In 2016, the median household income for a couple in New York City was $500K. The average cost of a Manhattan apartment is $2.2 million. New York couples know that entering into marriage is entering into a contract. As such, there are many financial considerations that must be taken into account to ensure a smooth transition from single to married life. Assets and debts are crucial items to discuss with your soon to be spouse. Significant assets include any savings that you may have, investment accounts, retirement funds including a 401K or pension, and any real estate in your name. Personal property such as family heirlooms, expensive jewelry and artwork of significant value also count as assets.
We recommend that you make a list, each, of all of your assets, and then make a list of all of your debt. Make sure that the list is comprehensive, and that you are not going through the process sin haste. Review your current bank account statement and assess what you have coming in, and what you have going out, and then you and your soon to be spouse will have to look at how your bills will change, if at all, once you are married. How will the bills be paid, if you will have a different way of managing finances? Many couples decide to get a joint bank account, and pay bills from this account. There are laws which vary from state to state that pertain to how property, specifically money in a bank account, would be allocated in the event of marital breakdown.
Here in New York, once you are married, the assets including the bank account would be split 50/50 unless you have a prenups citing otherwise. So even if you are married for 5 years, and hold a savings account with $50,000, and your husband never touches that money, has no access to the account, and you never pay any of your shared bills via this account during the duration of your marriage, your soon to be ex husband may be entitled legally to half of that account. It hardly seems fair when you think that a simple document prior to the marriage could have kept you in good financial standing, and your money would stay yours, and his, his. In general though, New York state statutes have little to say about prenuptial agreements. In general "[a] contract made between persons in contemplation of marriage, remains in full force after the marriage takes place.” There are specifics that indicate that the document must be in writing, signed by both parties in full understanding of the contents, and so forth, but in terms of legal restrictions, New York couples have the freedom to create a prenups that works for them. This is in part because prenuptial agreements, by their nature, are highly customized and tailored to the couple who is entering into it.
Another thing to consider, for example, is if either or both of you use pre-marital personal savings to buy a large ticket item- take a car for instance- will that property be split proportionally to the amount of money you invested at the time of purchase? For example, if the car cost $50,000, and the wife put in $30,000 and the husband put in $0, upon sale of the vehicle, would the wife might receive her $30,000 back or just get 60% of the sale proceeds as detailed in a prenuptial agreement.
Something that many couples choose to do, and in general is always a wise decision, is to agree upon review dates in the future where you will sit down together and review the agreement, and make a list of the things that have changed- assets, debts, and other circumstances. Then, together, see if there is anything in the document that needs reworking. At this point, you will have been married for a bit, so you will have had a chance to see how your lives are unfolding in relation to your finances, and if there are any changes you need to make. This review process is always helpful to the couples we have worked for, and it serves as an opportunity for a couple to do a big picture review of their overall finances, their goals, where they were, and where they would like to go. If you draft a new document at this time, it would be called a postnuptial agreement.
NYC Prenup is grateful to be able to help couples establish strong foundations by creating prenuptial agreements that protect them and their futures.