A postnuptial agreement is a legal agreement signed after marriage between spouses that sets forth the division of assets. Here’s what you need to know about making a strong postnuptial agreement.
Postnuptial agreements can be very useful in placating disagreements and issues upon divorce. Along with other provisions, it includes property, debts, jewelry, and spousal support. For couples contemplating divorce, negotiating a postnuptial agreement can reduce potential disagreements in the event of a divorce.
Differentiating Prenuptial from Postnuptial Agreements
Prenuptial Pros and Cons
Prenuptial agreements are often more easily enforceable than postnuptial agreements. This is due to the defense of coercion. Judges may be more inclined to presume that coercion is in play when a dependent spouse is signing a document rather than when independent people sign an agreement prior to their actual marriage and a mixture of their assets.
Prenuptial agreements can be especially beneficial for a plethora of reasons including but not limited to the following:
- Forces couples to discuss sensitive financial matters prior to coming into a legal union with someone
- May limit later misunderstandings
- May ease the fears that partners are entering the union for financial gain
- To make sure that children of a previous marriage are provided for
Due to prenuptial being an entity that requires prior negotiation of matters that are otherwise likely to come up for the first time in a divorce, it can save money on divorce attorney fees if or when the time for dissolution comes. However, a prenuptial agreement can be an uncomfortable thing to bring up to a prospective partner. It can be seen as negative, unromantic, or like a partner is unable to commit to the marriage.
Despite these advantages, asking a prospective partner to sign a prenup may be seen as a negative, such as a sign that he or she is not committed to the marriage. It will often prompt some difficult discussions. In addition, states frequently change statutes and case law regarding the validity of prenups which could lead to issues of enforceability of a prenuptial agreement.
Postnuptial Agreements
The primary benefit of a postnuptial agreement is that it may be used for couples who failed to propose a prenup but later find it to be beneficial. A postnup can be used to address concerns raised by a significant change that may include the following:
- An inheritance received by one of the partners
- Unknown knowledge of a partner’s financial situation surfaces
- A partner’s large debt surface
Sometimes, the reason is not for a change in finances but rather, as an inducement to increase the commitment of a spouse that is showing signs of discontent and willingness to dissolve the union.
Postnuptial agreements do have their faults. Due to the greater presumption that partners in a marriage are less able to make independent decisions and are more subject to coercion, a postnuptial agreement may be even less enforceable than the typical prenuptial agreement because it may assume that coercion was used to make spouses comply and sign. However, it is important to keep in mind that in the case that a partner announces a desire for a postnuptial agreement, the other spouse could later make the argument of “weakened commitment” as it could be considered a sign of pending marital difficulties.
Related: Prenup vs Postnup in California: The Difference
Reasons For a Postnuptial Agreement
There are a wide variety of reasons why couples enact postnuptial agreements, and they are not all because they think their spouse will get more than his or her fair share of assets in a divorce. Few situations may prompt a cause for a postnuptial agreement including the following:
- To update an existing prenuptial agreement
- A major change in the financial status of a spouse
- A spouse chooses to stay at home or gives up a career for the sake of the family
- A sudden change in finances like a spouse’s inheritance of a family business or rise to an important position in a family business can drastically change financial status
- Business success or decline. Spouses starting a growing business may want to protect outside partners or the business itself from the potential divorce of any of the partners. Some private firms even require senior executives to enter into such agreements as a condition of employment.
- Second marriages come with a host of potential complications such as childcare, care for elderly family members and care for disabled family members are issues that must be taken into consideration
- End disagreements or arguments that could potentially come up throughout the marriage
DIY Postnuptial Agreement
Assuming spouses follow the regulations and meet the specified requirements surrounding postnuptial agreements, a do-it-yourself postnuptial agreement may be valid and enforceable throughout California. A strong postnuptial agreement will include the following:
- How the couple will divide property and other assets in the event their marriage ends
- Whether one spouse will pay spousal support and for how long such support payments will be continued
- How any marital debts will be divided in the event of divorce, including things like mortgage loans, credit card debt, and other
- loans
- How assets will pass if either spouse dies during their marriage, which may include different provisions depending on whether or not divorce proceedings were underway at the time of the death
- Account for custody and support of minor children in the event the marriage ends in divorce or legal separation
Related to: How to Create a Postnuptial Agreement in California
Ensuring the Validity of the Agreement
An agreement will NOT be automatically valid. In order to be legally enforceable, the agreement must meet certain requirements which vary by State. A valid California postnuptial agreement requires the following:
- Must be in writing
- Both parties must sign the agreement willingly (notarization is not required but is preferred)
- Full disclosure of spouses’ debts, assets, and income in their entirety
- Ensures a fair division of assets
- Filed with a local family court where it accepted by a judge
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