What Is The Value Of Having A Pre Or Post-Nuptial Agreement For A High Net Worth Individual?
For a person with a high net worth that’s intending to get married pre or post nuptial agreements can be critical. The difference between the two is that a prenuptial agreement is executed before you get married and a post nuptial agreement is executed soon after you get married. If they are done right, they are legally binding and enforceable.
There are different things that you can accomplish with either agreement which allows you to deviate from what normal divorce law will give to your spouse. You can capture those property and assets that you have at the time of the marriage and divide those assets out. For example, if you have a Citibank bank account with $100,000 in it (and the last four digits are 1-2-3-4 in that account), then you can provide that your spouse will not be able to share in any funds which are in that account at the time you get divorced. This is true even if marital funds are added to or taken out of the account. The funds in that account will thus always remain your separate property.
A good pre- or post-nuptial agreement will go one step further and inform your spouse that “this is a deviation from normal divorce law.” As a further example, state that “as a general rule s/he would otherwise be entitled to claim a share of that bank account, especially if marital funds are deposited into it.”
“Marital funds” is generally any money that either party earns during the time of the marriage; your money is your spouse’s money and your spouse’s money is your money. If you do not segregate that account into your separate property with a pre- or post-nuptial agreement then you have not protected that money. Even if the account belonged to you with your name on the account before you got married, and even if you never added her name to the account, it can still be divided 50/50.
The same rule applies to any other asset or property. For instance, many people do not realize that retirement assets are marital property. This is because value is generally added to those accounts during the time of the marriage, either by the account holder and/or their employer. Under New York State law, any money added to those financial accounts are generally considered marital money and those accounts will most likely be divided in a divorce case – unless your pre- or post-nuptial agreement says otherwise. That’s the strength of having those things.
Something that people do not realize is that if someone has an established professional practice (such as a doctor or lawyer), before they got married then divorce law says that the practice can still be valued that has an active appreciation during the marriage. Active appreciation can have a price tag put on it by an appraiser which can be divided in a divorce case. However, your pre- or post-nuptial agreement can say that no matter what active appreciation happens to your practice, your spouse will not share in it.
The key thing your pre- or post-nuptial agreement should make it crystal clear (especially if 1 spouse is unrepresented) is that it is a deviation from normal divorce law. It should say that normal divorce law usually gives your spouse a portion of the active appreciation. Therefore, when your spouse is signing that pre or post nuptial agreement, they are waiving the normal divorce practice. The important thing is it’s a knowing waiver; they have been informed what the law is and they know what they are giving up by signing that pre- or post-nuptial agreement.
For more information on Value of Pre-Nuptial & Post-Nuptial Agreements In NY, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling