Belle Burden’s recent book, “Strangers: A Memoir of Marriage,” tells her story of how much of the wealth she brought into her marriage was lost due in part to an unfavorable prenuptial agreement. Before marrying, she had agreed under pressure from her future husband to revise their draft prenup so that any asset in both parties’ names would be split evenly upon their divorce, while income earned by one spouse during the marriage would stay with that party.
As a member of the famously rich Vanderbilt family, Burden used funds from a family trust in order to purchase an opulent marital home in New York City. She agreed to put title to the property in both their names. Her husband, Henry Davis, developed a very lucrative career. Meanwhile, despite being a lawyer, Burden stayed home and raised the couple’s three children. When Davis surprised Burden by saying he was divorcing her approximately two decades later, she found herself in a very unfavorable financial position when a court upheld the prenup.
Under New York’s equitable property division statute, unless a valid prenuptial or postnuptial agreement is in place, a marital estate consists of most assets and income acquired during the marriage, as well as any debts taken on during that time. Each spouse’s separate property, however, would not normally be subject to division.
While Burden’s story shows the risks that can occur when assets are commingled or when separate assets are used to purchase jointly owned property, a well-drafted prenuptial agreement can help individuals entering a marriage preserve a strong financial foundation for life should their marriage end in divorce. Separate assets can include the following:
- Property owned and income earned before marriage
- Resources received as gifts from third parties
- Inherited assets or money
- Personal injury compensation awarded to either spouse through litigation or a settlement
Commingling entails combining marital property with separate property, using marital income to preserve or improve separate property, altering ownership records to include a spouse’s name or otherwise combining what was once separate property with the marital estate.
New York family courts may consider the terms included in prenuptial (and postnuptial) agreements when identifying each party’s separate property, since those agreements can create “carve-outs” that are unique to the couple’s situation. Prenuptial agreements can serve a key role in the long-term protection of separate property. Spouses can specifically outline what counts as their current and future separate property, making it clear that certain assets were never meant to be shared.
The combination of a written agreement validating the separate property of each spouse and financial records establishing that certain assets have remained separate from the marital estate can help effectively exclude those resources from property division litigation. Recognizing that separate assets may need protection can help people understand the value of negotiating healthy prenuptial agreements.
Bryan L. Salamone & Associates, P.C. represents Long Island residents looking to create, enforce or challenge a New York prenuptial agreement. For a consultation, please call 631-388-6009 or contact us online.