When Should We Consider A Prenuptial Agreement?
Prenuptial agreements offer significant benefits for couples considering their financial future together. The following describes various circumstances in which one or both spouses most typically decide to prepare a prenuptial agreement.
One party has significantly more assets
This is perhaps the most typical reason people think one would seek a prenuptial agreement. In actuality, however, a prenup can benefit both parties as it provides a quick resolution in the event of a divorce. In addition, a prenuptial agreement can establish financial certainty in the event of a dissolution of the marriage.
Either party Wants To Protect Future Assets
New York Law presumes that everything acquired during the marriage is marital, i.e., jointly owned. While there are exceptions, without a valid and enforceable prenuptial agreement, the law presumes that everything is marital property and, therefore, subject to equitable distribution (e.g., at the discretion of a Family Court Judge).
At Novak & Novak, we have devised strategies and drafted our prenuptial agreements to cover assets acquired not only before, but specifically during the marriage too. While for the inexperienced, this can be a treacherous area of law, with nearly 30 years of experience at our disposal, our firm can help you obtain a valid and enforceable prenuptial agreement that protects the property that you acquire after the date of marriage. While there are caveats, and there are safeguards that you must employ (which we will advise you on and guide you through as part of our service once you retain our firm), you can obtain your objective of protecting your future assets via a prenuptial agreement.
Protect Your Pension & Retirement Funds
Being proactive when protecting your pension and retirement funds is imperative. In the event of a divorce, most spouses, without a prenuptial agreement, expect to divide assets such as real estate, stocks, and financial accounts. However, people are often surprised when they learn they can lose half of their pension in a divorce to their ex-spouse. Typically, without a prenuptial agreement, the entire amount of your retirement account and benefits that accrue while you are married is marital property and, as such, is subject to equitable distribution. In other words, your pension could be split 50/50 between you and your ex-spouse in a divorce. Unfortunately, as we have seen in nearly 30 years of practice, many people enter marriage without realizing that an individual Judge can later divide their pension (amongst other assets) between them and their ex-spouse.
At Novak & Novak, our prenuptial agreement can designate, if you desire, that each spouse’s retirement fund is kept separate before, during, and after the marriage. We will designate 100% of a spouse’s retirement benefits as the separate property of that spouse. If you want to guarantee the protection of your pension or retirement plan, then do not take chances. Retain a qualified attorney to obtain a prenuptial agreement and ensure that your retirement funds are safe and there when you need them one day in the future.
What About a 401K?
Like pensions, your contributions and the appreciation of your employer-sponsored 401K retirement savings plan are considered marital property during the marriage. Unless you have a prenuptial agreement, 401K plans can be subject to equitable distribution in New York. Therefore, if you want to ensure most (or all) of your 401K plan remains your separate property, in the case of divorce, you should obtain a prenuptial agreement from an experienced law firm.
Your Fiancé has significantly more debt
When one spouse has acquired more debt before the marriage, such as credit card debt, that is an issue we address within the prenuptial agreements we draft for our clients. Ideally, premarital debts are the responsibility of the party that incurred them. Without a prenuptial agreement, debts acquired after the marriage can be allocated between the spouses. This disparity can place the non-indebted spouse at a significant disadvantage in the event of a divorce. At Novak & Novak P.C., our prenuptial agreement will remedy this situation and address all current and future debt-related issues between the parties.
One spouse owns a business
One party may need to protect the financial interests of the child from a previous relationship. For example, a prenuptial agreement can be the ideal instrument to protect a child’s interests in a will. Our prenuptial agreements are designed to let your will control your estate while you are married.
There are children from a prior relationship or marriage
Quite frequently, in our prenuptial practice, we encounter one or both spouses who own businesses. A prenuptial agreement can protect the assets and shares of the company in the event of a divorce. A prenuptial agreement can further delineate full power to a party over the business’s present and future control and management. In addition, our prenuptial agreement can protect the future increase in the company’s value. Moreover, our prenup can secure and further protect the rights to the current and future profits, distribution, and dividends of the business.
A Party Was previously married
Individuals and couples that have been through a divorce have seen first-hand the difficulties (where there was no prenup in place) in dividing marital assets, pensions, debts, and inheritances. Moreover, a prior divorce may impact an individual’s future financial obligations.