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You’ve just married the love of your life and are enjoying the happiness that follows a wedding. Then, something unexpected happens: your financial situation changes significantly. Maybe you receive a large inheritance, start a new business, or one of you decides to become a stay-at-home parent. Suddenly, you begin to wonder if you should have protected your assets before getting married.
Many people think that once you’re married, it’s too late to create a prenuptial agreement. While you can’t get a prenup after marriage, there is another legal option for married couples: the postnuptial agreement. This guide explains what a postnuptial agreement is, why you might need one, and the key steps to make it a valid agreement.
Can You Get a? The short answer is no. A prenuptial agreement must be signed before marriage. Once you’ve signed the marriage license, that option is no longer available. It's off the Table.
However, this doesn't mean you've missed your chance to define your financial future legally. You can enter into a postnuptial agreement, often referred to as a "postnup." A postnuptial agreement (postnup) serves a similar purpose to a prenuptial agreement (prenup), but is created and signed by couples who are already legally married. It allows spouses to outline how their property, assets, and debts should be divided in the event of a divorce or death. Think of it as a financial roadmap for your marriage, created after the journey has already begun.
What is a Postnuptial Agreement?
A postnuptial agreement is a written contract between spouses that outlines how assets will be divided in the event of a divorce or separation. Unlike a separation agreement, which is typically created when a couple plans to divorce, a postnuptial agreement is established while both parties want to remain together. It’s a way to give both partners clarity and security, and it can save time, money, and stress if a separation happens later.
A well-drafted postnup can cover a wide range of financial matters, including:
- Inheritance and Gifts: How assets inherited or gifted to one spouse will be treated.
- Division of Property: Distinguishing between marital (shared) and individual property.
- Business Ownership: Clarifying the rights and valuation of a business owned by one or both spouses.
- Debt Responsibility: Assigning responsibility for debts accumulated during the marriage.
- Financial Responsibilities: Outlining each spouse's financial duties during the marriage.
- Alimony (Spousal Support): Setting potential terms for future spousal support.
The primary benefit of a postnuptial agreement (PNA) is that it allows you to determine the terms of a separation in advance. By working out these details while both of you are calm and cooperative, you can avoid a complex and expensive divorce later.
Prenup vs. Postnup: What’s the Difference?
Prenuptial and postnuptial agreements work in similar ways, but the main differences are when you sign them and why.
- Timing: A prenup is signed before marriage. A postnup is signed after marriage. This is the most straightforward difference.
- Reasons for Signing: Prenups are usually made to decide how to divide assets and protect personal wealth before marriage. Postnups often occur due to significant life changes that occur during the marriage. They can also update or replace a prenuptial agreement if circumstances have changed since the wedding.
Despite these differences, both are legally enforceable documents designed to provide financial certainty and protect both partners.
Why Should You Consider a Postnup?
Discussing a contract for the end of your marriage may not seem romantic, but it's a necessary step. Still, marriage is also a legal and financial partnership. Creating a postnuptial agreement can provide you with peace of mind, ensuring that both you and your spouse are protected, regardless of what the future holds.
There are several common scenarios in which creating a postnuptial agreement (PNA) is a wise decision.
A Significant Change in Financial Status
If one spouse receives a large inheritance or a significant financial gift, a postnuptial agreement can outline how that money should be handled. In many states, assets acquired during marriage are considered "marital property" and are typically divided equally in a divorce. Even though an inheritance typically begins as separate property, it can become "commingled" if used for shared expenses, thereby converting it into marital property. A postnup can help keep it separate.
Starting or Growing a Business
If one or both spouses own a business, its value is often seen as a marital asset. In a divorce, this means the company must be valued, a process that can be complicated and costly. A postnup can decide ahead of time how the business will be handled. For example, one spouse may retain the company, while the other receives a larger share of the different assets.
One Spouse Becomes a Stay-at-Home Parent
If one partner leaves work to raise children, they might have trouble returning to their career later. A postnuptial agreement can provide additional financial protection to the stay-at-home parent in the event of a divorce, ensuring their non-financial contributions are recognised and valued.
Accumulating Significant Debt
If one spouse takes on a significant amount of debt, such as student loans or business loans, a postnuptial agreement (PNA) can protect the other spouse from being liable for that debt if the marriage ends. This clarifies who is responsible for which debts and prevents one partner from being unfairly affected by the other’s financial decisions.
Legal Requirements for a Valid Postnup
For a postnuptial agreement to be legally valid, it must meet some essential requirements. These rules ensure the contract is fair and that both parties agree to it willingly and with a complete understanding.
- It Must Be in writing and signed: A verbal agreement won't hold up in court. The postnup must be a written document signed by both spouses. For an extra layer of validity, signing in front of a notary public is recommended, though not always required.
- There must be full financial disclosure: Both partners need to give a complete and honest picture of their finances, including all assets, debts, and income. If it’s found later that one spouse hid assets or lied about their finances, a judge might cancel the whole agreement.
- It Must Be Entered Into Willingly: The agreement cannot be signed under coercion, duress, or pressure. Both spouses must enter into the contract voluntarily. To help ensure fairness, it is highly recommended that each spouse hire their own independent legal counsel to review the document before signing.
- The Terms Must Be Fair: A court may invalidate a postnup if its terms are "unconscionable," meaning grossly unfair or one-sided. The agreement should protect both parties, not just one.
What Can a Postnup Not Cover?
Just like prenups, postnuptial agreements have limitations. Courts will not enforce provisions that deal with:
- Child Custody or Child Support: These matters are determined by a court based on the child's best interests at the time of separation. Parents cannot predetermine custody or waive child support obligations in a postnup.
- Anything That Encourages Divorce: The agreement cannot include terms that would create a financial incentive for one spouse to leave the marriage.
- Illegal or Unconscionable Activities: Any provision that promotes illicit acts or is fundamentally unfair will be struck down.
In some places, a postnup cannot give up the right to alimony, while a prenup can. Laws vary by state, so it’s essential to seek legal advice.
Secure Your Financial Future Together
Discussing a postnuptial agreement can be a sensitive topic, but it stems from a place of respect and a desire to be clear with each other. Planning your finances while things are good can save you both a lot of trouble, time, and money if life changes unexpectedly. A postnup is not a plan for divorce; it’s a way to strengthen your partnership by making sure you both understand and protect your future together.
If a postnuptial agreement could help your marriage, start by having an honest talk with your spouse. Then, speak with a family law attorney to learn about your options.