Sunset Clauses in Divorce
For most marriages, a prenuptial agreement is a binding contract that will last for the full length of the marriage. However, many couples choose to include a stipulation that the prenup will only remain in effect until an agreed upon date, also known as the notorious sunset clause. If a sunset clause has been included in the agreement, the entire prenup will typically be terminated after a specified number of years of marriage. Once these prenups have reached their expiration date, the terms of the division of property must be hashed out in court like any other divorce.
A couple might choose to agree upon a sunset clause for any number of reasons. For instance, the couple may wish to protect shared property from one partner’s debts and agree to a prenup that will give the partner a certain amount of time to settle the debt before they begin building shared assets. However, the most common reason for the inclusion of sunset clause in a prenup is an agreement that the prenup should be considered void once a marriage has lasted a certain number of years. This is a particularly attractive compromise to couples in a marriage where one partner has considerably more material wealth than the other. While the wealthy partner may wish to protect his or her assets if the marriage turns out to be a mistake, the other partner might only agree to signing a prenup if it will become void once it is proven with the test of time that they had gotten married for the right reasons.
There are two main variations of sunset clauses. The most common form of a sunset clause is makes it retroactive once the prenup reaches its termination date. This means that legal property rights will then return to both parties as if they had never signed to the agreement. The second form of sunset clause is partially non-retroactive and is typically used to settle premarital concerns over specific debts and property. In these cases, individual provisions will be included to allow the particular debts or property to remain in the separate names of the couple until a specified date, and these items might not be retroactively voided at the termination of the prenup. For example, one partner might wish to resolve his or her debts through a prenup rather than requiring the other partner to be burdened with the responsibility as well they are married.
The use of sunset clauses was virtually unknown until the last couple of decades, and the laws pertaining to sunset clauses will vary slightly from state to state.