Divorce rates have hovered around 50% in the U.S. for decades. This makes taking steps to protect your assets and income a highly practical decision.
However, it’s not easy to predict how each partner’s net worth will evolve over the course of a relationship; there are so many potential sources of income, including the Wild West of cryptocurrency. That’s why entering a marriage with a prenuptial agreement can give both spouses an increased sense of trust and security. And thankfully, with the rise of two-income households, today’s newlyweds are bucking the stigma surrounding prenuptial agreements.
With that in mind, here’s what a prenuptial agreement (or prenup) is and how it guards against lopsided divorce settlements.
What are prenuptial agreements?
A prenuptial agreement is a joint contract between a couple who are engaged to be married. It establishes a precedent for how finances and other assets will be split if the marriage ends in divorce.
Items covered in a prenup include:
- Pre- and post-marriage assets
- Spousal support
- Liabilities and debts
- Rights to estates or other properties
- Ownership of a business
- Cryptocurrency and other alternative assets or investments
Married couples share a lot of responsibilities, especially if they have children. Traditionally, this expectation of shared responsibilities is the basis for distributing assets after a divorce.
But for some couples, the standard way of distributing assets may seem unfair or just unnecessary. These couples may instead choose to predetermine the outcome of a potential divorce by signing a prenup.
A prenuptial agreement offers a transparent and liberating alternative to contested divorce proceedings. Whether the marriage lasts ever after or a few years, both spouses are assured that they will retain their most valued assets.
Are digital assets at risk in a divorce?
Legislation surrounding cryptocurrency and marriage is very new. And given the financial potential of digital assets, it’s important to account for their value in the event of a divorce. Just like any other asset, a spouse’s digital wallet will be assessed and distributed — unless it is protected by a prenuptial or postnuptial agreement.
Some partners may not be comfortable managing cryptocurrency. Given this asset’s volatility, it could be wise to exclude ownership of digital currency in a prenup to avoid sharing a significant financial loss.
Although New York applies equitable distribution principles instead of the outdated 50/50 split, a prenuptial agreement is the simplest way to designate ownership of all (or some) digital currency.
How Equitable Distribution Works in New York
What happens if you don’t have a prenuptial agreement? In New York, divorce settlements are decided via equitable distribution. This system gives the court flexibility to consider all aspects of the marriage to determine a fair dispersal of assets.
Factors the court will examine include:
- Individual assets like investments, retirement accounts, or jewelry
- Specific requests made by each party
- Spousal support or maintenance
- The health and age of each spouse
- Nonfinancial contributions made by each party
- The duration of the marriage
- The current living situation of each spouse
- Each spouse’s potential for earning income
- Actions by either spouse that compromised the marriage
Equitable distribution is adopted by 41 states and is designed to recognize each marriage’s unique circumstances. That said, working with a prenuptial agreement attorney can save divorcing spouses the time, hassle, and expense of lengthy divorce litigation.
Protecting Assets With a Prenuptial Agreement Attorney
Cryptocurrency and marriage don’t have to be a complicated pairing. A prenup can ensure both romantic partners are entering the marriage for the right reasons.