You have probably heard of, or you are aware of, a prenuptial agreement. A prenuptial agreement is an agreement that details what will happen to certain property named in the agreement, in the event of a divorce. It may also account for things other than property, such as alimony or attorneys fees.
What About After the Marriage?
Prenuptial agreements, as the name implies, are signed before the marriage takes place. But many people are unaware that there is another type of agreement that can be entered into between married couples after the marriage, called the postnuptial agreement. Although not as well known and certainly not as common as a prenuptial agreement, a postnuptial agreement may have some use to some married couples.
What is in a Postnuptial Agreement?
A postnuptial agreement does and can include everything in a prenuptial agreement. The only real difference is the time of the signing of the agreement, as a postnuptial will be signed while the parties are actually already married.
The postnuptial agreement can discuss what property will remain that of either spouse as non-marital property, thus making that property non-divisible on divorce. It may specify that some property will be divided on divorce and state exactly how the property will be divided between the spouses.
It may detail which spouse will be liable for which debts, who will live in the marital home upon divorce, or who will pay temporary attorneys fees or expenses while the divorce is going on.
Benefits of a Postnuptial Agreement
Just like a prenuptial, a postnuptial has the benefit of minimizing fighting later on in the event of a divorce. By agreeing to certain issues beforehand, the parties are minimizing what will be fought over when and if the divorce happens. In that way, a divorce may be cheaper, or quicker, given that there are fewer issues to fight about.
Are They Valid and Binding?
But one problem with a postnuptial is that the parties are already married when the agreement is signed. This can be a problem; the law doesn’t want a husband and wife to be at odds or to be in an adversarial position to each other.
Whenever contracts are signed in any capacity, the law wants the parties to a binding contract to be at “arm’s length” from each other, meaning that they are independent, neutral, and to some extent, both looking out for themselves–something that a married couple definitely is not.
Requirements for a Binding Agreement
This means that if certain requirements are not met, the postnuptial agreement can be challenged in court and potentially invalidated.
While in many cases, oral agreements are enforceable, when it comes to postnuptial agreements, they are not—postnuptial agreements must be in writing. Additionally, simply having a husband and wife sign the agreement will be insufficient; the law requires that there be two witnesses to the signing of the agreement.
There must be a full financial disclosure between the spouses. Simply saying, “We were married, he had access to the accounts, he knows what property I had when we signed the agreement,” will not suffice. It does not matter how much each spouse actually knows about the other’s property, holdings, income, bank accounts, or finances—full disclosure must be made by each spouse to the other before the agreement is signed.
Holding something back, or being less than truthful about finances, is one way that an aggrieved spouse, upon a divorce, will try to challenge the validity of the postnuptial agreement.
Although in most cases, courts do not look at who made out better in a contract, the divorce court will, with a postnuptial agreement. That means that one side should not get everything, and the other get nothing. Effort should be made for the agreement to be somewhat balanced as to both spouses.
Why Sign or Enter Into a Postnuptial Agreement?
There are many reasons you may want to enter into a postnuptial agreement. Often, the reasons may have to do with a spouse who has done something wrong or where there is suspicion of wrongdoing or wasting of marital assets.
For example, if a spouse were to develop a gambling habit, or where a spouse may be spending excess money on drugs or alcohol, the other spouse may not want to leave the marriage—but that spouse may want to protect him or herself, knowing that if the problem continues, a divorce may be a possible option.
If a spouse suddenly incurs significant debt, that may be a reason. For example, imagine a spouse who, against the wishes of the other spouse, takes out thousands of dollars in debt to fund a business. The other spouse may be supportive—but also may not want to be saddled with that debt in the event that there is a divorce.
Sometimes, a spouse just suspects something is off. Perhaps your spouse seems to be hiding money, finding money in places you did not know existed, or buying things you did not think you could afford. Maybe there is money in joint bank accounts that seems to be disappearing faster than you can explain.
If you suspect that another spouse is exerting excess control over what should be marital money, you may want to immediately know what assets are there, what the other spouse actually owns or makes, and to make sure that when and if a divorce happens, you are not left with nothing, or having to search endlessly for the financial truth about your spouse’s finances when a divorce happens.
One situation where a postnuptial may benefit you would be to protect the inheritance of children from a separate, prior marriage. You may not want to lose property in a divorce that you are holding for your children of a previous marriage to inherit. A postnuptial can protect this property.
Could a postnuptial agreement be right for you? We can help you make that determination and help you understand what can and should be included in your postnuptial agreement. An attorney at the Law Firm of Anthony J. Diaz can help. Contact us for questions.