then have significantly disparate assets and incomes and a significant lapse in time may have resulted in their financial sophistication levels being vastly different as well . Prenuptial agreements allow the parties to sit down as equals when their assets and financial sophistication levels are presumably at equal levels, rather than when the differences have grown astronomically large.
The typical prenuptial agreement contains terms that are fair to both parties based upon the financial circumstances that they are in or can reasonably expect to be in at the time the agreement is executed. Often, the prenuptial agreement will contain terms that are fair for a short period of time. The agreement will provide that the terms will be revisited every five to ten years, or sooner, if reasonable changes in circumstances warrant a new agreement to be negotiated. In the same manner that changes in law and differences between the parties can make boilerplate prenuptial agreements unfair, changes in circumstances can make even the most rational prenuptial agreement seem out of touch with the reality of the circumstances at the time it is enforced. Pre-marital contracts should provide for easy renegotiation, if reasonable changes in the parties’ circumstances change the fairness of the contract. While prenuptial agreements do not require fairness of outcome, the parties should make an effort to ensure that the agreement makes sense in light of real life circumstances, so that the parties can continue their good relationship, regardless of the outcome of the prenuptial agreement, finding it to at least be rational and fair and not some booby trap that was caught off guard by the court. If you are considering getting married in NYC, it is essential to consult with a skilled NYC prenup attorney so that you and your partner can understand the legal implications of entering into this agreement, and craft a prenup that meets your needs and concerns.
Reasons to Work with a Prenup Attorney in NYC
Expert Guidance: One of the biggest advantages of working with a prenuptial agreement lawyer in NYC is that they have a depth of knowledge about the marriage contract and how it works. They can provide expert guidance to ensure that your specific agreement includes all necessary issues that reflect your current financial situation. This can prevent mistakes that may later harm you or your spouse financially.
Legal Compliance: With prior experience with the prenuptial agreement process, your attorney can draft a legally binding document with enforceable contract terms that will hold up to legal scrutiny. They can help avoid common mistakes such as:
Negotiation: Many couples have difficulty discussing the important relationship issues that are codified by a prenuptial agreement. Your attorney can act as an intermediary to prevent unnecessary conflict and ensure the discussion of all relevant issues for a clear and honest agreement.
Protection: Your prenuptial agreement lawyer in NYC can make sure that the contract is fair and contains no loopholes that could allow legal separation or divorce from your spouse at a financial disadvantage.
Education: If this is your first prenuptial agreement, your attorney can answer questions and help you gain greater understanding about how the agreement can work for you.
Alternative dispute resolution (ADR): Some couples now enter into mediation, arbitration or collaborative divorce before the agreement to reduce the potential for the legal process to become a contentious issue. Your attorney can help facilitate the process to lessen the potential for adversarial proceedings.
Peace of mind: Knowing you have a legally sound agreement that properly protects your interests can go a long way toward allowing both parties to start a marriage free of potential worries over money or property issues.
Determining the Best Lawyer for Your Situation
In the heart of New York City, finding the right prenuptial agreement lawyer can be a daunting task. With an array of options available, it’s essential to consider several key factors to find the practitioner that best matches your particular case requirements and communication style.
The first step in the process is to consider your own needs, both personal and financial. The goals for the agreement should dictate the terms of the document, so it’s crucial to sit down and think about what conditions would be most suitable for your situation. This way, you won’t end up spending hours or even weeks arguing over terms that don’t really apply to your life.
Next, dig a little deeper into the backgrounds of potential divorce attorneys. You should take into account such factors as years of experience, specializations, and expertise in the specific issues pertinent to your case. You want someone who not only has a solid grasp of prenups generally, but also one who understands the unique factors that could influence the terms of yours. For instance, personal business ownership may require additional language to be addressed in the agreement, and those extras need to be addressed early in the process. Otherwise, you may have to start all over again from scratch to accommodate those variables.
Questions to Ask Your Initial Consultation
As important as it is to find a lawyer with specialty expertise in prenuptial agreements, it’s equally important to find one who has the right personality to work with. It’s for this reason that we recommend asking the following questions during your initial consultation:
- Do you work exclusively on family law matters or are there other areas of law that you work with?
- If you work on other areas of the law aside from family law, which ones?
- Does your firm also work on prenups and divorce agreements?
- How long have you been practicing law?
- How long have you been practicing exclusively in family law?
- Are you a member of any professional organizations?
- Do you work with other law firms or professionals on certain cases?
- On average, how many prenuptial agreements have you drafted in a year?
- What is your preferred method of communication (phone, in person, email) and how often can I expect to hear from you on this matter?
- Do you have an understanding of paternity claims and laws and how they may affect a prenup?
- Have you ever contributed to a prenuptial law publication or the media on the subject?
- If I contact you after hours or on a weekend, will someone be able to respond to me or will I need to wait until the next business day?
The initial consultation meeting is the time to determine if this lawyer is the right one to handle your needs. You should feel empowered by making decisions that are right for you, not pressured into broker or refrain from acting because of intimidation.
Understanding NYC Legal Proceedings
In New York City, the process for enacting a prenuptial agreement involves several steps and challenges that must be successfully navigated. Many prenuptial agreements require the party seeking it to disclose their income and assets to the other party. This allows both parties to understand their potential financial exposure and helps establish a foundation for a fair, enforceable agreement. In New York prenuptial agreements, a party may not leave his or her spouse without sufficient means for his or her support after the marriage’s dissolution. Because of this provision, many prenuptial agreements typically establish multipliers for various forms of financial support, from temporary spousal support, to rehabilitation support to lifetime maintenance.
Moreover, a New York prenuptial agreement may be deemed unenforceable if it is not executed in accordance with Article 13-B of the Estates, Powers and Trusts Law. Under section 7, subsection (4) of Article 13-B, a prenuptial agreement that would appear to be valid is nonetheless void if, at the time of its issuance, the parties to the agreement "have not voluntarily entered into the contract." A prenuptial agreement also may not be enforceable if either party was unable to understand its contents at the time it was signed. Likewise , a prenuptial agreement that was secured through fraud will also be unenforceable.
Alternatively, a premarital agreement in New York is valid and enforceable only if, among other things, it is a written contract that is signed by the parties. It must also be executed voluntarily by the parties. A voluntary contract is one that is reached as a result of the free and competent action of the parties. A voluntary contract also cannot be based on fraud.
The courts treat prenuptial agreements in New York as contracts that are subject to the general rules and requirements for contract formation. If there is a no-contest or general severability clause in the prenuptial agreement and a court finds the agreement to be invalid, the mutual consent of the parties is not necessary for it to be voided; the prenuptial agreement only requires the consent of the party or parties that are prejudiced by the invalid portion of the agreement. Here, there is a noteworthy exception. If a no-contest clause drafted by one party and signed by an opposing party also violates the statute of frauds or the statute of wills, i.e., a requirement that the agreement be in writing, the clause is enforceable. Accordingly, a prenuptial agreement containing a no-contest clause will be valid and enforceable if it does not violate the statute of frauds or the statute of wills.
Prenup Expenses: What to Expect
The varying costs of legal fees in New York can often be a source of confusion for those involved in legal proceedings, including when hiring a prenuptial agreement lawyer. Those who are looking for a lawyer for their prenup should be prepared for the expenses that accompany legal counsel, and should understand the three basic structures for how a lawyer charges for the drafting and negotiation of these often-complex agreements.
• Flat fee: A flat fee is the most straightforward and least expensive option. As the name suggests, there is a set charge for premarital legal services, and that charge will not change regardless of how much effort is required to book and negotiate the agreement. In most cases, simpler prenups can be achieved for a flat fee of around $2,500 to $3,500, while those requiring more complex legal assistance can cost up to $7,500.
• Hourly rate: This fee structure is determined using a method similar to that of the hourly rate for a typical attorney. The law firm bills by the hour for their services, and the total amount you pay will depend on the number of hours the attorney puts into your case. Hourly rates may vary from around $275 for less-experienced lawyers to as much as $900 for the most seasoned professionals.
• Annual subscription: Some firms offer an annual subscription service, for which clients pay a fixed annual fee and can obtain a number of legal services, ranging from prenup negotiation to divorce representation, during the course of a year. This is a good option for individuals who are concerned they might also need legal assistance in the future, such as if they have been married for only a couple years and are thinking about ending their marriage after 10 years. Clients must sign a contract committing them to the law firm for a full year.
Ultimately, your firm of choice should be able to explain its fee structure and negotiate with you to reach a mutually agreeable price range.
Common Myths Surrounding Prenups
Prenuptial agreements have long been misunderstood as tools for the greedy rather than for the wise. Traditional notions of what a prenup can do tend to revolve around the idea that, when a marriage fails, the spouse who was supposedly "in it for the money" will be able to pocket more of their partner’s income and assets. While an agreement’s asset/earnings division provisions certainly can provide this, the picture is not complete. In fact, the opposite is often the case; the marriage fails because one partner was focused on the financial arrangement and not the person, while the other saw a marriage as a holistic, spiritual experience with the person as soulmate. In any case, neither scenario is guaranteed and the agreement allows either extreme or anything in between.
This is one of the most important aspects of a prenup. It takes away the guessing about what will happen in the future, provides for an exit in a dignified way. A comprehensive agreement can provide for all eventualities, even those we don’t expect and can’t predict. PS: It is a common misperception that a cliché "Sunset Clause" is necessary for an agreement to be enforceable. It is basic contract law that says an agreement covers events that have already occurred. Thus, the simple passage of time cannot render an existing, signed agreement unenforceable.
Another common misconception is that prenups are just for people coming into a relationship with money and/or property to protect against a marriage with a "gold digger" or where the spousal roles are defined by societal gender norms. In fact , pre-nups are more often for the spouse earning less or is not totally responsible for the generation of assets or income, i.e., the homemaker or stay-at-home parent. It is exactly this situation that has provided one of the most common uses of a prenup, a "rehabilitative" provision to lift a parent up from post-marriage (often depression) and into the workforce: for child care, school and parental involvement. This is especially true when there are young children and an agreement provides a transition plan, perhaps based on the age of the youngest child at divorce. Parents often agree on full time care for that child for 3 years after the divorce. Once they’ve recovered, they can go out in search of a spouse that will appreciate their positive qualities and talents.
Drafting is the most important task that can be assigned to the attorney hired to prepare the agreement. If the agreements contain language that encourages judges to find them unconscionable, for example, they will never be enforced and money and relationships will be wasted. Further, we need to know and understand all of the assets and income to make good decisions about the terms of a prenuptial agreement. It is extremely important that the agreement be signed voluntarily, without coercion or pressure and with full knowledge of the assets and income. A costly and unexpected divorce may be the result of an unequal and concussive process. We will discuss a few failed prenup cases in future blogs to illustrate what went wrong in those matters.