Are Postnuptial Agreements Enforceable?

Prenuptial agreements, often known as prenups, have long been an engaged couple’s “fallback” option. They compel prospective couples to bargain over how to divide assets and who will be responsible for whatever debts they may have in the event that their marriage fails. But occasionally, long after the couple has married, the same questions still exist or even gain greater significance. As a result, postnuptial agreements, or postnups, are becoming more and more common.

Although the contracts are written after the wedding, postnuptial agreements are intended to address some of the same issues as prenuptial agreements, such as who will own which property and how much alimony a spouse will receive following a divorce. Couples can use it to specify what will happen in the event of a divorce. Let’s examine the operation of a postnuptial agreement and its enforceability in this article.

Understanding Postnups

The contract may contain a sunset clause that causes it to end after a specified number of years, or it may remain in effect for the duration of the marriage. The distribution of the couple’s marital assets and liabilities would follow state law in the event of a divorce and the agreement’s termination.

Among the choices that postnuptial agreements do not cover are the terms of child support agreements and the division of custody following a divorce. In the end, the courts must make decisions in such areas.

Postnuptial Agreement Justifications

Postnuptial agreements can be sought by couples for a variety of reasons. It’s possible that they just never got around to writing a prenuptial agreement before getting married. They can settle the same financial issues they’ve always wanted to—albeit after exchanging vows—with a postnuptial agreement. However, they are drawn in this direction by a significant life event. Couples may obtain a postnuptial agreement in the following situations.

 

Keeping an Inheritance Safe

When one spouse anticipates a sizable inheritance, the couple may wish to determine who will be entitled to the funds in the event of a divorce. In jurisdictions with community property, where assets gained during a marriage are often divided equally between the spouses, it is particularly crucial.

Generally speaking, one spouse’s inheritances during a marriage are not regarded as common property. However, an inherited item can be regarded as community property if a bequest has been handled in a way that causes it to mix with other assets. A postnuptial agreement would guarantee that each recipient would continue to have sole title to their inheritance, superseding any equal claim on the property.

Any rise in the inheritance’s value is regarded as marital property, even in places like Pennsylvania that do not have community property. Assume that during the marriage, the wife’s $1 million increased to $3 million. Both spouses would be entitled to the $2 million gain. A postnuptial agreement allows the spouses to agree that the original owner will retain the entire amount.

Supporting Stay-At-Home Wives

A legal document specifying the division of assets may also be valuable to a stay-at-home spouse whose earning capacity has decreased due to being out of the workforce, or to a spouse who wishes to support children from a previous relationship. One spouse may find themselves in a very precarious financial situation as a result, and a postnuptial agreement would attempt to shield them while they attempt to return to the workforce.

Returning Presents

A divorce settlement can be especially difficult when one spouse’s parents give the couple a sizable sum of money, possibly for a down payment on a home. The in-laws (and their child) can rest easy knowing that they will be compensated in the event that the relationship doesn’t work out thanks to a postnuptial agreement. In order to recover the money, the contract can provide, for instance, that the spouse whose family provided the funds receives the first $100,000 in assets. Even while some people may desire that legal protection, there are situations in which the way money is given does not create a legal duty.

Reestablishing a Connection

Negotiating these problems is sometimes viewed as a means of maintaining the financial stability of a failing marriage. Let’s say, for instance, that one of the people has cheated. A desire to maintain the relationship may be demonstrated by agreeing on postdivorce conditions that are advantageous to the other spouse.

Partitioning Business Interest

In a divorce procedure, valuing assets such as retirement money and bank accounts is quite simple. However, it is much more difficult to assign a monetary value to a firm where one or both spouses are principals. Postnuptial agreements are used by some couples to classify their business as separate property that will remain with the titled spouse because valuing a business can be very costly and time-consuming. To compensate, the couple can decide to give the other spouse a larger portion of the nonbusiness assets.

How Much Will It Cost?

Postnuptial agreements are typically expensive, even if they could be a wise choice for some couples. Each spouse requires a separate lawyer to draft the agreement in order to prevent conflicts of interest, which might result in high legal costs.

Particularly for larger estates or in situations where a business is involved, each spouse may wind up paying thousands of dollars. Nevertheless, resolving conflicts within the marriage is less harsh than the alternative. Remember that couples who appear to be in agreement and have communicated in advance may be able to control costs more effectively.

State Laws and Their Implementation

It’s also important to consider that postnuptial agreements may be more or less enforceable in different states before moving forward with one. As long as the agreements are in writing, signed voluntarily, and include complete financial transparency on both sides, most courts will likely maintain them.

Nonetheless, some jurisdictions impose extra restrictions or have local postnuptial agreements with particular wording. For instance, a contract must reflect “the highest good faith and fair dealing [by] each spouse, and neither shall take any unfair advantage of the other” in California, where spouses have a fiduciary duty to one another.

Some states simply lack case law to compare these contracts to since they are less popular than prenuptial agreements. Getting a local family law lawyer who can assist in negotiating a contract that is upholdable in court is crucial for this reason.

Conversely, prenuptial agreements have a longer history and enjoy widespread approval. When it comes to deciding what will happen to your financial assets and responsibilities, they are, in theory, a superior option. However, the truth is that many couples will experience considerable changes in their financial situation throughout the course of their marriage; postnuptial agreements are a means of managing these shifting conditions.

A Postnuptial Agreement: What Is It?

A legal contract created between couples after marriage to specify how assets and liabilities will be divided in the case of a divorce or death is known as a postnuptial agreement. It describes how assets, debts, income, and other financial matters will be handled in the event of a divorce, much like a prenuptial agreement. It is signed after marriage, though, in contrast to a prenuptial agreement.

What distinguishes a prenuptial agreement from a postnuptial agreement?

 

The timing of their execution is the primary distinction between a prenuptial agreement and a postnuptial agreement. Before marriage, a prenuptial agreement is signed; after marriage, a postnuptial agreement is negotiated. Although they are performed at different times within the marital chronology, both agreements have comparable functions in terms of defining financial arrangements in the event of divorce or death.

For what reasons might a couple think about signing a postnuptial agreement?

 

To preserve assets gained during marriage and to clarify financial matters, couples may want to consider obtaining a postnuptial agreement. A change in financial circumstances, launching a business together, or resolving financial issues that the couple just didn’t consider before to marriage are some of the reasons why people seek a postnuptial agreement.

What Can a Postnuptial Agreement Contain?

A postnuptial agreement may contain clauses pertaining to inheritance rights, property and investment management, spousal support (alimony), asset and debt split, and other financial issues. Additionally, it can cover situation-specific matters including how to handle business interests or intellectual property acquired during a marriage.