What Is a Sunset Clause?
A sunset clause defines the time or stipulation at which the terms of the prenuptial agreement expire. For example, a simple sunset clause might state that the prenup will expire after the couple has been married for 20 years. Other examples of sunset clauses include having the prenup expire after the birth of a child or when one spouse finishes paying off a debt they brought into the marriage.
Common reasons couples may choose to include a sunset clause:
- The reason for wanting a prenuptial agreement is tied to a temporary situation with a known end date, after which the prenup is no longer necessary
- The spouses expect their financial situations will even out over time, making the prenup no longer necessary
- Based on their situation, the couple thinks they only need the prenup for a set time frame
There are many reasons for having a sunset clause in a prenuptial or other marital agreement, and they will be unique to every couple, just as every prenuptial agreement is unique to the couple. Whether you include a sunset clause in your prenup will depend on you and your future spouse’s current financial situation, your relationship's circumstances, and your future goals.
Why a Sunset Clause May Not Be a Good Idea
Not every prenuptial agreement features a sunset clause. In fact, most do not. Prenuptial agreements are contracts that generally only take effect when a couple divorces. They are frequently used as a safeguard to protect both individuals’ economic rights in the event of a divorce and/or to establish clear expectations regarding each person’s financial responsibilities before entering the marriage.
Prenups can be used to:
- Denote what individual property should remain separate after marriage
- Delineate how debts brought into the marriage will be managed and by whom
- Identify what separate property will become shared marital property
- Keep a family business or inheritance within the family and separate from the couple’s shared estate
- Provide for children from previous relationships
- Outline how the couple’s shared property will be divided in the event of divorce
If you have a sunset clause, all or part of the prenuptial agreement may be rendered invalid when the sunset clause goes into effect, removing those carefully planned protections. Consequently, we recommend that our clients spend some time thinking about why they want a sunset clause and whether a sunset clause is in their best interest before moving forward with including one.
The Language of Your Sunset Clause Is Important
One thing we think is very important to stress about sunset clauses (and prenups in general) is that the language you use matters. For example, suppose you have a sunset clause saying the prenup will be invalidated after 15 years of marriage. Then, you and your spouse separate at 14 years and ten months. It then takes nine months for your divorce to be settled. Therefore, your marriage will technically be over at 15 years and seven months. In this case, you were still technically married at 15 years, the marker at which your sunset clause takes effect, and your prenup becomes invalid.
In this situation, the courts may rule that the prenup cannot be upheld and that the sunset clause has rendered it invalid. This may seem unfair and not in the spirit of the sunset clause, but imprecise language like this can pose a legal problem. Because your wording didn’t specify that you still had to be happily married at 15 years, the courts may not agree with your assessment that being separated at 14 years and ten months is a breach of the sunset clause’s terms.
Always Speak with an Attorney Before Signing a Prenup
Sunset clause or not, it is always recommended that you consult with your legal representation before entering into a legal contract like a prenuptial agreement. If you are considering including a sunset clause, we recommend that you spend some time thinking about both your motivations for wanting a prenuptial agreement and a sunset clause.
Too often, we see people include sunset clauses as a show of faith in their partner. While this is a nice gesture, a sunset clause is often not in either party’s best interests. A sound prenup should be mutually beneficial to both parties, and without one, you and your spouse will be at the mercy of your state’s divorce and property division laws. Because of this, we believe most people can benefit from a well-constructed prenup and should think twice before including a sunset clause.
Want to learn more about prenuptial and postnuptial marital agreements? Review these blog posts:
- Pros and Cons of Prenuptial Agreements
- What Should I Include in a Prenuptial Agreement?
- What Should You Do If Your Spouse Violates Your Prenup?
For help drafting a prenuptial agreement, call the Law Office of Alexandra White, PC. Our attorneys can help you build a prenup that meets your specific needs and help you decide if a sunset clause makes sense for you.