Postnuptial Agreements Help to Solidify Prenuptials

Postnuptial Prenuptial Divorce

According to Ilan Hirschfeld, the national leader of an accounting firm called the marital dissolution practice group at Marcum (http://marcumllp.com/mobile-management-profile/hirschfeld-alan), wealthy couples should not rely only on prenuptial agreements.  According to Hirschfeld, an old prenuptial agreement can be challenged with forensic accounting, and this is often the course of action for divorce attorneys seeking a greater settlement for their clients.

Although it’s more common to see prenuptial agreements upheld in court, we’re also seeing more and more of them being challenged and altered or completely thrown out by a judge.  In family law, the priority is fairness.  If a prenuptial agreement looks to protect the assets and wealth of the much higher earning spouse to a seemingly unfair extent, there’s greater potential for a judge to see it as invalid and make an alternate ruling.

The separation of assets is more predictable and secure when there is a recent postnuptial agreement or more than one in place to go along with the prenuptial agreement.  Keep this in mind if you generate substantially more income than your spouse and/or have assets you’re seeking to protect.  This is more applicable the longer your marriage lasts, as finances are more apt to change over time.  Although it’s never fun to think about your marriage ending, it’s far better to be prepared for a big storm than caught in the rain without an umbrella.

Choose Your Divorce Agreement Carefully

Divorce Agreement

A recent story in The New York Times brings to light the seriousness of prenuptial and divorce agreements.  Many articles on this blog have discussed the possibility of having a prenuptial agreement thrown out or altered by a judge; however, this is actually quite rare, even today.  The prevalence of voided prenuptials are steadily increasing, but this is still on a case-by-case basis, and only occurs when the judge overseeing a particular divorce case decides that a prenup is unfair or fraudulent and decides to take action to alter or discard it.

As evidenced in the case of E.C. v. L.C., from the New York Law Journal, legally binding agreements are carefully considered by a judge, and almost always accommodated by the court system, even when one party highly disagrees with the parameters of the agreement at the onset of a divorce.  In this divorce case, a couple from Nassau Country, Long Island, mutually agreed upon a divorce contract that the wife had found online.  This agreement stated that neither party would be responsible for paying the other maintenance/alimony or child support upon separating.  It also stated that the family home would be sold and the profits would be distributed equally between the two parties.

Although the separation was mutually agreed upon and the documents signed, the couple didn’t officially file for divorce until two years later, once their youngest child graduated from high school.  At this point the wife didn’t feel the divorce agreement was fair, considering she made substantially less money than the husband.  She also claimed that they had agreed on altering the agreement in the future, which she could not provide any evidence of.  Although the agreement was one that the wife had found online, making it appear less valid, both parties willingly signed it, and it was the wife who had selected this particular agreement in the first place.

The moral of this story is to choose prenuptial and/or divorce agreements wisely.  Look over ones that have already been created, but also make adjustments based on your own individual life circumstances and what you foresee your financial life looking like in the future.  It’s important to seek legal counsel regarding such legal documents as well.  Although this might seem like an unnecessary expense, realize that only legal professionals have the know-how to ensure you take all the steps needed to protect your assets.

Don’t Rely Too Heavily On Your Prenuptial Agreement

prenup denied

In recent news, a Long Island woman had the prenuptial agreement between herself and her millionaire husband revoked.  This has created more controversy regarding the validity of a prenuptial agreement and how well it protects your separate property and separate wealth post-divorce. Prenups used to be considered very difficult to void but things seem to be changing drastically in that regard.  More courts are finding prenups to be invalid or unfair to the lessor-earning spouse, giving a judge full leeway to deny or alter the terms of such agreements.

There are five primary conditions wherein a judge can revoke a prenuptial agreement:

1. The agreement is fraudulent:  if the judge finds that assets were misrepresented within the prenuptial agreement, the judge can deny it, based on the fact that the other party wasn’t fully aware of the true financial picture.  It’s commonplace for one partner to withhold financial information from a spouse when creating a prenup, but less people are getting away with it according to more recent developments within the legal system.

2.  The agreement was coerced, signed under duress or pressure, or signed by someone lacking the mental capacity to fully understand the repercussions of their actions:  This is one of the more difficult ways to have a prenup denied because it’s difficult to prove that someone coerced you into signing something.  It might be easier to prove that your spouse had you sign the prenup while you were mentally incapacitated or unstable (i.e., while under the influence of drugs or while suffering from an illness).

3. Errors in the paperwork:  If a prenup is poorly put together with many errors or miss-wordings, it can be considered legally unenforceable and therefore thrown out by a judge.

4. The prenup was signed without proper legal representation:  If the prenup was signed and one or both parties did not have their own lawyer present, the prenup can be considered invalid and denied by a judge.  For instance, if the higher earning spouse hires a law firm to represent both himself and his spouse-to-be, then later files for a divorce, a judge could decide that the lower-earning spouse did not have fair legal representation and can decide to deny the prenup in its entirety.

5. The agreement is obviously unfair or lopsided:  Major issues that would draw the attention of a judge, such as a statement that would leave one spouse nearly penniless, would probably create concern and lead a judge to either throw out or revise the provisions within the prenup.

Whether you are in the process of getting a divorce or considering marrying someone with the implementation of a prenup, it’s best to get financial advice from your own legal counsel, separate from that of your spouse.  Although it’s easier to have a prenup voided than it used to be, you should not rely on that because not every judge will consider denying a signed document such as this.  Also, you should gain legal help when devising a prenup so that you are ensured protection of your own assets upon getting a divorce in the future.

A Judge Can Reject A Signed Prenup

prenup rejection

As evidenced in the New York Law Journal, there are various divorce cases where a judge has rejected the conditions of a prenuptial agreement.  There are certain rules that need to be followed in order for a judge to consider a prenup valid, and the mere fact that one is signed, even without force, is not proof of validity.  A recent divorce case in Nassau County involved a prenup in which the wife would be left ‘practically destitute’ upon departing from an affluent partner grossing close to $1 million per year, resulting in the judge’s decision to reject the prenup entirely.

In this specific case, the wife was told to sign the paperwork if she wished to get married, and was given a lawyer referred by that of her future husband to review the prenup.  The lawyer assigned to her was already informed that the prenup was non-negotiable and so instructed her to sign it if she wished to wed this person.  Although she willingly signed the prenup, the judge saw that it was an unfair agreement, and so took the authority to reject it.

As per this case, it’s recommended that each party attain their own lawyer to review the prenup and to negotiate any aspects of it that seem unfair.  Each person should also be given adequate time to review the prenup before being expected to sign it.  It should not be assumed that a signed prenup is unbreakable, and so the person who has assets to protect should consider creating a prenup that is fair by ensuring that their future spouse attains their own unbiased legal counsel to also review the terms so that it cannot be rejected later if a divorce occurs.

A “Q-TIP” Trust Will Ensure Your Children Are The Final Beneficiaries Of Certain Assets

QTip Trust

Going into a second or even third marriage, you’ll want to ensure that any children from a prior marriage (if any) are still protected financially.  In this scenario, you can establish what is called a qualified terminal interest property trust or Q-TIP trust.  The income from this type of trust could still be considered marital property and therefore could be factored into alimony payments upon getting a divorce, however, your children will still be the ultimate beneficiaries of the trust.  Keep in mind that upon divorce, a court may find monies from a trust such as this one part of marital property, despite your efforts to keep it separate.  The best option is always to get a prenup, but establishing a trust or several trusts is the second best option.

People who go into a marriage wish to do so with complete faith that the marriage will stand the test of time, however, statistics show that close to half of Americans get divorced within the first 8 years of marriage.  To ensure that you are financially protected, couples should seriously consider devising a prenuptial agreement that is fair to both parties.  Often what can be devised in a prenup is more agreeable to both parties than the automatic contract one agrees to by getting married without one.