Family Law Matters Blog
Whenever I write about prenups or advise clients on them, I always emphasize the idea that prenups are not a one-size-fits-all document and should be tailored to meet the needs of the couple’s circumstances and goals. While there are many subjects and clauses that are routinely included in prenups, there are just as many that may only be beneficial or work in some situations or for some couples. Sunset clauses often appear in articles about prenups and it can be hard to understand the implications of having a sunset clause or what the benefits may be. How do you know if a sunset clause is a wise choice for your prenup?
A sunset clause is one that specifies a date or trigger event in which certain terms in the prenuptial agreement would expire. A common trigger event in a prenup’s sunset clause would be a specific anniversary, such as the couple’s 10th wedding anniversary. The prenup can also be constructed in a way that specific terms of the agreement are “phased out” over time. The general idea is that as the marriage moves forward, the initial motivations behind inclusion of these specified terms may no longer apply. What works for a marriage of short duration may not seem fair for a marriage of long duration. Examples are waivers of spousal estate election rights and waivers of maintenance (spousal support) – especially in situations where a significant imbalance exists in the parties’ assets and finances. Absent a significant difference in assets, the parties may still choose a sunset clause for their own reasons – such as the couple’s established commitment to the partnership.
Regardless of the couple’s motivation for including a sunset clause, it is important to understand the implications of how the sunset clause will be construed in the event of divorce. For example, if the sunset clause provides that certain provisions terminate upon the couple’s 10th wedding anniversary, this means that those provisions are valid until the 10th anniversary date. Typically, the sunset clause does not take effect if an action for divorce is commenced or if the couple has entered into a separation agreement. The conditions and terms of the sunset clause offer options to address both partners’ concerns and are specific to the situation. It can often help to break an impasse on a particular issue.
It is important to understand the implications that a sunset clause may have, as well as ensuring it properly reflects you and your partner’s goals. An experienced attorney is able to explore the various options in trying to meet each partner’s objectives and ensure that agreed upon terms are reflected correctly in the prenup. A prenup is a binding contract that establishes the foundation for a marriage. From the outset, negotiations for a prenup need to focus on how each term impacts each partner and whether the terms continue to be fair and reasonable over the course of a long marriage.