Prenuptial agreements, also called “prenups,” have become more commonplace in modern marriages. As a result, more couples are seeing the benefits of laying down guidelines for what would happen if they divorced. One likely cause is that the average age at first marriage is trending older. This age increase means the spouses have accumulated more personal assets to protect and enjoyed years of financial autonomy which spouses may want to maintain during marriage.
As you dig deeper into prenups, you may be considering a “sunset clause,” among others. In this article, I’ll define what a sunset clause is and, more importantly, whether or not you should get one added to your prenup.
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What Is a Prenup Sunset Clause?
A sunset clause specifies the “expiration date” of your prenup, meaning the prenup will no longer be valid if you’ve been married for a certain amount of years. This could be 5, 10, or 15 years after the date of your marriage or whatever date you agree to in your prenuptial agreement.
Pros and Cons of a Sunset Clause
Sunset clauses are often used to protect assets that may increase in value over time, such as a business or a professional practice. Plus, they can be used to encourage couples to revisit their relationship and decide whether they want to continue with the agreement. This allows couples to reassess their needs and make any necessary changes after a fixed time.
One potential downside of including a sunset clause in your prenuptial agreement is that it can create unnecessary uncertainty and anxiety about the future of your marriage. Plus, it’s difficult (if not completely trivial) to decide pre-marriage when your prenup should end.
Additionally, a sunset clause can drum up extraneous financial pressure. Keep in mind that several states, including California, have default rules for dividing up property in a divorce. These default rules would go into effect after the prenup expires and may be more favorable for one spouse, effectively shutting the door on new prenup discussions. Even if you start from scratch in negotiating a new agreement, it can be time-consuming and stressful if your financial picture is now more complex.
Should You Add a Sunset Clause to Your Prenup?
Generally, no. Instead of guessing how many years your prenup should remain valid, create an amendment or modification to your prenup when significant changes happen. You get to negotiate new terms to suit your situation while keeping your prenup intact. Amendments are a more flexible solution over a sunset clause; they empower you to make decisions as time goes on and finances change without the pressure of a looming expiration date.
If you’d like to discuss prenups in more detail or need guidance on prenup clauses to help set your marriage up for success, feel free to reach out to me — I’d be happy to help.