Statistics show the average age of couples marrying for the first time has been steadily rising. According to Pew Research Center, the median age at first marriage is at 30 years for men and 28 years for women in 2018. Men and women are waiting to first establish careers, pay down debt, and sometimes live with a potential partner before saying I do. The result of this is that many millennials are going into marriage with significant income and assets as well as debt from school loans and credit cards, which can result in conflict both during marriage and in the event of a divorce. A prenuptial agreement can help couples minimize future disputes by compelling full disclosure and discussion of each party’s finances and expectations. While these conversations may bring up many issues, there are 3 key areas that should be addressed in a prenuptial agreement.
- Separate vs joint property. A prenuptial agreement defines what income, assets and debts will be “separate” as opposed to “joint.” Under New York divorce law, separate property is property that is either acquired before the parties’ wedding date, a gift directly to one party, or an inheritance regardless if received before or during the marriage. Absent specific circumstances, separate property exclusively belongs to the spouse owning the property. Joint or marital property is property that is acquired after the parties’ wedding date. When a couple divorces, the marital property is divided between the parties. Problems arise, however, when couples comingle their separate property assets or debt with marital property as this may often result in the conversion of separate property to marital property. To avoid problems, these issues should be addressed in a prenup particularly if one party is bringing significant assets or debts into the marriage.
- Spousal support. A prenup can set out rights to spousal support during and after the marriage. This is especially important if there is a big income disparity between the parties or one parent plans to stops working to raise children. Millennials are waiting longer to have children. When they do, one spouse may decide to give up a job with substantial income and find it hard to get back into the workforce years later. The couple should discuss their expectations and decide how they want to provide for spousal support during the marriage and in the event of divorce.
- Estate planning. No one likes to think about death. A prenuptial agreement allows the parties to contractually agree to make Wills which define how each party will leave their assets in the event of death. While this is beneficial for any couple, prenups can also work to protect assets a party wants to leave their children from a prior relationship.
Entering into a prenuptial agreement doesn’t mean you are anticipating the failure of your marriage. It is a preventative measure that allows you to consider your present and future finances, so you avoid disputes later. Prenups are also often a tool for parties to learn how to have those difficult conversations that arise in a marriage from time to time. The best time to discuss these concerns is while you have a strong, connected relationship so you both are willing to communicate with trust and feel safe to share your views.
Like any contract, prenuptial agreements should be carefully negotiated and vetted by an attorney for each party. If you are considering a prenuptial agreement, please contact us to find out how we can help.