Postnuptial agreements are becoming increasingly popular as a means of creating financial harmony in marriages. They help solidify the relationship by providing both parties with a solid understanding of each other's assets, debts, and future financial wishes. The following information discusses key considerations when completing this agreement.

Separate and Shared Property

Defining what property is considered "separate property" and what property is considered "shared property" is one of the central features of any postnuptial agreement. Shared property is any property in which the spouses have signed documentation reflecting their clear intention to share ownership or any property purchased using joint funds. Each party will receive an interest in property purchased using joint funds (funds from both spouses) in proportion to their contribution.

Note that the parties may always change the amount of their ownership interests in shared property or reclassify separate property as shared property (and vice versa) through a written agreement. In the event of a divorce, shared property will be divided, typically by either selling the property and dividing the proceeds or by one spouse keeping the property and paying the other spouse half of the value.

Enforcing the Agreement

It is important to realize that courts are not required to follow every term in a postnuptial agreement. For instance, courts in some states are not necessarily required to follow provisions related to spousal support. Divorce and family courts must first determine which provisions of the spouses' postnuptial agreement will in fact be upheld. However, by using a postnuptial agreement, the spouses greatly improve their odds of having their original wishes carried out in the event the marriage ends by divorce, annulment, death of a spouse, or otherwise.

Waiver of Independent Counsel

It is recommended that each spouse consult his or her own independent counsel to review the rights and obligations under this agreement, especially if one party has more bargaining power or higher education. However, in the event that the parties opt to waive (give up their legal right) to independent counsel, the parties need to sign the waiver attached to the agreement titled "Advisement and Waiver of Independent Counsel." Please note that Minnesota and South Carolina always require each party to be represented by independent counsel. We do not provide the waiver of independent counsel if you are signing the agreement in one of these states. Furthermore, independent counsel is strongly advised in Alabama and Massachusetts but not required.

Full Disclosure

It is also very important that both spouses be completely thorough in disclosing all assets, debts, and income sources in the document. Failing to do this can result in the agreement being invalidated if it is ever litigated in court.

Dispute Resolution

You have the option of requiring disputes to be resolved through mediation and/or arbitration. In mediation, an impartial mediator helps the parties discuss the legalities of their conflict in order to reach an agreement. Arbitration is similar except that the arbitrator issues a legally binding ruling on the dispute and has the same authority as a judge. This can avoid the time and expense associated with the formal court system.

Last Will and Testament

A postnuptial agreement is not a replacement for having a last will and testament. Furthermore, nothing in this agreement prevents the parties from naming each other as beneficiaries in their wills, trusts, or retirement plans.

Waiting Period

State law normally requires both spouses to have at least a reasonable amount of time from the time they first receive the postnuptial agreement to review it and seek any legal or financial counsel before signing. It is highly recommended that the spouses wait at least one week from the time of first receiving the agreement before signing to ensure that the agreement will be enforceable.

Executing Your Agreement

In order to make sure your agreement is legally valid, you need to ensure that it is properly executed. When the parties are ready to sign, they should be sure to initial at the bottom of every page of the agreement in order to show that each page was read. You should then sign where indicated in the presence of a notary and two witnesses (three witnesses are needed in New Hampshire and Vermont).

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Frequently Asked Questions

• What is a postnuptial agreement?
• How does a postnuptial agreement differ from a prenuptial agreement?
• Who can create a postnuptial agreement?
• Why would someone consider creating a postnuptial agreement?
• Are postnuptial agreements enforceable?
• What needs to be disclosed in a postnuptial agreement?
• Do postnuptial agreements encourage divorce?
• What does it take to create a valid postnuptial agreement?
• What information should be included in a postnuptial agreement?
• When should someone avoid signing a postnuptial agreement?
• What steps should be taken before signing a postnuptial agreement?
• Is a postnuptial agreement created in one state valid in another state?
• Can postnuptial agreements be changed or cancelled?
• Can postnuptial agreements be used to set child custody and child support arrangements?

What is a postnuptial agreement?

Postnuptial agreements are legal contracts that married spouses enter into with one another to establish how the couple’s assets, debts, and income would be split in the event the marriage was to end in divorce or due to the death of a spouse.

In many respects, a postnuptial agreement functions much like a divorce settlement agreement.

In the event that a couple who have signed a postnuptial agreement later decide to go their separate ways, the postnuptial agreement can make the divorce process faster, less expensive, and significantly easier because the spouses had previously agreed on how assets, liabilities, and income will be divided.

How does a postnuptial agreement differ from a prenuptial agreement?

The key difference between prenuptial and postnuptial agreements is timing.

While postnuptial agreements are signed only after the marriage has already taken place, prenuptial agreements are created and signed when the couple is still contemplating and planning their marriage. The couple has the opportunity to go into the marriage with full knowledge of their future spouse’s income, assets, and liabilities, and to already have reached an agreement on important matters pertaining to the marriage and a possible divorce.

Who can create a postnuptial agreement?

As postnuptial agreements are legal contracts governed by state contract laws, both parties to the agreement must be legally able to sign the agreement. This does not necessarily mean that both spouses need to be physically able to sign their names, but they must both be at least 18 years old.

Both spouses must also be able to understand the nature of their financial situation, the nature of the terms included in the agreement they are signing, and understand what would occur if they did not sign the agreement.

Why would someone consider creating a postnuptial agreement?

Contrary to popular belief, neither postnuptial agreements nor prenuptial agreements are intended to be signed in contemplation of divorce. Instead, a divorce settlement agreement should be used in this situation.

Postnuptial agreements are increasingly being used by newlyweds as a practical means of disclosing their personal finances and agreeing to a fair division of assets in the event of divorce or the death of a spouse. This often helps decrease the incentive for divorce by ensuring each spouse’s assets and debts stay separate.

Spouses also commonly use postnuptial agreements when one or both of them has children from a previous relationship who they want to protect in the event of a future divorce. Postnuptial agreements may also be used when one spouse has developed a gambling problem or has amassed a sizable credit card debt balance, or when one spouse inherits assets from a deceased loved one’s estate. In these cases, a postnuptial agreement can help protect each party's interests.

Are postnuptial agreements enforceable?

The enforceability of postnuptial agreements is governed by the state statutes and case law in each state. Due to nuances and differences to the wording, format, and execution requirements between different states, trying to create a postnuptial agreement by hand is not recommended.

In most states, postnuptial agreements are enforceable so long as they are validly executed and are not unconscionable. As of 2017, only four states (Nebraska, Ohio, Oklahoma, and Wyoming) either do not enforce or strongly discourage postnuptial agreements.

While there are some differences in the laws and legal treatment of postnuptial agreements in various states, one constant holds true: A spouse who is planning on and preparing to divorce their husband or wife and convinces them to sign a postnuptial agreement has committed a fraudulent act. Postnuptial agreements are not enforceable when fraud occurs.

What needs to be disclosed in a postnuptial agreement?

As with prenuptial agreements, spouses who sign a postnuptial agreement must make a full and complete disclosure of their income, assets, and liabilities to the best of their abilities.

The decisions agreed to in postnuptial agreements are based almost entirely on each spouse’s relative power in the financial relationship. Therefore, for a postnuptial agreement to be valid and effective, each spouse must have a solid understanding of the other’s financial situation.

If one spouse in the marriage refuses or is reluctant to disclose his or her financial information, it should be a potential warning sign to the other spouse, who may want to reconsider signing the agreement.

Do postnuptial agreements encourage divorce?

On the contrary, rather than encouraging or driving spouses toward an inevitable divorce, the act of creating and signing a postnuptial agreement often helps facilitate a stronger bond between spouses.

Creating a postnuptial agreement forces each spouse to be open about discussing things like their income, the assets they hold individually and jointly with their spouse, and their liabilities. It also gives spouses an opportunity to talk about their future financial goals and wishes. These types of financial discussions can be difficult in many marriages, but by being deliberate and thoughtful about documenting everything, spouses have a chance to clear the air.

What does it take to create a valid postnuptial agreement?

To be considered valid, postnuptial agreements must be in writing. There is no such thing as an oral postnuptial agreement in any U.S. state.

The agreement must also be entered into voluntarily by both of the parties to the contract, with full and fair disclosure at the time it is signed.

Postnuptial agreements must also not be unconscionable. This means that the terms of the agreement cannot be unfairly one-sided in favor of the spouse who has greater bargaining power in the transaction.

Finally, both spouses must sign the postnuptial agreement in the presence of a notary public.

What information should be included in a postnuptial agreement?

Postnuptial agreements normally discuss the following items:

• Statement of intent – The spouses must indicate through language in the document that it is their intention to enter into a postnuptial agreement.
• Disclosure of assets – Each spouse must provide a full and fair disclosure of their own financial situation. This includes providing exact figures or reasonable estimates for all real estate, investments, bank account assets, vehicles, personal property, insurance policies, and any other type of financial asset.
• Disclosure of liabilities – Similarly, postnuptial agreements must also include a full disclosure of outstanding balances on mortgage loans and lines of credit, personal loans, vehicle loans, credit card debt, and other financial obligations.
• Income disclosure – The agreement should disclose each spouse’s income, usually for the most recent two tax years.
• Key terms and definitions – Postnuptial agreements should define key terms, including definitions of “marital property” and “separate property.”
• Division of financial assets and liabilities in the event of divorce or death – The agreement should establish how marital property and separate property will be handled in the event of divorce or when one spouse dies.

• Opportunity to engage separate legal counsel – Both spouses to a postnuptial agreement must have the opportunity to review and understand the terms of the agreement, and they must also have the opportunity to have their own attorney (if they have one) review the agreement with them prior to signing. If one spouse tells the other that he or she must sign the agreement right away without an opportunity to consult with a lawyer, it is likely that the agreement would not be enforceable.

When should someone avoid signing a postnuptial agreement?

Most of the time, when spouses decide to create and enter into a postnuptial agreement with one another, they are both upfront and straightforward about their intentions and the required disclosures. Possible signals that it may not be in your best interest to sign a postnuptial agreement include the following:

• Duress – If your spouse surprised you with the idea of a postnuptial agreement and is now trying to force you to sign the document, you should not sign it straight away. Most postnuptial agreements are the result of frank discussions among both parties, not a one-sided requirement of the other spouse.
• Sense of urgency – Do not sign a postnuptial agreement if your spouse is manufacturing a sense of urgency, saying you have to sign the agreement immediately and indicating that there is no time for you to have it reviewed by someone else.
• Vague about disclosures – Another red flag is when one spouse is vague about providing financial disclosures, or refuses to provide the information altogether. If there is any indication that your spouse may be hiding assets, you should not sign a postnuptial agreement.
• Unreasonably one-sided – You should avoid signing a postnuptial agreement if its terms seem to favor your spouse to an unreasonable extent. It is common for there to be some misalignment when it comes to the division of assets and liabilities; however, an extreme division proposal may be unconscionable.
• Overbroad provisions – There are limits to the types of provisions that can be included in a postnuptial agreement. If your spouse presents an agreement that purports to govern how child support and child custody would be handled after a divorce, you should not sign the agreement.

What steps should be taken before signing a postnuptial agreement?

Before you sign a postnuptial agreement, it is important to take the time to read the agreement thoroughly. Ask yourself the following questions as you review the draft agreement:

• Does this agreement accurately reflect our wishes as discussed or negotiated?
• Do the financial disclosures look complete?
• Do I understand what the agreement is doing and what it would mean for me financially if our marriage was to end in a divorce?
• Am I comfortable with what would be provided for me financially in a divorce scenario?
• Does it make sense to have an attorney help me to review the agreement to make sure that my needs are protected? If the agreement or financial attachments are difficult for you to understand, it may be in your best interest to have an experienced attorney review the agreement with you.

Is a postnuptial agreement created in one state valid in another state?

As postnuptial agreements are governed by individual state contract laws, there are some state-specific differences. However, generally speaking, a postnuptial agreement created in one state will likely be valid in another state as long as it was validly negotiated, drafted, and executed.

It may be advisable to have an attorney in your new state review the agreement to provide a legal opinion about its enforceability in that state.

As of 2017, only four states (Nebraska, Ohio, Oklahoma, and Wyoming) either do not enforce or strongly discourage postnuptial agreements.

Can postnuptial agreements be changed or cancelled?

Yes. Sometimes, postnuptial agreements are designed with an end date in the original agreement. For example, an agreement could provide that, if the couple is still married 15 years after the agreement was signed, it will become null and void.

As with any type of legal contract, both parties could mutually agree to terminate and revoke a postnuptial agreement or to change one or more of its provisions. Any such revocation or change should be made in writing, following the same legal formalities as the original agreement.

Can postnuptial agreements be used to set child custody and child support arrangements?

Postnuptial agreements can be used to establish how each spouse would be treated financially in the event the marriage was to end in divorce. However, these agreements cannot be used to outline the parties’ wishes for child custody arrangements or child support.

Child custody and support should be determined at the time of a divorce with the minor child’s best interests in mind. When spouses create a postnuptial agreement during their marriage, it is impossible to know what their situation, and their children’s best interests, will be in a hypothetical future divorce scenario.

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