In this podcast, Heidi Opinsky chats with John Maher about pre- and postnuptial agreements. She covers the basics of these agreements and outlines scenarios where they can be helpful. She also discusses the importance of creating a strong agreement.
John Maher: Hi, I’m John Maher. I’m here today with Heidi Opinsky. Heidi is a divorce and child custody lawyer in Connecticut and New York with over 30 years of legal experience in mediation, collaborative law, and litigation, and she represents clients in a full spectrum of family law needs. Today, we’re talking about prenuptial and postnuptial agreements. Welcome, Heidi.
Heidi Opinsky: Good afternoon.
What Are Prenuptial Agreements?
John: Heidi, we’ll start with prenuptial agreements. What is a prenuptial agreement?
Heidi: A prenuptial agreement is just as it sounds, it’s before the marriage, so pre-marriage. It’s an agreement that the parties come to in the hopes that in the event that they do get divorced, it will be a lot easier, a lot less expensive, a lot less taxing emotionally, or time-wise when they do get divorced.
How Long Have Prenuptial Agreements Existed?
John: Have they been around for a really long time? I feel like I first learned about them maybe back in the ’80s, or something like that, but have they been around longer than that?
Heidi: Sure. Equitable distribution came around in the ’80s, so I think they came around the same time, at least in New York. Connecticut, which is a state I also practice in, was a little bit slower coming to recognize prenuptial agreements than other states like New York, which is obviously a frontrunner in terms of case law or activity in law. It’s a major state in jurisdiction where there’s lots of case law, lots of statutory law, so it’s definitely a frontrunner in terms of establishing that.
When Should a Couple Create a Prenuptial Agreement?
John: Okay. When should a couple get a prenuptial agreement, in what sort of typical situations?
Heidi: Sure. A prenuptial agreement, someone should consider that when they have obviously major assets at stake because what you’re doing with a prenuptial agreement is you’re opting out of what the law would present itself as when you get divorced in the particular jurisdiction you’re in, so you’re opting out of that. It’s an opt-out of the law.
If you have major assets, obviously, divorce, the statistics are very high these days, and so you would certainly want to consider it if you have major assets. You also would want to consider it if you’ve been divorced before, you’ve already gone down this road, you know how expensive and time-consuming it can be.
Also, you would want to consider it if you are a parent of a child who’s getting divorced should consider it because the estate assets that you’re going to give your child could be very significant and you don’t know whether this relationship is going to continue until death do us part, as we all say, so you would definitely want to consider it if you are a parent of a child who’s entering into a marriage for the first time and you have significant assets.
What Steps Are Involved in Prenuptial Agreements?
John: Okay. What are the steps involved? How do you get a prenuptial agreement?
Heidi: You go to a lawyer such as myself to prepare an agreement. It’s an agreement pre-marriage, so the consideration for the agreement is obviously the marriage between the parties, and you work out what would happen in the event of divorce. What are we going to agree to? You’re agreeing basically to the division of the assets and property. It could be as expansive or circumscribed as you would like it to be.
Generally, in most jurisdictions, you can’t determine child support by a prenup, but actually, even nowadays, if child support as determined by statutory law in the jurisdiction you’re in, if it’s going to follow it, or be in accordance with statutory law, even if you prescribe in the agreement that you’re going to follow the child support statute in the jurisdiction you’re in, the courts will not necessarily knock that out or that aspect or portion of the agreement out as long as it’s in accord with what normal law would be for child support and custody and visitation.
What to Include in a Prenuptial Agreement
John: All right, so what are some of the things that should be included in a prenuptial agreement?
Heidi: Division of property would be number one. Who’s going to get what in the eventuality of a divorce? Who’s going to retain which property? Basically, the first and foremost issue in a prenup is, “I’m going to retain X, Y, and Z as part of the divorce, you don’t get a right to that,” and you call that your separate property.
Your separate property would be spelled out in copious detail in the agreement and you want to be very careful how you’re defining your separate property because if your words on a page are not express or clear, a judge overseeing a challenge to the prenup could determine, “This is not what I understood the agreement to say. I am interpreting it to mean this,” and so you want to be very careful when you write it an agreement that you have a lawyer that understands the terminology of matrimonial definitions in the law of the jurisdiction you’re in because if it’s not well-defined, you could end up with an agreement that’s set aside, or portions of it are set aside by a judge or they’re interpreted not as you would like them to have been interpreted.
I’ll give you an example. If you want to say your income after the marriage remains your separate property, that’s not good enough. Do you mean earned income? Do you mean taxable income? Things like that. You could end up with a battle that is as costly as a divorce about what the terms mean in your agreement.
Be as Specific as Possible When Creating a Prenup
John: So, you should be as specific as possible.
Heidi: Yes, as defined and specific and clear as possible. Most prenuptial agreements, if there’s money involved, get challenged. You have to assume that from the start, so you want to have an agreement that covers all eventualities that anyone picking up this agreement, and it will be a judge that’s the agreement’s under challenge with, is going to interpret it the same way you intended to be interpreted. You don’t want to leave it up to a judge to interpret it differently than how you intended it to be. That, like I said, could be as time-consuming, as costly as a divorce without an agreement.
Phaseouts and Sunset Clauses in Prenuptial Agreements
John: Can there be any sort of time constraints in a prenuptial agreement, like if we are married for up to one year, then the division of property will be this, and if we’re married up to five years, then it would be this?
Heidi: Yeah.
John: Can you do that sort of thing?
Heidi: Sure. You’re talking about phaseouts and sunset clauses, they’re typically called. It’s almost like the way Donald Trump had his prenup. If you’re married five years or longer, you’ll get X as property and, or as support. If you stay married for 10 years or longer, you’ll get another number, 15, 20, et cetera. There are some agreements where you can have a sunset clause and say, “This agreement, if we’re married X number of years, is no longer of any force in effect, it extinguishes.”
John: At that point, your divorce would just be like a normal divorce, yeah.
Heidi: Exactly.
John: Right, okay.
Heidi: Agreements, like I said, typically, don’t deal with custody or child support because the children are not part of the agreement. For that matter, they’re never part of the agreement, so even when you get divorced, they’re not part of the agreement, either. However, most agreements, most jurisdictions will not legislate custody and visitation and child support as part of a prenup.
But as I said, nowadays, as long as the prenup, for instance, there’s much case law in New York now, as long as what you’re providing for, for child support and the agreement’s in accordance with the guide child support guidelines in New York, that’s okay. A court will not necessarily extinguish those paragraphs of an agreement, even if it’s in a prenup, or as long as the custody and visitation is reasonable and appropriate, what a court would normally do, they wouldn’t necessarily extinguish that clause, even though those two instances, child support, custody and visitation, should not be in a prenup.
Another thing that’s typically not in a prenup that I’ll highlight is if you have ERISA rights to a pension under federal law, you only get those rights, they spring into existence when you’re married, so you can’t legislate that you don’t have a right to a qualified plan after the marriage. You can’t legislate beforehand that you don’t get that, so what lawyers do is we draft into a prenup that after the party’s married, they will execute waivers and consents to release and waive all interests and rights and entitlements that they would have in qualified plans that the other spouse may have.
Pitfalls to Avoid With a Prenuptial Agreements
John: Okay. Is there anything else that can’t be or shouldn’t be included in a prenuptial agreement? You said that child support and then the Erisa rights.
Heidi: Yeah, you shouldn’t write it so that the party who’s signing the agreement is going to be a public charge, for instance. Even in New York, if you’re waiving alimony and maintenance, and you’re going to be subject to being a public charge as a result, and the taxpayers of New York are then going to have to support the spouse, a judge could say, “That’s not proper. I’m going to award support, even though you waived it,” so you have to be careful on certain instances like that.
Another wrinkle that comes up a lot in New York cases is if the other spouse who’s signing the agreement, and let’s say it’s the non-moneyed spouse, by example, if the moneyed spouse hires the lawyer representing the non-moneyed spouse to represent that person in the agreement and they pay for that person, that’s going to be subject to challenge later on, so you have to be careful.
John: Right, ’cause there’s a conflict of interest there.
Heidi: Yes. You have to be very careful not to do something like that, so I always make sure whatever jurisdiction I’m in, or whatever jurisdiction the parties take that I tell the person, “The non-moneyed spouse needs to get representation so that they’re represented, they understand what they’re entering into. If they need an interpreter, get an interpreter. If they’re from another country, make sure they understand the terms and the impact of the terms. Make sure the lawyer is not recommended by you. Make sure you’re not paying for that non-moneyed spouse’s lawyer.” You don’t want to set yourself up later.
John: Yeah, you don’t want to have an issue later where the judge might be able to say, “Well, they were on your side the whole time.”
Heidi: Like it’s a setup, right, and that happens a lot, so you have to be careful.
What Is a Postnuptial Agreement?
John: Then let’s move on to postnuptial agreements then. What is a postnuptial agreement and what’s the difference between that and a prenup?
Heidi: Postnuptial agreements aren’t as common because, as you would imagine, they’re an agreement during the marriage, but you’re not yet getting divorced, and you’re almost toying with the idea of getting divorced, but you’re not really getting divorced, but I’d like to protect myself.
This happened even a week ago, I received a phone call from a gentleman who said, “I’m not sure what I want to do. I don’t really want to get divorced, but I don’t want to give my wife all these assets. At this point in my life, my kids are grown, they’re going to college. We’re empty nesters. We’ve had some problems. I want to just work everything out, so in the eventuality of a divorce — because we’ve toyed with it, and we’ve even started it once before, but withdrawn the action — I’d like to have an agreement in effect so I understand what my obligations are.
I’d like to start slowing down. I don’t want to work past 65 years of age. I don’t really like my job. I make great money, so I’m continuing it, but I’m not happy. We’ve talked about this, so I’d like to get a prenup in place so we’re not fighting about this under the scenario of a divorce litigation later on.”
Differences Between Prenuptial and Postnuptial Agreements
John: Okay. What would be the difference? What would be the reason for doing a postnuptial agreement then as opposed to just waiting and doing it in the process of the actual divorce? What would be the reason that a spouse would ever want to sign that and make that agreement?
Heidi: It may arise, like I said, if one of the spouses’ parents are very ill, but very wealthy, and they’re going to die and they’re not having a great relationship, but they’re not in a divorce scenario, per se, so they may want a postnup when that person dies, you’re not going to get anything.
The reason why I’m saying that is there are jurisdictions like New York where you have separate properties statutorily and it says an inheritance is separate property, or a trust is separate property, but if you are in a state like Connecticut that’s an all-property state and it doesn’t have a statute that says that inheritance or trust is separate property, when that person dies, if you get that property as the spouse, it’s marital property. People are shocked when I tell them that, even lawyers in New York.
John: You might think, “Oh, I’m getting that inheritance from my parents who died. It’s mine.” But actually, it’s half your spouse’s as well.
Heidi: It’s outrageous, I think, but that’s how the law is here in Connecticut.
Transmuted or Commingled Property
John: Right, so you’d maybe want that postnuptial agreement in order, like you said, to protect yourself so that in the event that, say, my parents pass away and I get that inheritance from them that I don’t have to share that with my wife, who I might be divorcing just a few months or a year later, or something like that.
Heidi: Correct, and another very important issue that comes up very frequently is the concept of transmuted, or commingled property. You could have an agreement and the agreement says, “All of this is this party’s separate property,” but there’s a lot of money involved, so 20 years later, 10 years later, you’re not thinking, and most people, when they sign these prenups, the day after they sign it, they’re not thinking about what they’re doing with their property, and that’s why it’s important to have the prenup.
However, a lot of people might do things in their life and not think about what the terms are on the page of their prenup and they may transmute or commingle property and make it marital, what could be challenged as marital, even though you intended it to be separate.
What do I mean by that? Let’s say your prenup says, “ABC account will forever be the husband’s separate property,” and let’s say the husband took his earnings and his earnings weren’t defined as separate property and he put it all in ABC account. A lawyer representing the wife later on can say, “That account’s not separate anymore. That’s mine. It’s marital. Half of it’s mine,” so you have to be careful.
What most people don’t do is they don’t think after they sign these agreements and they end up just living their lives and moving assets around and paying for things and they’re not paying any attention on which account they’re putting something into. If you really want your prenup to work to your most optimal advantage, you have to really pay attention, even during the marriage, that you don’t mix your separate and marital property accounts because I guarantee if there’s money involved later on that lawyer on the other side representing the non-moneyed spouse is going to challenge what you did with all of that, and if you’re not real careful-
John: As soon as you put some of your co-owned property, into that account that you think is separate, now the entire account now becomes potentially subject to being shared, yeah.
Heidi: I even have a case now where someone’s arguing because $500 was in the account that millions of dollars is now tainted because $500. Do I think they’re going to win that argument? I don’t, but they’re arguing that and their accountants are arguing that and they’re spending lots of money and time arguing that and trying to present that, so even though you have these agreements, you really have to be very buttoned up and tight about how you are treating your assets and property and monies, even during the marriage, if you really want that agreement to work optimally for you. You have to be very careful and most people don’t and they do commingle and they do transmute.
You can have the best case possible where almost every single piece of paper shows that you didn’t and that one item, that one $500 item, someone could come in and argue it. Like I said, I don’t think they’re going to win, I don’t think it will occur, but that happens, and it happens a lot that these agreements are challenged when there’s money involved. People will challenge.
If they hire a lawyer who says, “I can challenge this. We’ll argue this, this, and this,” they don’t know until it’s tried what will happen, so the entirety of the case, you’re arguing about the prenup. No matter what, you could have the best prenup in the world, and people will come in and argue if there’s money.
To Learn More, Contact the Law Offices of Heidi E. Opinsky LLC
John: Yeah. All right. Well, that’s really, really great information, Heidi. Thanks again for speaking with me today.
Heidi: Thank you.
John: For more information, you can visit Heidi’s website at the-law-offices-of-heidi-e-opinsky.websitepro.hosting, or call The Law Offices of Heidi E. Opinsky, LLC at (203) 653-3542.