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What Is a Postnuptial Agreement?
A postnuptial agreement may be a safeguard for couples after they are married so they can each protect themselves in the event of a divorce. This agreement is a legal contract that outlines how assets will be divided and what each individual in the marriage is entitled to should they enter into a divorce. It may also include other provisions that the couple agrees on.
Many couples find that postnuptial agreements are right for them if they are realistic about the potential for divorce and want to have a clearer picture of what that process will be like for them.
The Differences Between Prenuptial and Postnuptial Agreements
You may be very familiar with what prenuptial agreements are. These are the agreements that are completed before you get married, and they help each person in the marriage to understand how everything will get divided after a divorce. Divorce laws vary by state, so a couple may want to enter into a prenuptial agreement so that one or both of them can retain the assets they brought into the marriage if they go their separate ways.
A postnuptial agreement is very similar to a prenuptial agreement. Both usually cover the same situations and potential issues, and both can get very specific about what should happen with properties and other assets in the event of a divorce. The main difference between the two is that prenuptial agreements are entered into prior to a marriage or civil union, and postnuptial agreements happen after a couple has gotten married. Prenuptial agreements have always been more widely accepted, but postnuptial agreements didn't really gain popularity or acceptance until the 1970s when states allowed for "no-fault" divorce laws.
One of the other differences is that with prenuptial agreements, each person needs to have their own attorney separate from their significant other. In contrast, it's accepted in most states for the married couple to use one attorney to complete the agreement together. However, doing this could cause the postnuptial agreement to come under more intense scrutiny as the court may wonder if this arrangement, and therefore everything in the agreement, is in the interest of both parties.
What to Include in a Postnuptial Agreement
A lot of what is accepted and honored in a postnuptial agreement depends on state law, but here are some of the items to think about including in your agreement:
- Asset division: Both parties in the couple may come into the marriage with their own assets and property from their life before they met their spouse. Or, the couple may acquire assets and property while married to each other. In both of these situations, a postnuptial agreement can outline what should happen to these assets should the marriage end.
- Marital debts: Just like a married couple may gain assets during a marriage, they may also gain debts. These debts can be for credit cards, but may also include a mortgage, any annual subscriptions you have, and even shared monthly bills like childcare and healthcare expenses. Married couples may want to include information on how they'll divide these debts in a divorce.
- Spousal support: If a couple agrees that one party in the marriage deserves spousal support, be sure to include that in the agreement. This is usually if one spouse has quit their job to stay home with children.
- Child care/support: If there are children in the marriage, the married couple may include a section in the postnuptial agreement that provides for child support and custody. Sections like this can get very specific on what should happen in the event of a divorce. For example, a postnuptial agreement can clearly state days of the week or time periods when each parent keeps the child(ren).
- Asset distribution after death: A postnuptial agreement can also include what happens to the assets if one person in the marriage passes away while they are married. The agreement can contain specific guidance on what happens to assets depending on if the couple was considering divorce or in the middle of proceedings when one passed away. This provision typically supersedes a last will and testament.
Reasons to Consider a Postnuptial Agreement
If you enter a marriage without a prenuptial agreement in place, there could be any number of reasons why you'd want to consider a postnuptial agreement. Some of the common reasons among married couples include:
- More planning: Some couples simply want to have some clarification about their future situation should things not work out the way they'd hope they would. The couple may not have considered a prenuptial agreement, but feel a postnuptial agreement is a safeguard for an unknown future.
- Asset protection for children: One or both parties in the marriage may have children from previous relationships and want to make sure that their beneficiaries receive certain assets. A postnuptial agreement could account for this.
- Asset protection for self: It's possible that one or both parties receive a big increase in their finances from either a large promotion or family inheritance. They may want to protect that and hold on to their new income without having to share with their spouse in a divorce.
- Financial irresponsibility: During the course of a marriage, someone may have financial or legal troubles that their spouse wants to make sure doesn't impact them in a potential divorce. As an example, a postnuptial agreement can outline that the spouse who took on a lot of debt through gambling will be solely responsible for paying it off after a divorce.
- Spousal support: In a marriage, one spouse may end up supporting the other. This can happen in the case of having kids and one parent committing to staying home to care for them. If the marriage ends in divorce, the spouses may want to first agree on spousal support.
What Makes a Postnuptial Agreement Valid?
Just like with any legal contract, there are certain things that a postnuptial agreement must have to be binding:
- The postnuptial agreement must be in writing. Verbal agreements will likely not hold up in court.
- Both parties must have read the agreement in its entirety and experienced no duress in signing it. If one party didn't have enough time to read the agreement or felt pressured to sign it, the court can deem it unenforceable.
- The agreement must be fair to both parties. An unconscionable agreement that is very unfair to one person in the marriage will not be enforceable.
- The postnuptial agreement must contain only factual and complete information. If there is incomplete or false information in the agreement, a court may choose to throw it out. The same goes for any information that is withheld by either party. For example, if one spouse does not disclose their debts, the postnuptial agreement may then be invalid.
- A postnuptial agreement must be executed correctly. Each state has different requirements for the completion of a legal document. Some may require witnesses and a notary; without correct execution, the agreement may be considered invalid.
Once you've decided that a postnuptial agreement is the best decision for your marriage, you and your spouse should discuss all the details together and then learn more about contracts before entering into something that's legally binding.
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