Tuesday, September 9, 2008

More About Prenups

Not to denigrate some of the loftier reasons for prenuptial agreements, but when you get right down to it, they are basically contracts about money and property. Who gets to keep what? Who gets to get what? Who gets to break it to the accountant? 

One reason for this is the fact that, in New York, provisions in prenuptial agreements that attempt to govern child custody and child support are not enforceable. So, it doesn't make a whole lot of sense to pay a lawyer to draft something that can't be enforced in court. 

A second reason why is that, under New York law, property or income acquired during the course of a marriage is usually deemed marital property and therefore subject to equitable division upon divorce and a lot of people don't like this idea. 

Prenuptial agreements allow the parties to opt out of this financial scheme by designating what would otherwise be considered marital property as non-marital or separate property. This can be especially important where one of the parties owns a business in partnership with others or has property that has been passed down in her or his family for generations.

The permutations of ways and means to work out who keeps what and who gets what are endless. However, they can be sorted into broad categories, including:

Recognition of a spouse’s ability to buy, sell, use, transfer, exchange, lease, assign, encumber, and dispose of property during the marriage;

Setting alternative dispositions of property depending on whether the marriage terminates naturally on the death of either party or earlier due to separation, marital dissolution, or the occurrence of any other event that the parties might choose;

Elimination or reduction of maintenance (alimony);

Imposing an obligation to make a will, trust or other arrangements to carry out the provisions of the agreement; and 

Providing for the ownership and disposition of the death benefit under a life insurance policy or a retirement plan.

They may not be romantic, but there are many excellent reasons to have a prenuptial agreement.