Prenuptial Agreement Rules
Divorce attorneys across the country are reporting a dramatic increase in requests for the creation of prenuptial agreements for their clients over the past five years. It is striking that prenups have become so common today when just ten years ago they were nearly unheard of. Prenuptial agreements are now a generally accepted way for both spouses to protect assets at any age.
Data from various studies shows that over 50% of the requests for prenups were made by women in 2010 and attorneys also saw an increase in requests to include pensions and retirement accounts in the prenuptial agreements at the same time. It’s clear that these people are thinking more about protecting their assets if a marriage ends in divorce and they are taking steps to address the situation.
Most prenuptial agreements are binding for the full length of a marriage but now more couples are choosing to include a stipulation that the prenup will only remain in effect until a certain future date. This stipulation is known as a prenuptial sunset clause. A sunset clause will usually specify that the prenup will be terminated after a specified number of years of marriage. After a prenup sunset clause has expired, a divorce action and resultant property division will have to be negotiated in court as with any other non-prenup marriage.
Couples sometimes agree upon a sunset clause in order to protect shared property from one partner’s debts and agree to a prenup that will give that partner a certain amount of time to settle the debt before they begin building shared assets. The most common reason for a sunset clause is an agreement between spouses that the prenup should be considered void once a marriage has lasted a set length of time.
When one partner has considerably more wealth than the other spouse, the wealthy partner may wish to protect their assets if the marriage turns out to be a mistake. The less wealthy spouse might agree to signing a prenup only if it will become void after the marriage is proven to be lasting and shows that the couple got married for the right reasons.
Whatever the reason, the effect of the sunset clause is that legal property rights will return to both parties as if they had never signed the prenup agreement in the first place. The situation will usually deliver a positive result as long as both spouses are fully aware of the terms and length of any prenuptial agreement they are creating. There may be cases where individual provisions will be included to allow a particular debt or asset to remain in the separate names of the couple until a specified date, but as the use of sunset clauses was practically unknown until recently, the laws pertaining to them will vary slightly from state to state.