Tag Archive for: Postnuptial Agreements

Good Samaritan Divorce

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Is there a price tag to being a Good Samaritan in Divorce? 

“A Good Samaritan — a charitable or helpful person.” 

There are infinite ways of exercising kindness to one’s spouse during a divorce, but we will focus on the timing of divorce here.  

Sometimes, in a divorce, one party needs more time while the other wants the divorce finalized immediately. The one that wants the immediate resolution will try to exercise grace, extend the other party significant latitude, and give them more time, sometimes years to ease the blow and transition for the party having a harder time with the concept of the divorce and disentanglement. What can happen is that two, three, or even more years go by before the divorce process is underway. 

Due to that wait time, the spouse that has exercised patience can end up having to pay much more than if the divorce had been commenced earlier, because of the equitable distribution cut-off date being postponed and the maintenance entitlement, as a correlation to the length of the marriage, being longer. 

For example, wages/income earned, bonus payments, retirement accruals would be subject to equitable distribution, so you have cases where parties have been living separate and apart and want half of the other’s bonus payments and funds in separately titled accounts that income has gone into, in addition, to support payments.  

The cut-off date for equitable distribution is demarcated by the filing of a summons for divorce or the parties entering into an agreement, such as a postnuptial or separation agreement specifying the equitable distribution cut-off date. 

On the maintenance end, the formula states that for a marriage up to 15 years, maintenance is 15-30% of the length of the marriage; at 15-20 years of marriage, maintenance is payable for 30-40% of the marriage; and for a marriage over 20 years, it’s payable for 35-50% the length of the marriage. So, the longer you’re technically attached to someone, the longer you’re paying them. 

In one extreme case, a well-off husband, who worked for 5 years trying to negotiate an agreement but never filing a summons or doing anything to cut off equitable distribution, ended up being obligated to pay his wife a lot more due to the patience he extended to her during that 5 year period when they were still married, although living apart. 

In this situation, the more monied spouse exercised kindness and allowed the other spouse more time, which in turn cost him more than it needed to. Both spouses knew the marriage was over, and the spouse who needed more time was totally unsympathetic in the final divorce. 

Sometimes, the waiting spouse is acting from pure altruism — out of empathy and compassion towards their spouse; often, there is also an interlaced self-serving quality, as the waiting party thinks their spouse will be cooperative and less aggressive in their demands when they finally come around. 

Sometimes, this works in the reverse, where the non-monied spouse gives the other party latitude and by the time they are ready to proceed, there is a lot less money to divide, as assets have dwindled. 

The “feel good” concept we’ve all heard: “You attract the energy you put out” simply does not always unfold as such; far too often, the party putting out gracious energy gets taken advantage of, as cynical as it sounds.  

Unfortunately, being a Good Samaritan can get a divorcing party taken advantage of and leave them feeling beaten down and resentful.  

There are practical solutions to stop-gap this, including but not limited to, stop the clock agreements; equitable distribution cut off agreements; postnuptial agreements and interim agreements; filing a summons but holding off on filing a request for judicial intervention while the agreement is being negotiated.  

Feel free to contact us to discuss the various containment methods and best strategy approach where these Good Samaritan dynamics operate in the shadows.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

Do You Need a Postnup?

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While the term “prenuptial agreement” has made its way into mainstream vocabulary, many still look flummoxed by the term “postnup.” What is it and are you in need of one?

A postnuptial agreement is structured like a prenup and bears similar terms, such as separate and marital property designations, specific maintenance provisions or waivers, estate provisions, and the gaping absence of rights relating to children of the marriage. Akin to a prenup, the agreement is mostly relevant and effective upon a separation at a future date. Both agreements are governed under the identical principles of contract law.  

Postnups are usually not “Oops we forgot to enter into a prenup; let’s quickly patch it up with a postnup” situations. Rather, they are typically carefully calculated events that fall into one of the following categories:

The parties start the process before their wedding and intentionally decide to finalize their agreement after the wedding when the dust has settled.  

When clients first come to me for a prenup, I ask them what their timeline is — if they can’t negotiate the terms they want in time for a pre-scheduled wedding, are they willing to proceed with the wedding, do it as a postnup and continue the negotiations after the wedding.

There are those that vehemently respond NO — come hell or high water, they are not getting married without a prenup; others are more lackadaisical about it and respond that they feel comfortable proceeding with the wedding, as long as they know a postnup will be entered into afterwards.

It is important to advise the latter category that a postnup is easier to challenge, and there are no guarantees that it will be signed within a specific duration once the wedding takes place.

Ironically, there seems to be little correlation between the generosity of people in their negotiations and their decision to either postpone the wedding until a prenup is executed or do it as a postnup. I’ve had clients say they want their spouse to get nothing in the event of a divorce, while others have wanted to give much more to the other person than the law would extend. Both these types of people have told me they could wait until after the wedding to do it as a postnup.

The psychology people have in relation to their money, accumulation, and sharing is not always logical; assumptions cannot be made; it is important to check the party’s temperature on these facets.

The parties are giving the prenuptial agreement a facelift; updating it to make it more current and reflective of their present reality, as opposed to the reality of bygone years when the prenup was entered into.

This is fairly common in a strong, healthy marriage when the parties have entered into a prenup that was more heavily in one party’s favor with the oral promise that they would agree to update it and extend more leaves to the other party as their marriage progressed, their family grew, and they had a proven track record of being happy together.

Case in point is a client who married a high net worth individual whose family carved out the terms of the prenup to protect their vast real estate conglomerate. The groom told the bride that he would agree to update the agreement every few years; true to his promise, he has, with each postnup they enter into being more favorable for her and far exceeding the prenup. At this point, approximately 7 years into their marriage, she is receiving far more under the present postnup than she would receive under the law. Her words verbatim, “He sees I’m normal, not out to spend money, and is now happy to share more.”

This postnup-to-update-a-prenup scenario is not exclusively exercised in smooth sailing waters; there are times when it is the exact opposite dynamic that triggers the postnup. A party unhappy in a marriage, who is starting to check-out, has more leverage when their spouse is dependent on them, still loves them, or wants to remain in the marriage and the unhappy spouse tries to get their spouse to sign a postnup that alters the terms of a prenup.

The parties are entering into a joint venture such as purchasing a marital residence together and wish to explicitly set forth the terms and allocation of ownership.

When parties purchase a big-ticket item such as a marital residence, especially if they got married later in life and have significant separate property funds, they often want a postnup relating to the specific responsibilities and ownership interests of the asset.

This scenario is also common when parties have a prenup with unspecified or overly generalized terms regarding jointly purchased real property.   

One or both of the parties are starting a business either together or separately or assuming debt and wish to set forth the terms and protections as it relates to their marital and separate property rights/entitlements and liabilities.

A physician who had been with her husband for over 15 years recently came to me for a postnup because she was starting her own medical practice, had significant medical school debt, was about to assume more debt towards business loans for her new venture, and her spouse had significant student loan debt as well. While her spouse was willing to have her start her own business with no agreement in place, she strongly felt she needed a postnup to allocate rights to her business and assign the parties’ respective debts. In light of her unease with her situation, I couldn’t have agreed more.

An agreement often works like a charm to settle a party’s nerves when they are about to take bold entrepreneurial steps or feel they are in over their heads in areas largely out of their control; an agreement is a way to take the reins in whatever way they can. 

Another client learned that her spouse was 9 million dollars in debt and wanted an indemnification agreement to protect herself; such an agreement would also fall under the category of a postnuptial agreement.

The parties’ marriage has entered rocky waters; they are not yet ready to throw in the towel; the thought of either a separation or divorce is still too raw and shocking, and they are wading their feet in the waters, one step at a time, and doing “Trysies” on a separation or divorce.

The expression, “Marry in haste, repent at leisure” is on point. Some need to unravel their marriage in baby steps. As opposed to ripping off the band-aid, they need incremental stages to adjust. Often they also feel there is a possibility of reconciliation and a postnup lends itself to such more than a separation agreement (or divorce), which has a greater air of finality to it.

When navigating the waters of a postnuptial agreement, party’s different paths, as described, often lead to the same result.

If you find yourself facing a time-challenge with your prenup or are considering a postnup, feel free to contact me.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

‘Til Death Do Us Part…

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“’Til death do us part” may more aptly be phrased “I will follow you into the grave!” 

I’ve had a number of clients come to me that live in loveless, self-absorbed, and contentious marriages but manage to exist, having developed a certain understanding in their relationship, such as living in separate bedrooms. Many of these people feel contempt, anger, or apathy towards their spouse. For example, their spouse may be extremely stingy; wastefully dissipate money on addictions; abusive, or duplicitous and cheating on or stealing from them. Nevertheless, for a plethora of reasons, they are often resistant to divorce and want to stay in the marriage.

Many times these people think that there will be justice and a sense of dignity and self-protection if they predecease their spouse, as they believe their spouse will not be able to get anything more from them then. They believe that they can exercise some control while they’re alive to ensure that what is theirs will be carefully allocated when they pass away.

They then become disheartened and their bubble is burst upon learning that their will may not be actualized according to their wishes, and that their spouse may be able to collect under the Right of Election. The Right of Election ensures that you cannot disinherit your spouse; they are entitled to the larger of $50,000 or a third of their spouse’s net estate. Learning this motivates people to find out their options, which include: 

•Signing mutual waivers, which is a critical dimension of both Prenuptial Agreements and Postnuptial Agreements, especially amongst older couples where one or both of them have established a significant amount of wealth and have grown children who they plan on bequeathing their estate to. The fact that their spouse would be able to collect a certain minimum amount throws off the dynamics of what their children could potentially get. Under regular law, you cannot write your spouse out of your will. However, this waiver can dictate that what is written in the will dominates. 

Prenuptial and Postnuptial Agreements are increasingly popular across the board, and especially among older, more established spouses, or people with significant family wealth.

The Prenuptial Agreement is obviously an exercise of foresight, caution, and investment in insurance prior to the marriage. Sometimes, people are wary about bringing it up with their fiance because they are afraid of their fiance’s reaction. However, there are simplified prenuptial agreements that can be entered into that set forth reasonable, modified rights, and waiving the right of election is almost always included in these more narrow, limited-in-scope agreements. It is not overly offensive nor does it shock anyone’s conscience, so to speak, prior to marriage, and fiances are generally amenable to signing and don’t feel isolated in the relationship by such.   

As mentioned, often people are already married when they first learn of the right of election, feel indignant about it, and torn by their basic desire to have their wishes as expressly set forth in their will trump. Once people are married and wanting to carve out certain understandings, they can include a waiver for the right of election in a Postnuptial Agreement. Sometimes when an unhappily married client comes to me in this type of situation, they feel their spouse will be so resistant to a Postnuptial Agreement, they would rather just go through with a divorce at that point.

It is important for people to understand how wills, trusts, and estates are intertwined with divorce, including the fact that on the heels of a divorce, new wills need to be drafted, as new beneficiaries and trustees will likely need to be designated. Also, people should understand the implications of the rights that come with the marriage, such as the right to take against your spouse’s estate.

If you’re going into a marriage or contemplating a divorce and you don’t want your spouse collecting against your worth or your estate, consult with a qualified divorce attorney to put the appropriate measures in place to ensure your estate is bequeathed appropriately, within your control, and according to your wishes.

Feel free to contact The Law and Mediation Offices of Cheryl Stein with any questions.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
Offices in Manhattan and Brooklyn
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com