Part I of this series describes the several dangers commonly caused by asking a betrothed to sign a prenuptial agreement. There are, however, circumstances in which a compelling need outweighs the risks that the typical prenup creates. These include situations like when:

A couple intends to have an unconventional marriage and wishes to set their own terms. Many cultures don't share our view of a marital economic-partnership or our expectation that each spouse has a duty to support the other. For people with those beliefs, the ideas of marital-earnings-belongs-to-both-spouses or post-marital support might be anathema. Our society allows people to set their own terms for their marriage and, by a properly drafted and executed writing, the terms will generally be respected by the courts.

A couple anticipates that one of them will be sacrificing a career or education to care for the family and they want to ensure that that spouse is secured and properly provided-for. Though New York recently enacted formulaic maintenance guidelines, the maintenance guidelines will not provide sufficient resources for a non-monied spouse in a high-net-worth family to continue the marital standard of living. It might also be unfair to a spouse who left the workforce and relinquished a career to care for children. A couple may, therefore, want to provide the future homemaker with the peace of mind and security to know that the homemaker's future lifestyle and standard of living will be assured.

A betrothed intends to bequeath more than two-thirds of her estate to beneficiaries other than the spouse–as is common for people entering a second marriage who have children from the first. New York law properly does not permit a resident to completely disinherit a surviving spouse. New York, like many other states, protects surviving spouses from being disinherited by allowing them to "elect" to take one-third of the estate in defiance of any will that leaves them less. EPTL §5-1.1-A. Thus, if a betrothed wishes to ensure that prior children inherit more than two-thirds of their estate, the intended spouse has to execute a waiver of the spousal right of election, most preferably done before their marriage.

A fiance has, or will likely inherit, a substantial fortune and the family needs assurances that the fortune will remain in its blood-line. Because, as stated above, without a waiver a spouse inherits no less than one-third of a decedent's estate (and significantly more if the decedent dies intestate), the wealthy family of a betrothed may fear that its wealth will be inherited by the spouse and from there pass on to the spouse's family and not its own, diluting the original family's estate. To protect against such an eventuality, a family might insist that any betrothed obtain a prenuptial agreement ensuring that its wealth only be passed to the family's progeny and not to a spouse's family. Whatever the wisdom and effects of such a demand, the couple might have to accede to it. If the request for such a carve-out is refused and the betrothed proceeds with the marriage, the family might opt to exclude even the child from inheritance rights and bequeath directly only to the children of the couple.

Similarly, a betrothed that has a significant estate and wants to control who among the couple's beneficiaries will receive it after the death of the both of them, needs a waiver of the right of election by the future spouse to ensure that their estate plan is not defeated if the future spouse outlives the betrothed. Without such a waiver, the surviving spouse can "elect," reduce the estate by one-third, and dispose of that third in any way the surviving spouse desires without regard to the decedent's wishes. A waiver of the right of election therefore is necessary to eliminate the survivor's ability to defeat the decedent's wishes. Then, to allow the surviving spouse all of the income from the property but still guarantee its ultimate disposition after the death of the second-to-die spouse, the title-owner may want to transfer the property into a QTIP (Qualified Terminable Interest Property) Trust, thereby ensuring that the interest of the designated "remainder" beneficiaries cannot be defeated by the surviving spouse.

There is a significant chance that the couple will move to a state that allows its courts to invade a spouse's pre-marital property in a divorce. There are currently nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) with community property laws, some of which incorporate pre-marital property into the "community" pot available for distribution upon dissolution of the marriage. (For example, Washington and Wisconsin are community property states that do not ascribe to the "marital property system" that segregates premarital from marital property. J. Thomas Oldham, Divorce, Separation and the Distribution of Property §3.03[3] (Law Journal Press, 2020).)

In addition, there are several other states that divide all of the parties' property without regard to when it was acquired. (A number of states use the "kitchen sink" or "hotchpot" system in which courts divide all of the parties' property at divorce, regardless of how or when the property was acquired. Id. §3.03[2]. These include Connecticut, Hawaii, Indiana, Kansas, Massachusetts, Montana, New Hampshire, North Dakota, South Dakota, Vermont, and Wyoming.)

A few states use a "hybrid" system that allows a court to invade the separate property of one spouse when distribution of the couple's marital assets would be unfair to the other. (Alabama, Alaska, Arkansas, Hawaii, Iowa, Minnesota, Ohio, and Wisconsin. Id. §3.03[4] & n. 24. Some states limit the degree that a party's separate property can be invaded (e.g., Minnesota, 50%), and some require a showing of "hardship" before the court may do so (e.g., Iowa, Minnesota, and Wisconsin).)

Additional proposals, if enacted, would merge separate property into marital property after a certain number of years. American Law Institute, Principles of the Law of Family Dissolution: Analysis and Recommendations §4.12 (2002); J. Thomas Oldham, Should Separate Property Gradually Become Community Property as a Marriage Continues, 72 La. L. Rev. 127, 128-29 (2011); Elijah L. Milne, Recharacterizing Separate Property at Divorce, 84 U. Det. Mercy L. Rev. 307 (Spring 2007).

Thus, where a betrothed has significant premarital assets and there's a chance that the couple will move to a state with one of these regimes, a prenuptial agreement might be appropriate.

A betrothed wants to ensure that the appreciation of separate property will also remain separate, free from any claim of being marital. Whether the appreciation of one spouse's separate property during the marriage is subject to equitable distribution depends on whether the asset was passive or actively managed, whether the appreciation was due to market forces alone or the efforts of one or both of the spouses. A non-titled spouse can have a significant claim to the appreciation of an actively-managed asset. This can lead to significant litigation and require expensive and intrusive expert valuations. The parties may want a prenup to memorialize the existence and current values of any pre-marital assets, or the separate property investment one is making to a joint asset.

To eliminate or reduce these areas of contention, prenups are often drafted simply to provide that any appreciation of separate assets continue to belong exclusively to the titled-owner. While this may be simple and easy, when it applies to a couple's main future business, the non-titled spouse is left knowing that they've been excluded from the parties' major asset.

This type of a prenuptial provision might nevertheless be necessary where a fiance has a business with other partners. Most partners would never countenance a partnership with one of their partners' ex-spouse. (Indeed many business owners purchase "key man" life insurance policies so that in the event a partner dies, the business has the funds with which to "buy out" the surviving spouse's interest in the business. Insurance, however, is not available to pay out in the event of a partner's divorce. And, worse than having a partner's widow as a partner would be having a partner's ex-spouse as a one-half partner in the business.) Thus, business partners may require every partner to have a prenup preventing their spouses from ever obtaining an ownership interest in the business.

A prenup with such a provision, however, does not solve the inherent unfairness of excluding a non-titled spouse from what might likely be the parties' most valuable asset—one in which perhaps one or the both of them may have devoted the bulk of their energies to.

An Appellate Division decision has introduced further uncertainty into this field when it held that a spouse who listed separate property on a joint tax return might have converted it into marital property. Foti v. Foti, 114 A.D.3d 1207 (4th Dept. 2014) (losses from wife's inherited businesses listed on joint tax returns may constitute commingling and therefore summary judgment to declare them separate property was inappropriate). Though this reasoning has been rejected by two other departments (Miszko v. Miszko, 163 A.D.3d 1204 (3d Dept. 2018); Giannuzzi v. Kearney, 160 A.D.3d 1079 (3d Dept. 2018); Angelo v. Angelo, 74 A.D.2d 327 (2d Dept. 1980)), a party who requires certainty might wish to employ a prenuptial agreement. Moreover, with case law constantly evolving, a couple may wish to chart their own course and ensure what their outcome will be, without worrying about the shifting currents of judicial tides.)

A betrothed has significant debt and the couple wishes to decide how that will be handled. Generally courts will not entertain claims for recoupment of marital expenditures. Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415 (2009). Where one of the parties has significant debt and the parties want that debt allocated in a certain way, they might wish to memorialize their agreement in an enforceable prenup.

A betrothed, having seen friends or family experience terrible divorce battles, may be so afraid that they won't get married without a prenup. Because so many people have been through or seen ugly, painful divorces, a substantial number of them may fear marriage and may only consider getting married if they are assured of a smooth landing if the marriage fails. They may insist that all of the terms be resolved ahead of the marriage, and the number of issues to be fought-over reduced, so that they can rest assured that any divorce will be as painless as possible. For these people a prenup facilitates their marriage.

To avoid the transactional costs of divorce, the couple might agree that unless one stops working to care for children, there will be no post-divorce support from either of them to the other. They might want to agree on the existence and value of each of their separate properties and each's origination credits, and how any separate-property appreciation will be handled.

The next installment of this series will explore the least destructive ways of drafting and negotiating prenuptial agreements when they are necessary.

Chaim Steinberger chairs the Custody Committee of the ABA Family Law Section and is a family law attorney, litigator and mediator in New York City. He is the author of "Divorce Without Destruction," "Make More Money by Being More Ethical," and "Father? What Father? Parental Alienation and its Effects on Children." He can be reached through his website, www.theNewYorkDivorceLawyers.com or by telephone, 212-964-6100.