What Is a Postnuptial Agreement?
An agreement created after marriage is called a postnuptial agreement, and it operates in the same way as a prenuptial agreement. However, the addition of "post" does not mean that the contract is of less legal significance than a prenuptial agreement. If a couple already married and decides to enter into a postnuptial agreement, the contract also requires careful consideration and an appropriate review of its merit and reasonableness . The factors that help to determine the legal sufficiency of a prenuptial agreement apply equally to postnuptial agreements. Since both spouses are already married at the time of the drafting of such documents, postnuptial agreements also have the additional burden of requiring that independent legal counsel be obtained by each spouse, particularly where unequal wealth is involved.
Legal Standing and Requirements
In most jurisdictions, a postnuptial agreement is simply a contract between spouses that is entered into after the day of the marriage. The requirements for such contracts vary among jurisdictions. For instance, in some places a postnuptial agreement must follow formalities similar to those of a premarital agreement, such as being signed in the presence of a notary and two witnesses and being fair, reasonable, and supported by adequate consideration. In other areas the legal landscape is murkier and there may be little clear authority on the requirements for a valid postnuptial contract. However, many authorities state that a writing signed by both parties is generally sufficient.
The above notwithstanding, common elements are usually required to create an enforceable postnuptial agreement, such as:
Advantages of Postnuptial Agreements
A primary advantage of a postnuptial agreement is asset protection. Just as prenuptial agreements allow future spouses to separate their assets, postnuptial agreements benefit both current spouses by clearly defining the separation of assets upon divorce. This can keep finances amicable as one or both spouses become financially independent. Without a financial plan in place, however, a couple can end up on opposite sides of the aisle in court.
Clarity also benefits financially-similar spouses. A postnuptial agreement clarifies who is responsible for household bills such as rent, mortgage, utilities and food costs. When one spouse hasn’t been in the workplace for an extended period, the other is often responsible for these expenses. A postnuptial agreement ensures that the spouse at home isn’t financially reliant upon the other should the couple separate. For similar reasons, it can also protect a spouse who invests money while his or her partner may not do so, especially in states that consider such investments separately owned property.
The peace of mind that having a clear financial plan offers can put both spouses in a secure frame of mind in a variety of life situations. Spouses with professional jobs such as medical, nursing or law often carry liability from financial negligence cases. This is a liability that could impact the other spouse, leaving the couple with more financial worry than peace of mind. If the spouses have a child with special needs, the non-working spouse may need to continue working after divorce to provide adequate support for that child. A postnuptial agreement helps to ensure that all parties remain supported and safe.
Common Myths
Common Misconceptions are quite prevalent. The first of which is that many couples think that postnuptial agreements are unenforceable. That is simply not true. Many courts today honor and uphold these after-the-fact agreements, provided that they meet certain standards.
A second common misconception is that postnuptial agreements take a lot of time and are costly. This is simply not the case. While time lines may vary, having negotiations on the front end may actually cut down on litigation on the back end. As far as costs, a couple may choose to have only a few items addressed in their postnuptial agreement which will keep your fees to a minimum.
A third common misconception is that postnuptial agreements only carry a stigma of trouble in a marriage. While this is certainly not the case, creating the agreement can allow the parties to step back from the chaos and address the issues individually.
How to Create a Postnuptial Agreement
The first step in creating a postnuptial agreement is having a qualified legal advisor. The complexities surrounding divorce must be brought to the table when creating this agreement and a well versed lawyer who can counter proposals and explore every angle will be a benefit to the success of the agreement. After you have selected a qualified professional, you may begin negotiations with your spouse on the terms of the postnuptial agreement. This is also when the services of financial professionals, such as accountants and/or financial planners, may come into play. Custody of children, division of property, spousal support and any other relevant matters should be discussed and agreed upon during this phase. The intention from each spouse should be to find an arrangement that works for them and their family. Once consensus is reached on terms , both parties should sign paperwork establishing them as "uncontested." This document merely sets up proposed resolutions between the parties. A postnuptial agreement should have provisions specifying how the agreement is legally binding and which circumstances would nullify it. Next, the spouses will each be required to provide a complete financial disclosure. This includes a full inventory of assets, debits, provisions of personal income and compensation (including perks and the value of perquisites), and statement regarding any debts and liabilities. When complete, each party’s signature will be placed on every page of the postnuptial agreement, and the agreement will be submitted to the courts. In some cases, the court may require each party to appear before a judge to verify that they are being honest and doing so of their own free will. Once the postnuptial agreement is vetted, it will be filed with the courts and treated like any other legally binding contract.
Obstacles and Solutions
While creating a postnuptial agreement can be beneficial for many couples, the process is not without its unique challenges. It is important to acknowledge these challenges early on and take some steps to overcome them.
When discussing the idea of creating a postnuptial agreement with your spouse, you may find that he or she is resistant to the idea. If this is the case, try to explain to your spouse why you believe the agreement is necessary. In these discussions, it is important to emphasize that you are looking out for both parties’ interests. Be sure to mention how a postnuptial agreement could give you peace of mind for years to come.
In some cases, even though both parties agree to getting a postnuptial agreement, they may have difficulty agreeing on the terms, leading to a stalemate. If this happens, it is time for further discussion. Talk about what your hopes and expectations are of the agreement – and what obstacles are keeping you from reaching an agreement.
Consider hiring a mediator to help you resolve the conflict. While mediators are often associated with divorce, they are divorce in and of themselves is a negotiation, and mediators can play an important role in helping divorcing couples to reach agreements on a variety of issues. You may also want to talk to an attorney who is experienced in family law.
When Should You Consider a Postnuptial Agreement?
An agreement arrived at between spouses post-marriage is referred to as a postnuptial agreement. While most people would not think to discuss such agreements in a positive light, there are circumstances that warrant their consideration. Perhaps a huge business deal is in the works and the husband would like to ensure that if he walks into the office on a Monday morning to find the company doors locked, his wife cannot assert a claim to the business. Perhaps the wife wants to inherit her late mother’s estate without concern for support of Mr. Squeeze-Each-Penny who hoards the TV clicker because she doesn’t want to let him buy another video.
A postnuptial agreement may also be appropriate if the husband and wife experience a substantial change in income shortly after marriage and one or both of them want to make clear that such income is separate property. If a husband owns something of substantial value prior to marriage and then uses marital funds to improve it, a post-nuptial agreement can clarify that the increase in value would be separate property.
If one of the parties owes a substantial separate debt from prior to the marriage, that debt could become a marital debt, subjecting the assets of the marriage to seizure, or jeopardizing credit ratings. A postnuptial agreement can protect the other spouse from the debts of the debtor spouse. This often occurs where one spouse has a substantial credit card debt, student loan debt or even tax liability.
It should be noted that there is tension in the law regarding a spouses ability to completely disavow a future increased earned income as separate property. While one can waive his right to spousal support or alimony, when the issue arises as to the division of property during marriage, it is less clear. This is an issue best addressed with counsel as cases evolve.
Consulting with an Attorney
Just as a prenuptial agreement is most effective when it is prepared by a legal professional, so is a postnuptial agreement. Many people assume that if there is no child born to the marriage, a postnuptial agreement won’t be effective any way. Nothing could be further from the truth and it is important to understand that postnuptial agreements, like prenuptial agreements, can have a binding effect on the parties in the future should they decide to separate or divorce.
It is important to remember, however , that this effect is not accomplished unless the agreement is properly prepared. Related concerns are that the terms are fair and that the agreement itself has been fairly negotiated. The best way you can ensure this for yourself is to retain the services of a lawyer who knows family law, knows the law related to prenuptial and postnuptial agreements, knows your particular situation and your needs, and knows how to prepare a prenuptial agreement that will not only be effective, but will stand up in court. There are many lawyers who handle all types of matters, but family law truely is a specialty and one that should be handled by someone who limits their practice to this area of the law.