As a business owner or high-income professional, you have worked hard to accumulate your assets and build your business. To ensure your assets are protected and your family's future is secure, it is essential to understand the importance of prenuptial and postnuptial agreements in New York State. This blog post will discuss the key aspects of these agreements, their validity, and how they can address various issues related to income, business equity, matrimonial and trust and estate disputes.
A prenuptial agreement is a legally binding contract entered into by two individuals before marriage, outlining their financial rights and responsibilities in case of divorce, separation, or death. These agreements can help protect separate property, including business interests, address spousal support (maintenance), and clarify the division of other assets and debts upon Divorce.
Similar to a prenuptial agreement, a postnuptial agreement is entered into after the couple is already married. It is sometimes referred to as an anti nuptial agreement. It serves the same purpose as a prenuptial agreement and can be especially helpful for couples who experience significant changes in their financial circumstances after marriage (including business success) or for those who did not create a prenuptial agreement.
Validity of Agreements in New York State
For a prenuptial or postnuptial agreement to be valid in New York, it must meet the following general requirements:
1. Be in writing
2. Be signed by both parties
3. Be entered into voluntarily
4. Include full and fair disclosure of each party's assets and liabilities
5. Be fair and reasonable
It is important to note that these agreements cannot address issues related to child custody or child support, as these matters are determined by the best interests of the child and the court's discretion. And there are other technical details of an agreement that may affect its validity.
Separate property is just that: separate and belongs to you or your spouse individually and will not be subject to equitable distribution in a divorce, as “marital property” would be. Both prenuptial and postnuptial agreements can define separate property, which typically includes assets acquired before marriage, inheritances, and gifts received from third parties. The parties may also agree that certain property, including business interests or other assets acquired during the marriage, may be defined as separate property even if they would otherwise be considered marital property. By clearly establishing and defining separate property, these agreements help protect business interests, professional practices, real estate, and other valuable assets, including retirement accounts, from being divided during a divorce.
Income and Spousal Support (Maintenance)
Prenuptial and postnuptial agreements can address income and spousal support by specifying the amount and duration of maintenance payments, if any, as well as any conditions under which these payments may be modified or terminated. This can help provide financial stability and predictability for both parties and prevent disputes over future support obligations.
For business owners and high-income professionals, protecting business interests is a top priority. Prenuptial and postnuptial agreements can be used to address the treatment of business equity and income during a divorce. For example, an agreement may specify that business interests remain separate property, or it may outline a specific valuation method and buyout process in the event of a divorce.
Of course, anyone with assets to preserve to ensure a stable financial future should be considering a prenuptial or postnuptial agreement because if the marriage does end (such as in a Gray Divorce), then you will want to ensure that you have a strong financial footing for your future into retirement.
Whether you are planning to get married or already are married, prenuptial and postnuptial agreements are essential tools for protecting your income, business interests, and assets in the event of matrimonial divorce or trust and estate disputes (see our blog post about Spousal Elective Share here).
Our experienced attorneys can help you draft a comprehensive and enforceable agreement tailored to your unique circumstances. Contact our law firm today to schedule a consultation and secure your financial future.
If you are facing similar concerns or if you have questions about your Matrimonial situation, please feel free to contact us here. We have many years of experience handling such matters and will be able to assist you in resolving the dispute.