Most people have heard of prenuptial agreements, or “prenups,” that couples enter into before marriage to dictate what will happen in the event of a divorce. A prenuptial agreement isn’t your last chance to do that before divorce, though. Spouses can also choose to draft a postnuptial agreement after they are married.
So, what is a postnuptial agreement? This post explains what this type of agreement is, why you may want to create one, and what the agreement should include.
What is it?
The main difference between a “prenup” and a “postnup” is that a prenuptial agreement is created before the marriage while a postnuptial agreement is created during the marriage.
Like a prenuptial agreement, a postnuptial agreement is a written contract that spouses can choose to enter into which addresses legal issues that would arise in the event of a divorce or in the event either spouse were to pass away.
Were such an event to occur, a postnuptial agreement will help simplify the legal process and protect the financial interests of each spouse, which saves both parties a significant amount of time, energy, and expense.
Why get one?
There are many reasons why couples would want to create a postnuptial agreement. Some of the possible purposes for drafting this kind of contract are:
1. Anticipation of a divorce. If your marriage is on the rocks, it can be better to address the issues that would arise in a divorce before you move forward with legal action. Divorce is far less expensive and much faster if there is already an agreement in place on several of the most contentious legal matters, such as the division of assets. You may also be better able to compromise before the relationship progresses to the point in which it can no longer be saved.
2. To protect an inheritance. If one spouse inherits a large sum of money, a postnuptial agreement can be used to determine how the inheritance will be divided in a divorce. Generally, an inheritance left to only one spouse during the marriage is considered to belong to that person separately. However, if the inheritance is comingled with marital funds it could become marital property and subject to division during a divorce. If a couple has a postnuptial agreement in place, however, the terms of that agreement will override the standard rule for property division and can protect that spouse’s interest in the value of their inheritance.
3. To waive inheritance rights. Alternatively, while a widow is legally entitled to receive a certain portion of their deceased spouse’s estate, there are some circumstances where a person may want this right waived. For example, spouses who desire to protect the inheritance of children from a prior relationship may draft a postnuptial agreement with their new spouse to waive inheritance rights of future children.
4. To modify a prenuptial agreement. In many marriages spouses wish to modify their original prenuptial agreement to accommodate changing circumstances in their relationship and lives. When a spouse has put a prenuptial agreement in place and would like to change a significant number of its terms, creating a postnuptial agreement may be the most efficient way to do so.
5. To ensure repayment of family gifts during the marriage. When a married couple is given a substantial amount of money from one spouse’s family, such as a down payment to purchase a house, a postnuptial agreement could be important to ensure that the spouse of the donor family can recoup those assets in the event of a divorce.
6. To help save the marriage. Spouses may also want to create a postnuptial agreement in an effort to help keep a fracturing relationship together. For example, where one spouse was unfaithful and wishes to show their commitment to being faithful moving forward, the couple could create an agreement that would provide for a more favorable divorce settlement for the faithful spouse in the event of any future infidelity.
7. To protect a business. The value of a business that either spouse created can be subject to division during divorce proceedings, even sometimes if it was created prior to the marriage. If one spouse owns a business and wants to ensure that the other does not have a financial interest in the company in the event of a divorce, a postnuptial agreement could be created to override that default outcome.
8. To provide for a stay-at-home spouse. When a spouse decides to leave the workforce it can limit their future earning power. In marriages where one partner is no longer working, couples may decide to draft an agreement that compensates for any loss of future earnings in the event of a divorce by guaranteeing the non-earner a certain amount of financial support or access to certain marital assets which they may otherwise not be entitled to.
What should be included?
A postnuptial agreement should address most of the key issues that would arise in a divorce. Some of the items that a couple should include in their contract include the following:
1. What is separate property and what is marital property.
2. How marital property will be divided in the event of a divorce.
3. What will happen to separate property if one spouse dies.
4. What will happen to marital property if one spouse dies.
5. How marital debt will be divided in the event of a divorce.
6. If a spouse will be awarded spousal maintenance, and if so, how much and for how long.
7. Any other provisions that are important to each spouse in the event of a divorce.
What shouldn’t be included?
While postnuptial agreements can address many of the issues likely to arise in divorce, it cannot necessarily address all of them, including:
1. Child custody.
2. Child support.
3. Any other provision is that void of Missouri public policy.
What makes it enforceable?
A postnuptial agreement is enforceable if both parties voluntarily sign a written agreement. However, there are circumstances in which a court might decline to enforce the contract in the event of a divorce. This can occur in the following situations:
1. If either party signed the Agreement under fraud or duress based on material misleading statements.
2. If the Agreement is found to be unconscionable.
3. If one spouse failed to properly disclose financial information prior to the Agreement being signed.
4. If each spouse didn’t have an independent attorney representing him or her in the negotiation of the Agreement.
Should you need the assistance of an experienced prenuptial agreement or postnuptial agreement attorney in Creve Coeur and O’Fallon or have questions about your situation, know that we are here to help and ready to discuss those questions with you.