A Postnuptial Agreement, often referred to as a “postnup”, is a legal contract made between two people after they get married. Aside from the timing of the contract, it is essentially identical to a prenup.
A postnup sets out the financial rights and responsibilities of each partner in case the marriage ends in divorce, annulment, separation, or death. To be valid, both partners must have enough time to consider the agreement and sign it voluntarily.
For example, you can’t pay your spouse to sign a postnup. Without a postnuptial agreement, your state’s default laws on divorce or inheritance will apply to you and your partner.
What is a Postnuptial Agreement?
Use a postnuptial agreement template to determine how to divide your assets between you and your spouse should your marriage ends. With a postnuptial agreement, you can make these legal decisions after you’re already married.
A postnuptial agreement, or postnup, is a contract that states how assets between spouses will be divided and handled should the marriage or civil union end. This can also include related conditions such as debt, alimony, spousal support, or budget plans for retirement.
Postnuptial agreements are very similar to other post-marital agreements, such as prenuptial agreements, but they’re mainly used to legally and fairly protect assets after a divorce, death, or separation.
What’s the difference between a postnuptial agreement and a prenuptial agreement?
Postnuptial agreements are used the same way as prenuptial agreements, although prenups are more common. Both agreements address the division of assets after marital separation, but postnuptial agreements are drawn up after the marriage instead of a contract agreed upon beforehand.
In addition, prenups must be negotiated using separate lawyers (if attorneys are used), while there is no such restriction for postnups. In general, both agreements must abide by state laws when it comes to what they can include.
What’s the difference between a postnuptial agreement and a separation agreement?
A separation agreement is a document with the same general functions as a postnuptial agreement but with different intent. Spouses use separation agreements when they want to live apart but remain legally married. They may have the intention of having a divorce later on.
Postnuptial agreements are usually not meant to prepare for inevitable divorce, but spouses can use a legal separation agreement for that purpose. This is usually done to retain certain healthcare or tax benefits without having to live together.
Legally, a separation agreement can address any matter that is part of divorce proceedings, with none of the restrictions that come with a postnuptial agreement.
When Should I Use a Postnuptial Agreement?
Using a postnuptial agreement may not seem ideal until after marriage, in which case a prenuptial agreement is no longer valid. Changes in the financial situation of a married couple, such as one person receiving an inheritance or taking on debt, may necessitate using a postnuptial agreement to protect one or both spouses.
A postnup may also be used to simplify the legal process of getting a divorce by dividing the assets beforehand, assuming that both spouses can agree without the need for separate divorce attorneys.
Certain niche cases, such as inheritance for children from another marriage or income generated from a business solely owned by one spouse, are also conditions to consider and protect if a marriage ends. These things may not be clear until well into the marriage.
The very idea of a prenuptial agreement may seem unattractive for many couples, but the practicality of one may not be appealing until it’s too late. In many cases, this is the biggest value of a postnuptial agreement. If nothing else, the postnup will provide the same protections for you or your spouse’s assets as a prenuptial agreement.
Limitations of Postnuptial Agreements
You might find it hard to enforce a postnuptial agreement in some states, as they have limitations on what can be included. For example, most states prohibit postnuptial agreements, including child support or custody provisions. Also, any matter regarding inheritance or alimony must adhere to state laws.
Marriage comes with stricter marital obligations for spouses in states like Utah and California. A judge may disapprove the postnup if the agreement was signed unfairly, is uncertain, or includes anything violating state marital laws.
You should have your state’s family law attorney review your completed postnuptial agreement form.
How to Write a Postnuptial Agreement
Step 1 – Include Party Information
When writing a postnuptial agreement, you must provide information about both parties.
Besides the basic details related to you, your spouse, and your marriage, you will also need to include your marital background, legal representation, and financial disclosures in later sections.
For this section, provide the following information:
- First party Name
- Second party Name
- Marriage date
- The city where you were married
- The state of where you were married
Information about existing children
- Include the number of children and mention whether either party has children from a previous relationship
Acknowledgment of full financial disclosure
- If this is not present, the agreement may not be deemed valid in court
- Make sure to attach the financial disclosures of each party to the document as exhibits
What financial information should I include in the agreement?
Each spouse should attach their own information regarding their net worth, assets, income, holdings, liabilities, and debts. The law requires “full and fair disclosure” to enforce a prenup, so each person must fully disclose their financial affairs and include all relevant information. For example, you should share with your future spouse all financial information like bank statements, retirement accounts, credit card balances, and any outstanding debts or loans.
Step 2 – Provide Property Information
This section is split into three subsections:
Property Owned Before Marriage
You can designate all prior property as separate or shared, or a mix of both. For anything acquired before marriage, you can decide that:
- Property acquired before the marriage is separate property
Property acquired before the marriage is separate property, with some exceptions
- Make sure you specify the exceptions in the document
- Property acquired before the marriage is joint property
What’s the difference between marital property and non-marital property?
Marital property is any asset owned by both partners or property obtained during the marriage. For instance, if you and your spouse purchased a home and share ownership of the property, it would be considered marital property. Specifying marital property is important because separation or divorce disputes concern how marital property will be distributed between the two parties.
In contrast, non-marital property is property you don’t want to share with your partner. Non-marital property is also known as “separate” property. You can specify in the agreement for all or any property that you do not want to be considered marital property so that only one person will have ownership/liability. In the case of divorce, non-marital property is not subject to division and remains the sole property of the individual.
Property Acquired During The Marriage
Once you’re married, you can similarly decide that:
Property acquired during the marriage is separate property
- Anything that either party acquired during the marriage will continue to belong to that person. If you bought stocks for $100 while being married, those stocks might be worth $1 million down the road. The increase in value only belongs to you if there is a separation. Also, if you receive an inheritance or gift from your beloved great grandmother while being married, that inheritance or gift will continue to be yours if there is a separation.
Property acquired before the marriage is separate property, with some exceptions
- Anything that either party acquired during the marriage can be designated as marital property. If you own 100% of a business worth $50,000 while being married, you can designate that your spouse-to-be will own 50% of the business. During your marriage, if the business booms to $500,000 with the help of your spouse, you both own 50% of the increased value, so you would get $225,000 each.
- Make sure you specify the exceptions in the document
Property acquired before the marriage is joint property
- Anything acquired during the marriage by one partner equally belongs to the other partner. If you two purchase a house together for $300,000 after getting married, you both own 50% of the house. If your house appreciates to $600,000 at the time of separation, you each own 50% of the increased value.
Division of Marital Property
In the event of a divorce, you must specify how the marital property will be divided:
In accordance with your state’s laws
- If you cannot agree on how to divide property, a judge will decide for you. Usually, property will be divided equitably or fairly based on various factors if you did not specify how the property will be split.
- Specify each party’s percentage of the marital property (e.g., first party 50% and second party 50%).
Step 3 – Include Business Information
This section is split into two subsections:
Business Owned Prior To Marriage
If you or your spouse owns a business that existed before the marriage, you need to clarify how any increases in the value of the business will be divided:
- Increases in value will be granted to the owner of the business
- Increases in value will be shared equally between both parties
Increases in value will be divided by a percentage
- Specify the percentage of each party in the agreement
Business Acquired During Marriage
If you or your spouse owns a business that was created during the marriage, you need to clarify how the business will be divided:
- Granted to you
- Granted to your spouse
- Shared equally
Divided by percentage
- Specify the percentage of each party in the agreement
If either of you starts or inherits a business DURING marriage, you can choose to share or not share any future increase in the value of the business. An inherited business would be classified as separate property unless marital funds are used to support said business financially; however, a business started during the marriage would be classified as marital property,
It is important to choose how a non-marital and/or marital business will be divided among the Parties. Here’s an example: Ashley and Jesse start a business worth $100,000 while married. They decide to share any appreciation in the value of the business equally in the event of a divorce.
Four years later, the business is now worth $500,000. The appreciation in value is $400,000. Unfortunately, their marriage ends after those four years. According to their postnup, Ashley gets $200,000 of this increase. Jesse receives $200,000 of this increase.
You should also specify if the financial accounts of the business will be excluded as marital property or not.
Step 4 – Provide Debts and Taxes Information
This section is split into four subsections:
Debt Owed Before Marriage
You must clarify how debt owned by either you or your spouse will be treated:
- As each party’s separate debt
- As each party’s separate debt, with some exceptions
- All as both party’s joint, marital debt
Suppose you have any outstanding loans or financial obligations before getting married. You and your partner can decide whether these debts will remain only one person’s responsibility or whether both of you share the responsibility for repaying debts after marriage. Here’s an example:
Alex has $30,000 in loans before getting married, and Casey has none. Casey and Alex agree to share all debts incurred before marriage. Alex’s $30,000 loan thus becomes shared marital debt. In other words, Casey agrees to help pay for Alex’s loans. By doing this, Casey accepts the potential for creditors to go after her for any money Alex owes. Another option allows the parties to keep all debt separate, with specific exceptions.
What is marital debt?
Marital debt includes any financial obligations jointly shared by you and your partner because of marriage. Each of you is liable for marital debt, even if only one person originally incurred the debt.
Suppose you have any outstanding loans or financial obligations before getting married. In that case, you and your partner can decide in the postnup whether these debts will remain only one person’s responsibility or whether both of you share the responsibility after marriage.
Debt Acquired During Marriage
This is similar to the previous section, and you will have the same options.
Division of Marital Debt
In the event of a divorce, you must specify how marital debt will be divided:
- In accordance with your state’s laws
- Specify each party’s percentage of the marital debt (e.g. first party 50% and second party 50%).
The division of debt can be divided according to state law or set by percentages (i.e., the first party 50% and the second party 50%). If the couple cannot decide how to divide debt, the couple will need to go to court, and the judge will decide how the property should be divided.
Usually, property will be divided equitably or fairly based on various factors if the parties did not specify how the property will be split. As an example situation:
Roger and Kelly are married. They have $100,000 in marital debt from student loans. In their prenup, they agree to split the marital debt 50/50. Unfortunately, they decided to get divorced, splitting the $100,000 in debt equally, even if only one person created the debt. As a result of their divorce: Roger owes $50,000 of the debt. Kelly owes $50,000 of the debt.
Taxes During Marriage
Here is where you specify whether you want to file tax returns separately or jointly as a married couple.
Step 5 – Specify How You’ll Divide The Marital Home
The marital home is the home that you and your spouse share during your marriage. In this section, you need to decide how the home will be divided. There are several options available to you:
- State whether the home is owned by either party or rented
- State who owns the marital home or whether both parties jointly own it
- Specify who will be responsible for mortgage payments, taxes, and other maintenance expenses. Alternatively, you can decide both parties will be responsible
- If the home is going to be divided, determine who will own the property in a divorce
- If you decide both parties will share the property, state if one party is entitled to stay in the home and for how long (e.g., ten years)
- State which party will be responsible for lease payments, rental insurance premiums, and other maintenance expenses. Alternatively, you can decide both parties will be responsible
- Specify if one party will be entitled to remain in the marital home if the marriage ends
You can also choose not to divide the home at all.
Division of Household Expenses
Specify how you will share the household expenses during the marriage:
- Paid entirely by the first party
- Paid entirely by the second party
- Paid equally by both parties
- Each party will pay specific expenses
Whichever option you choose, you should state what expenses the respective party should pay for. For example, you could decide that each party will pay for specific expenses and list out what those expenses are. This makes the responsibilities of each party clear and easy to follow.
Step 6 – Include Pet Information
If you or your spouse has a pet you acquired during the marriage, you should clarify who will own the pet if the marriage ends. You can also state the visitation rights and schedule for the other party (e.g., monthly visits)
Step 7 – Add in the Final Details
Waiver of Rights
State if both parties waive their right to spousal support in the event the marriage ends
Disability and Death
Include information about whether one party will support the other if they become disabled and property inheritance rights if they pass away
Include any additional clauses here, such as having a sunset clause that terminates the postnuptial agreement after a certain amount of time has passed (e.g., five years) or an event has occurred (e.g. birth of a child)
Decide how parties will resolve disputes:
- Litigation refers to state or federal (depending on the claims asserted, the amount at issue, and where the parties reside) court processes to resolve a dispute according to the rules in place in that jurisdiction. The court procedures governing litigation are highly formalized. A judge and/or jury hears litigation cases. This is the sort of dispute resolution process that most people are familiar with from television and movies
- If the spouses cannot agree on a resolution, the mediator becomes an arbitrator. The spouses present their evidence and make their arguments to the arbitrator, and they then make a decision that is legally binding on the parties.
- A process by which the spouses try to mediate their dispute with a neutral person, the mediator
- Mediation, then arbitration
Date and Governance
State the date and which state’s laws will be used to interpret this agreement. For example, if you get married in California, the default is that the laws of California will apply to the postnuptial agreement if there is a disagreement. If you want a different set of state laws to apply, you can specify this in the agreement.
Step 8 – Notarize The Document
Finally, notarize the agreement before a notary public so that it becomes a legally enforceable document.
What Should be Included in a Postnuptial Agreement?
When writing your postnuptial agreement, you should make sure to include the following details, so both parties have some protection in the event of a divorce:
Separation of Property
- Having a clear understanding of what property is separate and what isn’t is crucial in avoiding disputes later down the road
Definition of Marital Property
- Another crucial element to have in the document is the definition of marital property. It’s a good idea to establish this for both present and future property.
- Clearly stating the financial support a party will receive during and after the marriage can be helpful. For example, it may make sense to have an agreement where if one spouse has to leave their job to become a stay-at-home parent, they will receive financial assistance from the other spouse as compensation for being the primary caregiver.
How to Make Your Postnup Valid
It’s important to check the laws of your state because each state may have specific requirements for postnuptial agreements. In general, there are a number of 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 needs to 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 needs to be signed by both parties and notarized to prove that 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
It’s important that all assets are known by both parties prior to 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 important that both parties fully understand the document before signing.
Postnuptial Agreement Sample
Use a postnuptial agreement template to ensure that your postnup is valid and effectively protects your assets.
Postnuptial Agreement Frequently Asked Questions
Do I need a lawyer for a Postnuptial Agreement?
No, you don’t need a lawyer for a postnuptial agreement. But this kind of agreement is a complex document with strict requirements from the court. While you can draft the agreement yourself, it’s advised to at least get a lawyer to review the agreement to ensure it’s fully compliant with the law.
Is a Postnuptial Agreement legally binding?
Yes, a postnuptial agreement is legally binding. However, this is dependent on whether the provisions in the document are within the limits of the law and if the document has been drafted correctly.
How much does a Postnuptial Agreement cost?
There can be a sliding scale with the cost of postnuptial agreements, with the complexity of the agreement being the primary factor. For example, a simple postnuptial agreement can cost anywhere from $50-$500 if you do it yourself. If you hire a lawyer, the price can be $2000-3000. If there are complex clauses that require lengthy negotiations, that price can be significantly higher, such as $10,000.
Can a Postnuptial Agreement be voided?
Yes, a postnuptial agreement can be voided if they don’t meet the following terms:
- Parties must sign the agreement voluntarily – a spouse cannot be coerced into agreeing to the terms
- There must be a full disclosure of assets and liabilities and income
- The agreement must be fair – there can be no provisions that give one party a significant advantage over the other
- The agreement must be notarized