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What can a prenuptial agreement protect?

On Behalf of | Oct 8, 2019 | Family Law |

Individuals in New York who actively purchase stocks, bonds and other equities may protect their ownership rights through a well-written prenuptial agreement. Getting married does not automatically entitle a future spouse to dip into your portfolio; assets traded during your marriage, however, may otherwise be considered marital property.  

In the event of a divorce, it might be easier to pay a departing spouse for his or her fair share of marital property rather than liquidating your holdings and splitting the proceeds. A prenuptial agreement may contain a clause to establish which investments are your separate property; these would not be part of the commingled property that you and a spouse must share in value. 

When the founder and CEO of Amazon and his wife announced their divorce after 25 years of marriage, questions about how it would affect the value of Amazon’s stocks swirled. Because the couple did not have a prenuptial agreement, many shareholders were concerned that the CEO would need to sell his stocks during the divorce, which may have caused substantial price fluctuations.  

Some investors also raised the issue of whether the CEO would maintain his controlling voting power if forced to split half his shares with his soon-to-be ex-wife. According to Business Insider, however, the couple split amicably with his ex-wife relinquishing 75% of her ownership in the stocks that she held together with her ex-husband.  

Without a prenuptial agreement, a spouse may have the right to sell an asset that is part of your marital property and realize half of its value. You may also wish to consider a postnuptial agreement — a document signed by both spouses after the marriage — to verify which assets are separate and which are part of the community property. Either type of an agreement may help to ensure that your assets remain part of your separate property. 

This information is provided for educational purposes only, and should not be interpreted as legal advice.