What is a Postnuptial Agreement?
A postnuptial agreement is a written contract executed after a couple gets married, or have entered a civil union, to settle the couple’s affairs and assets in the event of a separation or divorce.
Is a Postnuptial Agreement as good as a Prenuptial Agreement in Court?
Courts prefer prenuptial agreements over postnuptial agreements, for a statement of who came into the union with what that is drawn up before the union is probably more accurate than one drawn up years later.
What Standards Are Likely to Meet Court Requirements?
The legal requirements for postnuptial agreements vary from state to state, so be certain to check the laws in the area where you live for more specifics. In general though, for a postnuptial agreement to be used as the basis for a divorce property settlement, the following must be true :
- It must be in writing.
- It must be signed by both spouses and notarized.
- It must be voluntary, meaning one spouse can’t threaten, physically force or trick or deceive the other spouse into signing the agreement.
- It can’t be completely one-sided and unfair.
- There must be full and accurate disclosure by both spouses about all property and assets they own.
- Both sides had independent legal representation.
Is Creating a Postnuptial Agreement Expensive?
Creating a postnuptial can be costly, because it is recommended that each side hire their own attorney. Sometimes it is best to have them drawn up by a third attorney. In the long run, however, it can save a lot of trouble and money if you end up separating. Sometimes Mediators work with the individuals to create the agreement to settle areas of perennial disagreement.
Why would a couple of modest means have a postnuptial agreement?
- Pass separate property to children from prior marriages
- Clarify financial rights, particularly after a change in financial status
- Get protection from debts
- Specify settlements of specific issues
- Express a commitment that the marriage continue
Postnuptial agreements are sometimes drawn up to try to “fix” something that is going wrong in the marriage, so that the marriage can go forward. They are used by spouses as a way of controlling certain behaviors, such as adultery or over spending.
Postnuptial agreements might be used to set a budget for household expenses or remove a business from the table in the event of a divorce. Couples also have used them to decide such things as how often the mother-in-law gets to visit or how many boys-only weekends the husband gets to take. It can insulate a spouse from the spouse’s business debts or specify when, where, and how often they’ll be taking vacations. It can include division of labor agreements as to who gets stuck with weeding and raking the backyard.
What Questions Should be Addressed in the Agreement?
1. What property is held jointly and/or individually? Are there legal, emotional or other reasons why changes should be made?
2. Who is responsible for paying off debt? Is debt in joint name? How can debt be repaid and what are the priorities in repayment of debt?
3. How are earnings allocated? Is there an inequity in how the parties spend or save earnings? Should there be an agreed upon percentage of earnings that each person is able to spend/save? Are both contributing to the family’s income to the best of his or her ability?
4. What is the role of the spouse, if any, in a business now or in the future?
5. How should a business be disposed of in the event of divorce, disability or death?
6. What are your marital priorities for the future; are your goals to pay for a child’s private school college education or to purchase a boat or to save for retirement? How are you going to implement these ideas?
7. How are monies divided in a blended family? How much support should be given to children from previous marriages? What are the ages and needs of the children? What monies should be used to pay for these needs? Are there children with “special needs?”
8. What happens if one spouse falls ill or becomes disabled? Have you considered purchasing long term health care insurance, disability insurance, have you executed a health care proxy or power of attorney?
9. What protection do you have in the event of one another’s death? Do you have life insurance for the other; updated wills; considered estate planning?
What Property Should be Included in the Agreement?
1. All personal belongings at the beginning of the marriage, including jewelry, china, linens, and art.
2. Intangible assets (intellectual properties) that might possibly generate income in the future. This could include goodwill.
3. Financial assets such as stocks and bonds, savings accounts, annuities, and IRAs. Don’t overlook the frequent flier miles!
4. Special family heirlooms and pets
5. Who gets the gardener, the cleaning service, and various personal assistants
6. Assets amassed since the marriage that the client feels belong to them as an individual or items purchased with your client’s personal funds (that is, not money from a joint checking or savings account)
7. Gifts received after the marriage from friends or relatives that both spouses have enjoyed the use of
8. Provision for items acquired in the future
Wills should be updated at the same time.