Should I Get a Prenup?

Just a couple of months ago, the country was shocked when the world’s richest man, Jeff Bezos, found himself in the middle of a divorce.  While the divorce appeared to most to be amicable, his wife of 25 years, MacKenzie, finds herself a likely recipient of half of his $137 billion net worth.  Understanding the situations in which this may happen is the key to understanding whether a prenuptial agreement may be right for you.

While some states rely on the common-law method of splitting property based on whose name it is titled in, New York distributes property in a divorce through the doctrine of equitable distribution. This means when a couple divorces, the court will divide the property fairly. Unlike other states, this does not necessarily mean an even split of the assets. In New York, the court will rely on factors such as each spouse’s income before the marriage, the duration of the marriage, each spouse’s age and health, and childcare dependency, along with many other factors.

Before the Court can get to the distribution of property, there must first be an understanding of what property is subject to equitable distribution. Only marital property is subject to equitable distribution.  Marital property includes all property acquired by either or both spouses during the marriage, regardless of the form in which title is held. This includes each spouse’s income, the property they bought with that income, the appreciation of the property owned, and even their retirement benefits earned during the marriage.

In contrast, “separate property” is not divided when a couple divorces. Separate property includes property that each spouse acquired before the marriage, property received individually or as an inheritance, compensation for personal injuries, or importantly, any property that is characterized as separate property in a valid prenuptial agreement.

Although prenups have a bad stigma associated with them, a prenuptial agreement can be useful in settling issues of property division and support in the event of death or divorce. In order to create a valid prenuptial agreement, the agreement must be in writing and signed by both future spouses before a notary public.  Any oral agreements will not be upheld. Although validly executed, the prenuptial agreement will not go into legal effect until the parties are legally married.  Typically, a prenuptial agreement addresses issues such as each spouse’s right to a specific piece of property, the distribution of assets during the marriage and in the event of death or divorce, and each spouse’s right to buy, sell or transfer property.

While most people associate prenuptial agreements with the distribution of property after a divorce, a prenuptial agreement may also be used to distribute debt following a divorce. For example, an individual marrying a person with substantial debt before the marriage may have the future spouse sign a prenuptial agreement holding that the debt will not be shared following a divorce. Overall, a prenuptial agreement can be used for a wide array of situations. The only clear limitation to a prenuptial agreement is that it cannot resolve child custody or support payments.

Prenuptial agreements can be complex legal contracts.  When thinking about executing a prenuptial agreement, you should contact an experienced family law attorney.  The lawyers at Wingate, Kearney & Cullen, LLP can help you draft a prenuptial agreement and can also help you update various essential life documents that control your estate. For more information or to schedule a consultation, call (718) 852-5900 or, for divorce matters, (646) 620-6416, or fill out our contact form.