What is a Postnuptial Agreement?
A Postnuptial Agreement, or Postnup, is an agreement that a couple enters into AFTER marriage, including civil union and legal marriage. This document often outlines many of the same things that a Prenuptial Agreement is created to address.
The Postnuptial Agreement can be tailored to your specific needs and will usually address financial rights and property ownership for each party if the marriage ends. In cases of a Postnuptial Agreement, there must be a full disclosure of all assets.
Not disclosing all assets can render the document null. It’s also imperative that each party has its representation and neither party is coerced into agreement.
Questions the Postnuptial Agreement Addresses:
Who does pre-marital property belong to in the event of a divorce?
Legally, the property can often be considered jointly owned once a couple is married, regardless of which spouse paid for or owned the property before marriage.
With a Postnuptial Agreement, you can outline the exact ownership of any properties purchased before the marriage. You can also specify that “non-marital” property is not shared – for instance, an inheritance would only be owned by the spouse whose family member passed.
Who owns property acquired during a marriage?
Without a contract, property purchased during a marriage would belong equally to both parties. Some couples may decide to keep their finances completely separate. In other cases, couples might split everything purchased or built during the marriage.
The Postnuptial Agreement allows you to legally specify how your property and finances will be handled during the marriage and in the event of a separation.
Who owns your business after a marriage?
If you own a business or open one after your marriage, this agreement can help you specify whether or not your spouse is entitled to any portion of that business.
How will you budget for your future?
A Postnuptial Agreement doesn’t just answer questions to protect parties from a divorce; it can also be structured to help couples itemize their financial goals for the future, such as retirement needs.
These documents can be specific enough to include clauses for household budgets on a regular basis and they can delineate the portion of savings each spouse puts toward a future retirement fund.
How will alimony be handled?
Different states have specific laws about how alimony or spousal support is handled, so any agreement needs to consider the state where spousal support might be awarded. In some cases, spouses can’t waive their rights to spousal support.
It should be noted, too, that spousal support is usually awarded when one spouse earns significantly less than the other or if one spouse foregoes their monetary pursuits for the betterment of the household.
One example might be a spouse who agrees to stay home to raise children or tend to an ailing relative during the marriage. Spousal support would be considered to help that party until they can comfortably build their income on their own.
How will children from previous relationships be supported if this marriage dissolves?
Often in second marriages, children are supported by the couple who are not the biological children of both parties.
A Postnuptial Agreement can determine how those children should be supported if the marriage dissolves and assets are split. It can also address the possible inheritance of children if one of the spouses passes away.
Is a Postnuptial Agreement Right for You?
Postnuptial Agreements are very similar to Prenuptial Agreements, though they are entered into after the legal marriage has already taken place. Sometimes, couples have a whirlwind courtship and marry without taking steps to lay out a Prenuptial Agreement.
This step would only be taken to remedy that lapse after the wedding.
In some cases, there may be issues in an existing marriage due to a difference of opinion about finances or one spouse’s bad behavior.
In those cases, a Postnuptial Agreement can be entered into to help the couple better communicate their wants and needs to strengthen the marriage. In all cases, both spouses must agree to the terms of the contract. If either spouse is coerced, it can nullify the agreement entirely.
You should use a Postnuptial Agreement If:
- You were married without a Prenuptial Agreement and had concerns about financial holdings.
- There is a significant difference between spouses in earnings or inheritance.
- You or your spouse was in a previous marriage that resulted in children.
- Either spouse has a large amount of personal debt.
- You have earned many retirement benefits or contributed significantly to a pension plan before the marriage.
- There is a substantial difference in current and projected earnings between the two spouses.
- You want to legally agree to the budgetary responsibilities for each spouse going forward.
- You or your spouse owns the property from before the marriage.
- You or your spouse owns stocks or other assets that pre-date the marriage.
- You are the owner of a business or sole proprietorship.
- You have concerns about the impact of your new marriage on your financial or business holdings.
- You or your spouse have children from a previous relationship that you do not share biologically or legally.
- You or your spouse have received or expect to receive a substantial inheritance.
- You have agreed that one spouse will stay home to raise children or run the household.
- You have agreed that one spouse will be responsible for caring for ailing or ill family members.
You should not use a Postnuptial Agreement if:
- The Postnuptial Agreement is too heavily in favor of one party. Both parties need to agree on terms before signing.
- You are coerced or feel forced into signing a Postnuptial Agreement.
- You have not had legal counsel of your own. Both parties need access to their counsel, so neither spouse is taken advantage of in this process. Not allowing legal counsel might cause the Agreement to be nullified by a court later.
- Neither spouse has sizable assets or property nor substantial debt.
- You want to direct the way alimony is allocated.
- You and your spouse agree with the default divorce laws in your state.
Why Use One? The Pros vs. The Cons
There are several good reasons to use a Postnuptial Agreement – the couple may not have realized that they needed one before the marriage, or they may decide to use the features to help them create a healthier relationship.
- Settle issues of property disbursement in the event of a divorce.
- Settle issues of alimony should you not agree with the divorce laws in your state.
- Protect business assets in the event of a divorce. This can be especially important for small business owners, where splitting a business can mean the company can no longer operate.
- Create a plan for financial support of children from previous marriages.
- Address questions of ownership for assets acquired during the marriage.
- Provide for a spouse who foregoes work to care for children and ailing family members or to run the household.
- Set a budgetary plan for future finances and retirement.
- Protect family inheritance.
- Protect you from liability in your spouse’s debts.
- Protect you from costly divorce litigation in the future.
- This document can prevent you from being entitled to your spouse’s assets or property.
- Can prevent you from being entitled to any family inheritance.
- Depending on clauses, this document can mean a loss of alimony in divorce.
- This document can be overturned in court if there is cause to do so – such as proof that a spouse was coerced or that there was no full disclosure of assets.
How to Make Your Agreement Valid
It’s essential to check the laws of your state because each state may have specific requirements for Postnuptial Agreements. In general, there are several criteria that a Postnuptial Agreement needs to follow:
- It needs to be in writing. An oral contract is often difficult to enforce legally in any case. For a Postnuptial Agreement to hold weight in court, it must be a written document that both parties have had ample time to review.
- It needs to be signed and notarized. For the document to be legally enforceable, it must be signed by both parties and notarized to prove the signatures are valid.
- It needs to be fair and reasonable. Postnuptial Agreements are usually entered into because one spouse earns or owns considerably less than the other. The agreement needs to protect both parties.
- There must be full disclosure of assets by both spouses. Both parties must know all purchases before signing the Postnuptial Agreement. If, for example, one spouse has hidden assets, it can nullify the entire agreement.
- Both parties agree to the terms of the Postnuptial Agreement. If either party is coerced, forced, or deceived into signing the document, it’s not enforceable. It’s essential that both parties fully understand the document before signing.
In most cases, a Postnuptial Agreement will be upheld in the case of a courtroom challenge. A judge will most often honor the Postnuptial Agreement if the agreement is entered into without deception and all parties have representation and understanding of the clauses.