Due to a once-widespread assumption that having a prenup translates to anticipating a potential divorce, many couples choose not to draft one. However, in reality, couples can greatly benefit from having financial clarity, regardless of whether their marriage ends in divorce or not.
A prenuptial agreement encourages couples to disclose the assets that they own individually before entering a marital relationship. By laying everything on the table, they can better understand each other’s financial situation. Furthermore, with the inclusion of a sunset clause, couples can help ensure that their prenuptial agreement has an expiration date. What is a sunset clause, and which couples should include one in their prenuptial agreements?
What is a sunset clause?
When a couple includes a sunset clause in their prenuptial agreement, it allows them to set an expiration date for that prenup. For example, a couple can agree to opt out of the prenup or do away with specific terms if they reach their 10th marriage anniversary.
This provision can particularly appeal to couples who appreciate the value of a prenup but are unsure of its long-term implications. Such couples can benefit from the flexibility to reassess their financial arrangements as their marriage progresses.
Prenuptial agreements can sometimes inspire tension or discomfort, especially if one partner feels that the agreement is overly protective of the other. A sunset clause can help alleviate these concerns by indicating that the prenup is not a permanent fixture.
How does a sunset clause work?
A couple gets to choose an event as the trigger for the contract’s termination or re-evaluation, such as:
- Purchasing their family home
- The birth of their first child
- Launching a jointly-owned business
When the expiration date is reached, the couple can let the contract expire or choose to renegotiate or renew it, depending on their marital needs at that time.
A sunset clause can be a valuable addition to a prenuptial agreement because it gives a couple the flexibility to re-evaluate their financial arrangements after being married for a set period. With appropriate legal guidance, couples who are considering a sunset clause can more fully understand its implications before incorporating it – or not – in their unique prenuptial agreements.
