Legal Glossary
Every term used in the agreement, defined in plain language. No Latin unless absolutely necessary.
Active appreciation = growth due to someone's labor/effort (e.g., building a company). Passive appreciation = growth from market forces (e.g., stock market going up). In NY, active appreciation of separate property can become marital property — unless a prenup says otherwise.
Events that MUST happen before a contract takes effect. Here: (1) both parties sign, (2) the marriage actually happens. No wedding = no prenup.
A loan that converts into equity upon a future event (usually a funding round). Similar to a SAFE but structured as debt with interest. Same prenup treatment applies.
A mathematical formula used to determine what portion of an asset (like stock options or a pension) is "marital" vs. "separate." Numerator = time earned during marriage. Denominator = total earning period.
New York Domestic Relations Law Section 236 — the master statute governing equitable distribution, maintenance (alimony), and prenuptial agreements in New York divorce.
New York's system for dividing marital property in divorce. "Equitable" means fair, not equal. A judge considers ~15 statutory factors.
A contract where performance is still outstanding — something remains to be done. A SAFE is executory because the company hasn't yet done the thing (a qualified financing) that triggers your right to equity.
Property acquired during the marriage by either spouse, regardless of whose name is on the title. Subject to "equitable distribution" (not necessarily 50/50) in divorce.
Simple Agreement for Future Equity. A Y Combinator-created instrument that gives an investor the right to receive equity upon a future triggering event (like a priced funding round). It is NOT equity — it is a contract.
Property that belongs to one spouse alone and is not subject to division in divorce. In NY, this includes pre-marital property, gifts, and inheritances.
A provision that makes the agreement expire after a set number of years. Forces the parties to revisit and update terms as their lives change.
A legal doctrine that lets a court void a contract (or part of it) if it's so one-sided that it "shocks the conscience." The main weapon used to challenge prenups.
The process by which you earn the right to own shares over time. Typical startup vesting: 4-year schedule with a 1-year cliff. Before vesting, you have nothing but a promise.
Key Case Law References
Majauskas v. Majauskas, 61 N.Y.2d 481 (1984)
Established the coverture fraction for dividing pensions. Extended by analogy to stock options and other deferred compensation.
Price v. Price, 69 N.Y.2d 8 (1986)
Active appreciation of separate property can become marital property. The case that makes founder equity complicated in divorce.
DeJesus v. DeJesus, 90 N.Y.2d 643 (1997)
Stock options subject to equitable distribution using the coverture fraction.
Bloomfield v. Bloomfield, 97 N.Y.2d 188 (2001)
Standard for prenup enforceability — looks at disclosure, counsel, and overall fairness.
Petracca v. Petracca, 124 A.D.3d 538 (2015)
Prenup voided for failure to disclose assets. The cautionary tale for hiding the ball.
Hartog v. Hartog, 85 N.Y.2d 36 (1995)
Business valuation methods in divorce — minority discounts, marketability discounts, excess earnings approach.
Panossian v. Panossian, 569 N.Y.S.2d 182 (1991)
Absence of independent counsel is a significant factor in unconscionability analysis, though not dispositive.