Should You Include a Sunset Clause in Your Premarital Agreement?

At Hamilton O’Neill, our clients use premarital agreements, also known as prenuptial agreements to clarify what assets each spouse will get in the event of divorce or, sometimes, also if your spouse predeceases them. Premarital agreements are especially useful if one or both spouses have small businesses or intellectual property related to their name or likeness. A well-drafted premarital agreement can prevent many common legal disputes in divorce, providing peace of mind. Few people anticipate divorce, but it is always a possibility.

Our clients have some flexibility about what to include in a premarital agreement. In this article, we consider whether you should include a sunset provision, also called a sunset clause or termination clause.

What Are Sunset Clauses & Do You Need One?

A premarital agreement is signed before marriage and goes immediately into effect once you are legally married. Generally, a premarital agreement will last for the duration of the marriage; however, you could decide to have it “sunset” or lapse after a certain amount of time.

Some clients like sunset provisions because the agreement provides some protection, at least in the early years of a marriage (when the possibility of divorce is highest). For example, you could have a sunset clause stating that the premarital agreement becomes ineffective after 10 years of marriage.

By including this clause, you still protect yourself from, for example, a greedy spouse who lies to get married only to divorce soon after. It is unlikely someone will stay in a marriage for 10 years or more if they are motivated solely by fraud.

Sometimes, your fiancée insists on a sunset clause. They agree to sign the premarital agreement to convince you of their sincerity in getting married. But including the sunset provision is a concession: after a certain amount of time, the agreement will lapse. In other words, including a sunset provision might be part of a bargain you strike with your fiancée (or their lawyer). Each side can show good faith.

Including a sunset provision also encourages reassessment of your finances as a couple. After 10 or 20 years, you can sit down and go over your current finances. Some couples decide at that point to draft an entirely new postnuptial agreement to go into effect, while other couples are more comfortable without any new agreement.

There are risks to including a sunset provision. Once the agreement lapses, you lose any protection. If you get divorced, you might lose business assets or intellectual property. Your ex-spouse could demand a hefty alimony payment or more property than they would have gotten under the agreement.

Call Our Office to Discuss Premarital Agreements

Each premarital agreement should be drafted to suit the needs and desires of each spouse. What works for one couple might be less than ideal for you and your partner. Contact Hamilton O’Neill today to discuss options with a Miami premarital agreement lawyer. We can go over the various considerations and then draft an agreement that works for you.