Did you know that 59% of Americans are now working from home? With the post-pandemic world allowing us all to be that much more mobile (I’m looking at you tech workers), it begs the question: which state should I make my prenup’s choice of law clause? The simple answer is: you should make your choice of law clause be for the state in which you plan to reside permanently. Now, if you end up moving or have no clue where you plan to reside, then the answer gets a little murkier. Let’s dive in.
What is a choice of law provision?
Choice of law provisions allow parties to a contract to determine which state’s laws will govern their agreement. For instance, if you reside in New York, you can sign a prenuptial agreement under New York law. If you are still living in New York at the time of your divorce, then the divorce proceedings will take place in New York and will follow New York law. If you are no longer living in New York at the time of your divorce, stay tuned for more information below. The general rule of thumb is to choose the state in which you plan to permanently live forever but in this day and age, that is hard to plan.
What does a choice of law provision do in a divorce?
A choice of law clause basically tells the court what law to apply as it pertains to the enforcement of the prenup (is the prenup valid or not) and the divorce laws (think: property division, alimony, etc.).
For example, let’s say you don’t want to waive alimony, and instead you want to leave it up to a court to decide. If your prenup says something like “we want state law to apply to determine alimony” and your choice of law is California, but you moved to New York… What alimony law does a court apply? Does it apply alimony laws from California? Well, it depends on the state. Some states WILL apply foreign law and others will not.
Let’s look at another example:
Say you get a prenup done in New York with a choice of law clause selecting New York as the governing law. Then, you move to Massachusetts and eventually get a divorce. You ask the Massachusetts court to enforce your prenup under New York law and apply the divorce law of New York (such as property division rules). The question becomes two-fold:
- Will New York laws regarding the enforcement of the prenup apply in Massachusetts?
- Will the New York divorce laws apply in Massachusetts?
The answer is still (unfortunately) it depends. Very few states have explicit answers on this question. Many states do apply foreign state law, and others may not. For example, MA recently applied foreign law in a 2019 unpublished Appellate case, Marshall v. Marshall. This MA court demonstrated the concept by following a foreign state’s law (according to a couple’s choice of law clause). In plain English: a MA court applied out of state law based on the language of the prenup. This is great news for couples who have no idea where they will be living in the future and hope that their future home state will apply their prenup state’s law. However, the bad news is, not all states will apply foreign state law.
The bottom line: whether or not a state will apply an out of state’s law is variable. Some states will, others will not. It may depend on the state’s precedent and the language in the prenup.
What if we don’t know where we’re going to live?
What happens if you aren’t sure where you’re going to live? What should you put as your state for your choice of law clause? Well, this is much more difficult to answer because if you end up choosing a state in which you don’t end up residing in, whether or not they apply your chosen law is variable. For example, some states may apply foreign state law and others may not. Some states don’t have precedent (existing case law) on the issue so it’s very unclear on what they will do.
What does this mean for you? Well, it depends on what the state you’re divorcing in says about choice of law clauses. Many states will respect your choice of law provision and uphold the prenup (as long as it was drafted correctly in your original state). However, there is a chance that your state could throw out the prenup because they aren’t willing to uphold the choice of law provision. So… why would it get thrown out in that case? Well, if it wasn’t drafted in accordance with the “new” states laws or if it refused to apply the other states divorce laws.
The bottomline: if you aren’t sure where you’ll be living tomorrow, in two months, or in five years, then you need to do your best to choose a state you have ties to. Do not pick a random state.
Example scenarios
Let’s look at some common scenarios that people frequently ask us about.
Scenario 1: You are getting married in California but you will permanently reside in New York.
What choice of law clause should you use in this situation? This one is very straightforward: New York should be the state for your choice of law clause. Remember, the general rule of thumb is that where you will permanently reside should govern your prenup.
Scenario 2: You live in Illinois now, but plan to move to New York in a few months.
Where should you make the prenup choice of law clause? New York is likely your best bet. The only way this potentially causes an issue is if you ended up getting divorced before you actually moved to New York. Then, it would be up to the Illinois courts on whether or not they want to apply your New York choice of law clause.
Scenario 3: You live in Florida now, but plan to move somewhere (you’re not sure where).
What do you if you have no idea where you’ll be in a few months or even a few years? What state should you put in your choice of law clause?
Choose a state that you have some connection to; not a random state. In this scenario, the best option is likely Florida since you have no idea where you’ll be in a few years.
Generally, states will usually enforce your prenup even though it was created in another state (as long as it was validly created in the original state). However, whether or not a state will apply another state’s divorce law depends on the state.
If that all seems scary to you and you’re still unsure on what to do – when in doubt, have a consultation with a few attorneys in a few different states. Many lawyers provide free 15-30 minute consultations where you can cut right to the chase about choice of law and get a few different opinions on the issue.
Making the “Choice”
So, which state should you choose in your choice of law provision? As usual, the answer to this legal question is “it depends.” In general, it’s advisable to choose the state where you are currently residing or plan to reside during the marriage. If you have no clue where you’ll be living, we urge you to read the section(s) above.
Keep in mind that most states require a connection between you and the state you choose to govern your prenup. That means that you shouldn’t just choose a random state if you have no connection to the state you choose.If you’re completely lost– it’s always a good idea to consult with an attorney who can provide guidance.
Okay, I know my state, what now?
Before deciding that New York law, California law, Illinois law, (or whatever state) should govern your prenuptial agreement, it’s critical to ensure that you meet all of that particular state’s requirements for a valid prenup. This is especially important in states with strict procedural requirements for prenups. For instance, Minnesota requires that prenups be signed by two witnesses and notarized. While many other states do not require two witnesses. Without notarization and two witnesses in Minnesota, you do not have a valid prenup.
There’s another important requirement to understand: financial disclosure. States differ significantly in their financial disclosure requirements. Some states mandate strict parameters (full and fair financial disclosures), while others may allow less strict parameters around financial disclosure and may even allow you to waive it. It’s a good idea to disclose all of your financial information to avoid future problems.
Bottom line: Use HelloPrenup’s state-compliant platform, research your state, or consult with an attorney to ensure that you meet all of the requirements in the state you choose for a valid prenup.
Lisa Zeiderman is Managing Partner at Miller Zeiderman LLP, based in New York. A matrimonial attorney, CFL and Certified Divorce Financial Analyst, she regularly handles complex financial and custody divorce matters, as well as pre- and post-nuptial agreements. Named to the Crain’s New York list of Notable Woman Attorneys for 2022, as well as a Crain’s New York Notable Diverse Lawyer for 2022, a Hudson Valley Best Lawyer in 2022, a 2021 Best Family Law Attorney for Client Satisfaction by the American Institute of Family Law Attorneys, among many other awards, Lisa is a founding member of the American Academy of Certified Financial Litigators and a member of the panel for Attorneys for Children. Lisa is also a member of the Forbes Business Council.
In addition to authoring a well-read blog on Psychology Today, “Legal Matters: Understanding Mental Health Issues as They Apply to Divorce and Child Custody,” Ms. Zeiderman is regularly published in Financial Advisor Magazine, the New York Law Journal, and by the Forbes Business Council. She is also interviewed on issues ranging from financial empowerment to tax issues to child custody in a host of media. Ms. Zeiderman, a Fordham University of Law graduate, also serves as the Vice President of the Board of Savvy Ladies, Inc., and on the board of LIFT, Legal Information for Families Today.
0 Comments