A common, and sensitive question for engaged couples preparing for marriage is whether they should have a prenuptial agreement (also known as a prenup or premarital agreement). 

Popular culture often portrays prenuptial agreements as unromantic or mistrustful. But in practice, they are sophisticated legal instruments designed to promote clarity, reduce conflict, and protect both parties’ interests if married life doesn’t go according to plan. 

These contracts, which become effective upon marriage, allow couples to define their property and support rights and obligations in the event of divorce, as well as their rights and obligations with respect to their respective estates in the event of a spouse’s death. Having a prenuptial agreement in place can potentially avoid costly and emotionally fraught litigation in the future. 

Because everyone’s situation is unique, prenuptial agreements are tailored for the specific needs of each couple. There is no “one size fits all” model. 

Individuals in all financial conditions and in different phases of life can utilize these agreements. Similarly, there are myriad reasons why it might be desirable to enter into a prenuptial agreement with your future spouse. 
That said, consider the following questions when thinking about whether a prenuptial agreement is right for your relationship and circumstances:
 

1. Are you bringing unequal wealth into your marriage?            

Prenups can be particularly useful where:

• One partner has significantly more assets than the other
• One partner expects to inherit substantial wealth
• One partner owns a business

A prenup can clarify what will remain separate property and how marital property will be defined. New York law allows couples to designate assets as separate or marital in a prenuptial agreement.

 

2. Do you have children from a prior relationship?     

A prenup can help ensure that:

• Certain assets remain earmarked for your children
• Your estate plan aligns with your intentions

While a New York prenup cannot determine child custody or child support, it can protect assets intended for children.

3. Do you own a business or expect to start one?


Without a prenuptial agreement, a business (even one you started before marriage) can become entangled in divorce proceedings. A prenuptial agreement can:

• Define the business (and any appreciation in its value) as separate property
• Prevent your spouse from gaining an interest in the company
• Protect business partners or shareholders

Given the complexity of business valuations, entrepreneurs may desire prenuptial agreements to protect their companies.

4. What are your career plans, and how might they change?


Marriage often involves decisions that affect earning capacity, including:

• Pausing a career to raise children
• Relocating for a spouse’s job
• Going back to school

A thoughtful prenup can address compensating a spouse who sacrifices income-earning opportunities for the marital partnership.


5. Do you or your partner expect to receive substantial future compensation?


This often includes stock options, deferred compensation, restricted stock units, partnership interests, bonuses, or other forms of incentive pay. These assets can be particularly complex to value and divide in the event of a divorce. A prenuptial agreement allows parties to determine in advance how these forms of compensation will be characterized and distributed if the marriage ends.


6. Are there real property interests that you want to protect or keep separate?


Many individuals enter marriage already owning a home, apartment, investment property, or vacation residence. Although premarital property is generally considered separate property under New York law, there are nuances. A prenuptial agreement can be used to clearly delineate ownership, responsibility for expenses, and what happens to any appreciation in value.


7. How do you want to handle spousal support/maintenance?


A prenup allows both parties to set expectations in advance, rather than litigating support obligations in the event of divorce. New York permits couples to limit the amount and duration of maintenance or to waive it. Spousal support terms must be fair and reasonable at the time the prenup is signed and not unconscionable at the time of divorce. Such provisions also cannot result in one party becoming incapable of self-support and likely to become a public charge of the state.


8. Are you both emotionally ready to discuss a prenup?


Prenups are not just about financial and property rights and obligations. Emotionally, they involve trust, communication, and long-term planning. Couples should discuss:

• Their financial values
• Their goals for marriage
• Their expectations for money management

A prenup discussion addressing these topics can lead to a stronger financial partnership and can avoid misunderstandings and uncomfortable situations during the marriage.


9. What happens if you don’t sign a prenup in New York?

If you marry without a prenup, in the event of divorce, your property and spousal support will be governed by New York’s default rules set forth in the Domestic Relations Law. This may involve the equitable distribution of marital property based on statutory factors and potential spousal maintenance awards.  


If a spouse dies without a prenup in place, his/her property will be distributed in accordance with a valid Will, or, if he/she dies intestate (without a Will), in accordance with New York’s Estates, Powers and Trusts Law. A prenup allows couples to opt out of the default systems and create personalized financial terms.


10. Should you consider a postnuptial agreement instead?


If your wedding date is approaching quickly or if discussions feel rushed, a postnuptial agreement, which is signed after the marriage, may be an alternative. Postnups serve a similar function to prenups and can address the same issues and concerns.

A well-crafted prenuptial agreement is not a prediction of divorce but rather is a proactive planning tool. These agreements can facilitate healthier communication during marriage by helping couples articulate expectations regarding finances, property, and long-term goals beforehand.

Ultimately, choosing whether to have a prenuptial agreement is a personal decision. Still, it is one best made after thoughtful consideration of various factors, including your financial landscape, your family structure, and your long-term intentions as a couple. 

If you have questions about prenuptial agreements in general or whether a prenuptial agreement might be right for you, please click here to reach out to Matrimonial and Family Law Attorney Sarah R. Gersowitz.