Should You Have A Sunset Clause In Your Prenup?

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Should You Have A Sunset Clause In Your Prenup?

3 August 2015
 Categories: , Blog

Does your soon-to-be spouse want a prenup? Do you? Prenuptial agreements can be tricky to discuss because they suddenly throw all sorts of practical questions into what's supposed to be a period of romance. Here's what you should know about something called a "sunset clause" and how one might take the sting out of your prenup conversation.

Prenuptial Agreements Can Cause Problems Before The Marriage Even Starts

Prenuptial agreements often come up for two reasons:

  • one of the partners involved has been through a bad marriage before and is afraid of getting burnt again
  • there are significant differences in wealth and assets between the two people.

Since roughly 50% of marriages still end in divorce, the fear that things won't work out is a valid one.

Sometimes another family member (such as a parent of the intended bride or groom) is the driving force behind the prenuptial agreement. Anxious to protect their children or "family money," they may start pressing their son or daughter to get a prenup. The non-moneyed member of the couple often feels taken by surprise or coerced, maybe even insulted. The whole issue can create a lifetime of hurt feelings and set the couple up for a fall.

A Sunset Clause Can Be An Excellent Compromise Agreement

A sunset clause is simply an expiration date on the prenup agreement. Once that time period has passed, the prenup becomes null and void (along with any limitations on what the less moneyed spouse can collect in a divorce).

A sunset clause can allow the partner who is hesitant to enter into the marriage without a prenup agreement to feel more comfortable. The contract gives him or her some assurance that if the romance dies after only a year or two, he or she won't have to sacrifice a great deal of personal wealth during a divorce.

It also can soothe the feelings of the other partner to the agreement. It allows that person to compromise and say, essentially, "Okay. I can understand your fears. However, if we make it past a certain point, I think it will be time to set those fears aside."

There Are Several Types Of Sunset Clauses

The most common version is to simply have the prenup expire after five to ten years (or longer, depending on preference). Another type of sunset clause allows the prenup to essentially phase out over time. As certain anniversaries pass, the prenup becomes less and less restrictive. At the five year mark, for example, restrictions on alimony might fall off. At the ten year mark, all the material property might become marital property. By the fifteen year mark, all stocks, bonds, royalties and other investments could become jointly held. By twenty years, the whole thing is null and void.

Of course, ultimately, you'll want to talk to an expert in family law before you make any decisions regarding a prenup, so consult an expert about your particular situation to see if a sunset clause makes sense. You might consider speaking with a family lawyer at Grenadier, Starace, Duffett & Keisler, PC.