What Is the “Sunset” Clause?

Prenuptial agreements exist to offer marrying couples peace of mind. Asking for a prenuptial agreement (or “prenup”) may be considered rude or indicative of having little faith in the impending marriage, many couples opt for prenups simply to sort out the details of a potential divorce from the start. This means there is far less room for interpretation should the couple decide to divorce because the prenup will outline each spouse’s obligations and entitlements.

Only marrying couples that own large amounts of property and assets tend to bother with prenuptial agreements. Not everyone marries for love, and some people may attempt to use marriage to strip a spouse of his or her property through divorce. Prenuptial agreements exist to prevent this and encourage honest marriages founded on love and true affection. These agreements outline the obligations each spouse has to the marriage and what actions may dissolve the marriage.

Types of Sunset Clauses

Prenups can have several clauses, and one of the most important is the “Sunset” clause. This clause is aptly named because it covers how the prenuptial agreement ends. Couples can arrange sunset clauses however they wish, and most include them in their prenups based on the assumption that after so many years of marriage, the prenup will no longer be necessary or accurately apply to the marriage.

A sunset clause typically will dictate the end of a prenuptial agreement after a set number of years of marriage. For example, a couple may decide on a sunset clause that dictates the agreement expires once the couple reaches 25 years of marriage. After being married for so long, any doubts that may have inspired the prenup will have likely subsided, and the prenup is no longer required.

Phased Sunset Clauses

When some couples divorce, one spouse must pay alimony to the other due to the financial strain of separation. Prenuptial agreements typically outline what entitles or precludes a spouse from collecting alimony, and how much. The nature of many types of financial assets and investments makes paying alimony five years from now very different than having to pay it 10 years from now. Phased sunset clauses can fully outline the terms of the marriage over time.

A phased sunset clause outlines how to divide property and determine alimony after specific milestones. For example, the phased sunset clause could have specific allowances for after 10, 15, and 20 years of marriage. As time goes on, more of the prenup is nullified as more of each spouse’s property becomes joint property.

Arranging a Prenup

If one spouse owns vastly more assets and wealth than the other, a prenuptial agreement protects the wealthier spouse from a speedy divorce and loss of assets. The prenup also helps protect the less-wealthy spouse after many years of marriage, because he will have grown accustomed to and reliant upon the other spouse’s financial support. A prenup can also safeguard the assets of one spouse from the debts of the other.