What is a Post Nuptial Agreement?
In the simplest of terms, a post nuptial agreement is a legal contract between a married couple with the main purpose of outlining the division of assets and liabilities in the event a marriage ends. It could also be known as a post marital agreement. A post nuptial agreement is similar to a pre nuptial agreement but with two major differences – it is created after the marriage, and neither party is required to, or can be forced to sign it.
With a pre nuptial agreement, one person can state that their wedding won’t happen without the agreement, but if there isn’t a legal document drawn up prior to getting married, all laws of the state will apply for the married couple. When a couple makes the decision to create a post marital agreement, there are generally two primary reasons.
The first is they want to have a legal document that would expedite the process if there is a divorce, and the second is the couple wants to lay out terms and provisions that are contrary, or different, from what is deemed the legal norm. When it comes to divorce, depending upon where you live, the standard division of assets will either fall under Community Property or Equitable Division.
- Community Property – in Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and Puerto Rico, the common practice is for all community property owned by both spouses to be divided equally between them. Property that can be proven as separately owned, usually goes to that person.
- Equitable Distribution – in all the other states, assets, liabilities and earnings that were acquired and accumulated during the marriage are divided equitably between the spouses. It is important to note that equitable does not mean equal, but rather the Court will determine what is considered to be a fair division. For example, if one spouse has physical custody of the children, or is not working at the time of the divorce, maybe because of being a stay-at-home parent, the judge may award spousal support or alimony, or maybe the ownership of the family home.
When a couple gets divorced, they can negotiate how to divide their assets, and it can be different from the standards of the state, but if they can’t reach an agreement, the court will make the final decision. The purpose of a post nuptial agreement is to have all these details worked out BEFORE the issue of divorce comes up, hopefully when the couple is on more amiable terms. You may have noticed that neither community property or equitable distribution take into consideration what is considered to be an “at fault” divorce – for example, in the event of adultery, spousal abuse or if one party is involved in criminal activity.
When a couple gets married, the plan is usually to share their lives equally – and this means finances as well. However, if one partner comes to the marriage with a significantly higher-income level and has more assets, or perhaps has “family money” or owns a business, he or she may choose to have either a pre-nuptial or post-nuptial agreement stating how assets should be divided if the other violates the sanctity of marriage.
The typical financial matters covered in a post nuptial contract include:
- Property Division – Who gets to keep what?
- Spousal Support – Will there be alimony, and if so, how much and for how long?
- Marital Debts – Who is responsible for paying what bills?
- Child Custody – Will there be joint or shared custody? Will there be a visitation schedule? Will there be limitations to how far the custodial parent can move away from the other?
- Child Support – How much will the non-custodial parent pay?
- Insurance Benefits – Will one party be responsible for medical insurance for the other? What happens with retirement or life insurance?
A post nuptial agreement can lay out different scenarios based upon the reason for divorce as well as what will happen if one spouse becomes unable to work or dies.
Why You Might Need a Post Nuptial Agreement
The primary reasons for having a post nuptial agreement is to expedite the divorce process, especially if a couple wants to lay out provisions that differ from the standards of community property or equitable division of property. Almost certainly the most common form of post marital contract is one that is drawn up because a couple has made the decision to live separately. Another common reason for creating a post nuptial agreement is when their needs to be a revision to an existing pre nuptial agreement, or a couple realizes that it probably would have been a good idea to have one done before they get married. In many other cases, a couple may decide that having a legal agreement would make sense because there has been a significant change in circumstances. Some examples include:
- Poor Financial Habits – what happens when during a marriage, one partner engages in irresponsible spending behaviors such as compulsive shopping or gambling? Legally, the other partner is just as responsible for these debts – and if there is a shared bank account, he or she can’t stop that person from accessing the money. In cases like these, post marital contracts can be set up to do things such as creating separate bank accounts, allocate spending and to clearly state financial responsibilities for debts in the event of divorce.
- Change in Work Status – in the event one-party stops working, for example, due to disability or to stay home and raise the children, it may give that person a sense of peace to have a legal document which states what would happen in the event of divorce. Another example would be a partner who puts their own career on hold in support of the other.
- Family Inheritances – under state laws, unless there is a will stating differently, in the event death, property and assets go to the surviving spouse. The same is true for divorce. If one party has family money, or received an inheritance that he wants to make sure goes to other heirs (or at least split between the spouse and the heirs), a contract is needed.
- Business or Career Success – when people get married, it is supposed to be through good times and bad, but if one partner is doing really well, especially if there are problems in the marriage, it might be a good idea to draft a postnuptial agreement that clearly defines the division of assets in the event of a divorce.
- Infidelity – when people get married, usually the last thing, they are thinking about is the other partner cheating, but if it does happen, it may make the wounded party think twice about equitable distribution. While the couple may choose to work things out, a spouse may request an agreement outlining the division of assets if it happens again.
Why You Might Not Want a Post Nuptial Agreement
While a post nuptial contract that clearly states how financial assets and liabilities should be distributed, the truth of the matter is that post nuptials are not always in the best interest of every person involved. Let’s start with this fact – if your spouse wants a post nuptial contract and you don't; you cannot be legally forced into signing one. Unlike a pre nuptial when one party can say, “I won’t go through with the wedding, unless we have a pre-marital contract,” you’re already married and as such; all the laws of your state regarding the division of assets are legally binding.
If you are a person who has less income or came to the marriage with fewer assets, your spouse can’t change his mind later and make you agree to take less than the laws of community property or equitable distribution in your state allow for. With this being said, the absolute worse mistake you can make with a post nuptial agreement is signing one that you don’t think is fair. Sadly, there are times when one spouse “knows” that he or she is planning to divorce (unbeknownst to the other), and will request a post nuptial in an attempt to avoid paying spousal support, alimony or equal distribution of marital assets.
If you are in a situation where you have a spouse who you think is requesting a postnuptial contract that is either unfair, or who is not disclosing all financial assets, you absolutely need to consult an attorney. Your legal counsel may suggest that a complete and through financial audit be done prior to putting together any legal documents.
Do We Need a Lawyer to Draw up a Post Nuptial Agreement?
Whether or not you choose to use a lawyer to help you draw up a post nuptial agreement will depend on your situation. Even if you live in a state that does not legally require an attorney for a post nuptial agreement, if you and your spouse are putting together a post nuptial under “less than ideal” or even hostile circumstances, it is strongly advised that both parties retain their own legal counsel. Another reason for using professional legal assistance, which if your situation is amicable could be a single attorney to represent both of you, is when there is a large amount of financial assets or liabilities involved.
The more complex the agreement, the more it “goes against” what is considered standard law for what happens when a couple divorces or a spouse passes away; the more likely legal counsel should be used. For couples with fewer complicated financial matters to settle, but who still would like to have a neutral third party involved in the process, one option is to work with a marital mediator. A mediator is different from a marital counselor in that the person will have training and experience in family law, with particular knowledge of the divorce laws in thecouple’s state. Unlike when putting together a prenuptial agreement, because a couple has already been married for a period of time, there may be tension, making the post nuptial process a bit more sensitive. A mediator will work with the couple to ensure effective communication, which will help them to collaborate on the terms of the agreement.
There is an added benefit of using marital mediation, beyond putting together the actual postnuptial document. Although most mediators are not therapists or marriage counselors (some are), they do have specialized in training in the process, and many also have an education in psychology. For couples who are having troubles with their marriage, and who may even be contemplating divorce, working with a mediator has been known to help both parties feel better heard and able to work towards fixing what is “broken.” Using a mediator is less expensive than an attorney and some couples will use a family law mediator to help put together the first draft of the postnuptial agreement before showing it to their lawyers in order to save on expenses.
History of The Post Nuptial
There once was a time that post nuptial agreements were simply unheard of – mostly because the standard of “marital unity” was thought to legally consider a husband and wife a single unit, or “person.” This meant that any contracts between married couples would be considered not valid, thus not able to be legally enforceable. At this time, it was also more difficult for people to get divorced unless they could prove that they had a really good reason. Starting in the 1970s, more and more states were recognizing what we call “no fault” divorces — allowing people to end their marriages for any reason, as long as there was a period of separation.
It was at this time when postnuptial agreements also started to be legally recognized. As more and more divorces started happening, people realized that it might be a good idea to have a document ahead of time that would speed up the process. Some of the first post nuptial agreements are what we usually think of as separation agreements. In many cases, the early uses of post marital contracts were used by people who realized after they got married that perhaps there should have been a pre marital agreement drawn up in the first place, but they didn’t exist at the time.