A prenuptial agreement can be an effective tool for protecting assets in case of a divorce. It allows you to establish clear terms for the division of property, debts and other financial matters before entering a marriage.
When properly drafted and upheld, a prenup can prevent lengthy disputes and help ensure the protection of certain assets. However, it is also important to keep in mind the potential weaknesses of this document.
How does a prenup work?
In New York, courts generally honor prenuptial agreements as long as they meet specific legal requirements. Both parties must voluntarily agree to the terms without pressure or coercion. There must be full financial disclosure of all assets and debts, and the terms of the agreement must be fair at the time of signing. Prenups that meet these conditions can protect a range of assets, such as business interests, real estate or investments. The agreement accomplishes this by ensuring that the protected property remains the separate property of one spouse in case of divorce.
When will a prenup fail to work?
There are situations when a prenuptial agreement might not fully protect all assets. One common issue occurs when a court deems the terms of the prenup to be unfair or unreasonable at the time of divorce. For example, if a prenup severely limits one spouse’s access to marital property or leaves one party at a significant financial disadvantage, a court may decide not to enforce those terms.
Additionally, if one spouse hides assets during the creation of the prenup, or there is evidence of fraud, the court may invalidate the entire agreement. Changes in circumstances, such as a significant increase in the couple’s wealth, could also lead a court to reevaluate the fairness of the prenup. In some cases, the court might even ignore provisions about child custody or support included in the prenup because New York courts prioritize the best interests of the child over any agreement made between the spouses.
While a prenuptial agreement can offer strong protections for assets in a divorce, it is important to understand that certain circumstances might limit its effectiveness. If divorce is on the horizon, consider modifying your prenup to ensure fairness, transparency and full financial disclosure to increase the chances that the prenup will be upheld.
