What is a Prenup? What’s in it? When is it Used? Can it be Contested? in New York City

Once you’ve decided to tie the knot with your significant other, you then come across the concept of a prenuptial agreement and wonder, “what is a prenup and do I need one?”

A prenup is a contract entered into by two persons who are intending to marry, signed prior to the marriage. The prenup sets forth the rights and obligations of the parties to each other in case of death or divorce. Usually, these rights and obligations refer to spouses’ property rights and obligations. Some prenups have attempted to address custody and child support issues. Although this is a point of consideration, the courts are not bound and will always evaluate a prenup’s custody and child support provisions to see whether they were made for the best interests of the child.

If you are looking for an attorney for your prenup, we at the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or send us an email at [email protected].

Requirements of a valid prenup

To be valid, a prenup in New York must be:

1. in written form
2. signed by the future spouses before the marriage; and
3. notarized

The future spouses must also marry in order for the prenup to be valid. If the future spouses sign a prenup and then break up before getting married, the prenup is not valid or enforceable.

Can a prenup be contested, challenged, canceled or set aside

The prenup may also be questioned and challenged before the court on the following grounds:

• Attorney conflict of interest – The future spouses used one attorney and the prenup is unfair for one spouse and in favor of another.
• Fraud – One future spouse misrepresented his assets and financial situation.
• Unconscionable – The prenup was severely unfair and inequitable at the time it was signed. For example, a prenup that has left one spouse with absolutely nothing during divorce can be considered unconscionable.
• Coercion or duress – One future spouse was forced to sign the prenup under pressure or was not given enough time to review the prenup before signing. However, the threat not to marry if the prenup is not signed is not considered duress or coercion.

What is in a prenup

A prenup addresses many different issues, such as but not limited to:

• the identification of marital and separate property, including the classification of future property;
• the amount of spousal support or alimony;
• child custody, child support, and visitation issues;
• establishing debt incurred prior to the marriage;
• establishing support for children of a prior marriage;
• protection of pension and retirement accounts; and
• protection of business and intellectual properties.

Typical situations where a prenup is used

A prenup is typically used in these scenarios:

One future spouse is wealthier than the other

Although one might think that the prenup will not benefit the poorer spouse, this is a wrong impression. A prenup can also benefit the poorer spouse because the poorer spouse can already negotiate on issues of spousal support or alimony. Usually, an “escalator clause” is inserted in a prenup to make the amount of support or alimony dependent on income or the number of years the couple is married.

One future spouse has children from a previous marriage

In New York, the spousal right of election entitles a spouse to the greater of $50,000 or 1/3 of the net estate upon the other spouse’s death. To go around this provision, a future spouse can waive this spousal right of election in a prenup, allowing you to leave a majority of your estate to your children from a previous marriage. If this is not addressed, when you die first before your subsequent spouse, your spouse may inherit most of your property, and when she dies, it goes to her heirs (who are not your children from a previous marriage).

If you were not able to address this in a prenup, you can still execute a post-nuptial agreement with your spouse. If your spouse refuses to sign a post-nuptial agreement, you can consult an estate planning lawyer on the use of a qualified terminable interest property (QTIP) trust.

You would like to identify which property is separate and which property is marital

A prenup allows the spouses to determine which property is separate and which property is marital. For example, you use a prenup when you have a business or you have a sizeable inheritance you expect to receive in the future that you’d like to keep as separate property. You can also state that income from this particular source is separate while income from another source is marital.

Remember however that, despite the fact that you have identified certain property as separate or marital in a prenup, your actions during the marriage can make separate property be deemed marital. For example, if you have a house that you already purchased prior to the marriage, and during the marriage, you transfer the title to both you and your spouse, the house may be deemed to be marital property because you are considered to have made a gift to your spouse. Another example is, if you receive an inheritance from your deceased father during the marriage, this is considered separate property. However, if you place this money in a joint account with you and your spouse as account holders, instead of putting it in a separate bank account in only your name, the inheritance you received, though considered separate property, may be considered marital due to your actions.

One spouse has a significant amount of debt

If your future spouse has a significant amount of debt, such as student debt, you might want to get a prenup. Although debt prior to the marriage is considered separate debt, any property and income acquired during the marriage is considered marital property in New York. Thus, if you are the higher income earner, in the event of divorce, your spouse will own half of what you both have accumulated during the marriage which can answer for his separate debt. If you want to make sure that your money is not used to pay for someone else’s debt, you need a prenup.

How a prenup fits with New York divorce law

A prenup operates against the backdrop of Domestic Relations Law (DRL) §236 Part B, which governs equitable distribution of property and spousal maintenance in a New York divorce. Equitable distribution divides marital property fairly, considering factors such as the length of the marriage, the income and property of each spouse at the time of marriage and at divorce, the future financial circumstances of each party, and the contributions of each spouse to the marriage. Without a prenup, the court applies these factors to every dispute about property. A prenup can simplify or eliminate those disputes by predetermining how specific assets, debts, and income streams will be treated.

The same statute, DRL §236 Part B(3), addresses the validity of agreements between spouses or future spouses. To be enforceable, the prenup must be in writing, subscribed by the parties, and acknowledged with the formality required to record a deed. Beyond the statute, the courts have applied general contract principles, refusing to enforce prenups tainted by fraud, duress, overreaching, or unconscionability.

The role of financial disclosure

Although New York does not strictly require attached schedules, complete financial disclosure is one of the strongest defenses to a later challenge. Each future spouse should provide a detailed listing of assets, debts, income, and reasonably anticipated interests such as expected bonuses, vested stock, or future inheritances. Attaching schedules to the prenup creates a record that both parties knew what they were agreeing to. Courts have set aside prenups where one spouse hid significant assets or misrepresented their financial picture.

Independent counsel and timing

Each future spouse should have their own attorney. While a single attorney can technically draft a prenup that both sign, a court reviewing a challenge will look closely at whether each party had an independent advocate. Separate counsel also tends to produce a more balanced agreement that is easier to defend later.

Timing matters. A prenup signed days before the wedding is vulnerable to claims that the signing spouse felt pressured into agreeing to avoid embarrassment or cancellation of the ceremony. Beginning the conversation months in advance and signing well before the wedding date reduces this risk.

What a prenup cannot do

• Predetermine child custody and visitation, which a court must decide based on the best interests of the child under DRL §240
• Eliminate a parent's obligation to support a child under the Child Support Standards Act
• Encourage divorce by providing financial incentives for ending the marriage
• Waive maintenance to such an extent that one spouse would become a public charge
• Override the rights of third parties, such as creditors, lenders, or co-owners of a business

Postnuptial agreements as a backup

If you marry without a prenup, or if circumstances change after the wedding, a postnuptial agreement can address many of the same issues. Postnups must satisfy the same formalities as prenups and the courts review them with extra scrutiny because spouses already owe each other fiduciary-like duties. Common situations for a postnup include the launch of a new business, receipt of an inheritance, reconciliation after a separation, or one spouse leaving the workforce to raise children.

Frequently asked questions

How much does a prenup cost?

Costs vary widely based on the complexity of the parties' financial picture and whether the case is contested. A straightforward agreement between parties without significant assets is far less expensive than one involving multiple businesses, trusts, or international property. Investing in the document during the engagement is almost always less expensive than litigating the same issues during a divorce.

Will the court reveal our prenup?

Prenups are typically referenced during the divorce process, and any disputes over enforceability become part of the case record. Parties concerned about confidentiality can include nondisclosure provisions and structure the agreement to limit publicly filed disclosures, though no provision can fully prevent judicial review.

Can we update our prenup over time?

Yes. Spouses can amend a prenup with a postnuptial agreement at any time, provided both sign with the same formalities. Major life events such as the birth of a child, the start of a business, or a significant inheritance often prompt revisions.

Conclusion

If you are engaged to be married and have debt or property, you should discuss with your spouse these financial issues and consider what you can put in a prenup. Anyway, these are issues you would also have to address when you are already married. When you have significant debt or property or children from a previous marriage, a prenup will be helpful and will prevent a contested divorce, saving you legal expenses in the future.

Should you need assistance in drafting a prenup, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].