Does your prenuptial agreement have a sunset provision? Many couples have language in their prenups that states that all or part of the agreement expires after a certain number of years. Often, it is 10 years, but it can be more or less.
These provisions are often requested by the spouse who has more money going into the marriage, perhaps as insurance that his or her spouse isn’t just going to stick it out for a few years and then leave with a nice chunk of change.
Often, however, couples let these sunset clauses expire, only to find themselves having to divide a significant fortune with a spouse whom they’ve been married to for a long time. Chris Rock is an example of this. When he and his wife divorced after an 18-year marriage, their prenup had reportedly expired.
The same thing happened with Jack Welch, the one-time chief executive officer of General Electric and business tycoon. He and his second wife divorced after 13 years — three years after their prenup had expired.
If you choose to include a sunset provision for all or part of the items listed in your prenup, it’s essential that you and your spouse regularly review it. Just as with an estate plan, a prenup may not keep up with the changes in your financial situation and/or your relationship. Sometimes the spouse who went into the marriage with considerable individual assets ends up being the less individually wealthy of the two.
Maybe one spouse was in a boy band when he married, but that boy band is no longer successful. Meanwhile, his wife has built a fashion empire. Changes to the prenup or the drafting of a postnuptial agreement may be essential to protect both of them.
The point is that a prenup should not be a one-and-done situation. Things change, and as with all legal documents that impact your life and family, a prenup should be regularly reviewed and re-evaluated to ensure that it is still protecting both spouses.
Source: Investment News, “Chris Rock’s divorce offers lessons in divorce planning,” Daria Mercado, accessed June 23, 2017