Prenuptial agreements are intended to protect a person from losing a disproportionate amount of wealth to a spouse in a divorce. They can also be used to provide other protection and make the divorce process proceed more smoothly when numerous assets are involved. Once seen as a symbol of distrust between engaged couples, prenuptial agreements are now nearly as common pre-marital milestones as rings and making up guest lists, at least among high net-worth couples.
A Long Island decision raises concerns
In March of 2013, a woman named Elizabeth Petrakis won the right to have her prenuptial agreement thrown out by the New York Appellate court. She signed the agreement before her wedding at the insistence of her then-future spouse, but only because he verbally promised to discard the agreement once they started having children. When they split up, Elizabeth fought the prenup on the grounds that she was “fraudulently induced” to sign it, a claim that she eventually succeeded in proving and which has stunned many in the legal community. She may now be entitled to a significant portion of her ex-husband’s holdings, which are estimated at $20M.
This case should raise concerns regarding enforcement of prenuptial agreements by the New York courts. It is also a reminder that prenups should never be signed in the “shadow of the altar” but rather well in advance of the marriage to avoid accusations of coercion or putting faith in hastily offered concessions. Another teaching point — make sure everything related to the prenup is put into writing and done with separate attorneys to represent each party present.
Despite this controversial ruling, prenuptial agreements remain effective contracts that protect both spouses’ interests when handled correctly. Just remember, do not try to do-it-yourself when it comes to prenuptial agreements. Call a New York City attorney qualified to work on these agreements for high net-worth clients.