What is a postnuptial agreement?
A postnuptial agreement is a contract made between married parties. If a valid agreement exists, it typically must be reviewed under conditions of contract law. Postnuptial agreements are commonly used as part of a divorce settlement and tend to be more informal than many prenuptial agreements. For instance, a premarital agreement may not mention inheritable property, while a postnuptial agreement often does. Because there are so many variations in how postnuptial agreements can be used, there are no set stipulations . Some postnuptial agreements hold up better in court than others. For instance, postnuptial agreements that discuss support or written waiver of support or alimony have higher rejection rates in court than those that do not include these provisions. In some cases, using a postnuptial agreement means going through mediation instead of divorce court. A divorce lawyer can explain the use of postnuptial agreements to marry spouses in specific situations.
Divorce: What Should You Consider?
When a couple decides to leave a marriage, divorce is often the process through which this happens. While some marriages have more amicable end points, many couples who choose divorce feel a lot of emotions, from anger and frustration to depression and anxiety about an unknown future. When a couple splits up amicably, however, divorce proceedings can be relatively quick and efficient.
In any case, understanding how divorce works is absolutely essential for people who are considering it. During the process of divorce, spouses typically want to make sure that they are able to meet their own needs in addition to those of their children.
Someone who is considering divorce should understand that during divorce proceedings, their main concerns will likely be the equitable division of property, child custody, child support and spousal support. If there is any child abuse or domestic violence in the situation, a person should seek legal representation immediately.
Equitable division of property typically means that property is divided in a way that is not necessarily equal, but reflects the unique situations of the spouses. Child custody refers to the actual custody of the children after the divorce. This does not include the financial provisions of child support.
Within proceedings, parents will be awarded either primary legal custody (the right to make all decisions for a child) or joint legal custody. Physical custody can also be primary or granted equally. Child support generally describes the amount of money one parent has to pay to the other parent.
Spousal support, also called alimony, refers to the money that one spouse pays to the other. Some factors that affect the amount of spousal support include marital and individual income, the property division structure, parental responsibility, the duration of the marriage, the physical and mental health of the spouses, lifestyle requirements and the contributions to the marriage by both spouses.
It is a good idea to consult with a skilled attorney when going through the divorce process.
Postnuptial Agreements and Divorce
When faced with marital woes, couples always have a choice to make — move forward and form a postnuptial agreement or separate and pursue a divorce. Here, we explore both options. A postnuptial agreement is a personal contract that a couple drafts and signs following marriage. This private, often one-off-agreement is an alternative to divorce, subdividing financial and other assets between spouses with the intention of staying wed rather than splitting. If either spouse is interested in the postmarital agreement, it is typically because he or she wishes to avoid a divorce. Postnuptial agreements can be wise product of the couple’s attempt to reconcile otherwise irreconcilable differences, as documented in Forbes. A divorce, on the other hand, involves the exhaustively legal process of breaking a marriage legally, often involving lengthy negotiations over alimony, child support, asset division and other items. For couples who are well beyond attempted reconciliation, a divorce may be the best option. It could also be the only option if things seem beyond the point of no return or one spouse is adamant about splitting up for whatever reason. Some couples are better off apart for the benefits of themselves and their kids. And others are happier staying together for financial, emotional or other reasons. Ultimately, it’s up to the couple to decide whether it’s best to sign a postnuptial agreement and live on, or sign divorce papers and part ways for good. Divorce is time-consuming, expensive and emotionally draining, but so is the process of executing the postnuptial agreement. Working with a qualified divorce attorney is imperative for understanding the benefits and drawbacks of this option, as well as determining the timing of the option and how to proceed from there in a way that has the best chances of achieving the desired outcomes for the individuals and the family unit.
Finances: Solving Debts and Protecting Assets
When it comes to the financial considerations of a marriage in crisis, a postnuptial agreement and a divorce are very different – with an agreement, the decision to separate assets and liabilities is made by both parties, while in a divorce, it’s made by the state. Postnuptial agreements can be prepared to remove the ability to acquire assets and liabilities without the consent of both parties, or to establish exactly who gets what if you ever do separate. This may seem like a way to sound-proof your future as a couple, but essentially it’s the most explicit form of risk management you can achieve. If wealth is a concern, then it makes sense to enter into a partnership with a clear and mutually acceptable plan for asset and debt separation so that once the tendency toward growth does show, the potential for high-stakes disputes is already mitigated.
Moreover, if you and your spouse can agree to set aside certain assets, debts, inheritances, and business interests, you’ll be in a far better position to install a buffer between those vulnerabilities and your quality of life, should a divorce become necessary. Discussions around postnuptial agreements can lead to the discovery of joint concerns that you may not have noticed, such as spending habits and whether or not one person is bringing more debt than assets to the marriage. If you both do find that you have a couple of vulnerable financial points, you may decide to put a traditional divorce on the table, if only to make the decision to separate your assets and liabilities as a means of risk management.
The Legal Process
When considering a postnuptial agreement, the process begins with the preparation of the agreement. Typically a postnuptial agreement is put together by the spouses and then presented to each for review and signature. Where there is a fundamental disagreement, however, with respect to the substance of the agreement, a spouse may seek counsel to assist both in clarifying the issues and in putting together a final draft of the document. Your lawyer can also review this draft to ensure that it is consistent with your objectives and does not overlook any potential issues that may arise later. In that sense, "a little legal advice may go a long way." That attorney will then present the agreement to the other spouse just as one spouse or the other presented the original draft to you.
From a legal perspective, the only distinction between a postnuptial and marital agreement is its timing. If a divorce action is pending at the time an agreement is presented for signature, it will be treated differently and more carefully than it would be in the context of a postnuptial agreement. In either case, you have the absolute right to retain independent counsel with respect to the decision to sign the document and its substantive terms before it is presented for signature to the other spouse.
Once it is signed, the postnuptial agreement is presumed to be valid. A court will not typically look behind the agreement to determine whether the parties would have made the same deal if they had retained separate counsel. So while your agreement can be done at a very low cost, any mistake could be very costly to you later . Because the agreement will then require judicial approval and the divorce court considers a variety of different factors in deciding whether to approve the agreement, you should think long and hard about proceeding without legal advice.
On the other hand, as already noted, when entering into a marital agreement, if there is a divorce pending, special steps are required to present the agreement to the court for approval. This is because the court will perform a much more intensive inquiry into whether the agreement is fair. In that situation, as a general rule, the parties cannot negotiate the terms of the divorce, including issues of custody and visitation, spousal support, child support and payment of legal fees without the judge’s review. To support the fairness inquiry, they must provide the judge with the current financial affidavits and a proposed child support guideline calculation, among other things.
If the judge finds the agreement to be fair, he or she will approve the terms of the agreement and incorporate them into an order of support, in the case of issues related to children, or a judgment of divorce, following which, your divorce is final. In many cases, one or both parties will seek the assistance of an expert, such as a forensic accountant, to value assets, such as a business, or to prepare a pension valuation, etc. in anticipation of presenting the marital agreement to the court. These valuations and calculations will generally be incorporated into the agreement that will then be presented to the court.
An experienced matrimonial attorney will be able to advise you with respect to the entire process, whether in the context of a postnuptial agreement or a divorce.
How It Affects Your Family
A postnuptial agreement may, in fact, help the business partners – it’s still a difficult road, but at least they have a road map. It may also allow them to do some needed planning for the future.
A divorce has an immediate and often profound impact on people’s lives, and most spouses want to do what is best for their children. That is one of the reasons that many couples choose to have a postnuptial agreement instead of a divorce, especially when the children are younger or they still hope that their marriage can be salvaged. They don’t want to disrupt their children’s lives, they don’t want their children to be exposed to the battles that are an inevitable part of divorce, and they don’t want that to be a part of their lives. Sometimes those factors become even more important than money.
There are several issues that those entering into a postnuptial agreement while their marriage is still intact and healthy, should consider:
1. How will it impact their relationship with their kids? A divorce changes children’s lives. It can disrupt everything, from living arrangements, to their schedules, school, friends, to their socialization. Every child will handle a divorce differently. Some kids internalize things; others become angry. In any event, however, children are very sensitive to events in their household. They can feel the tension of marital problems; they can feel the change in the relationship.
While postnups will not address these issues – they will be addressed between the parents. Will parents go out of their way to shield their kids from the marital problems that they are dealing with? Will they stress the importance of keeping the status quo? Will they be honest if they are asked questions? Or, will the entire issue be hidden? This is a very personal, individual decision that each couple must make. It is, however, an important one.
2. How will it impact their relationship with their extended family? Unfortunately, divorce doesn’t just end one relationship, it changes many. Sometimes relationships with the couple’s parents become strained because one party feels badly that their parents are upset. Then, there is the relationship between the parties and the other’s family. Will this relationship become strained? Will people aline themselves with one party? Who will be invited to the children’s birthday parties?
3. What will be the impact on their pending divorce? This goes hand in hand with the two points above, but is a point worth emphasizing. While a postnuptial agreement does not guarantee that a divorce will not happen in the end. It is well known that information once given is not forgotten. If discussions were had about their relationship during the negotiations, will everyone be candid in the future? Are they embarrassed by what has been kept as confidential? Have they, by necessity, gotten too involved with one party? Will that information, or their involvement impact their divorce?
These are all issues that people need to take into account when thinking about whether a postnuptial agreement is right for them and their business and family.
Making Your Decision: Consulting a Professional
Turning to trusted professionals can provide clarity. Lawyers, financial advisors, and therapists can guide the decision-making process and reduce the emotions that often cloud the decision to settle or divorce. A therapist can help individuals or couples navigate their personal emotions that may be driving the decision-making process and to develop effective communication strategies that are imperative for successful negotiation .
A lawyer can help to assess the legal pros and cons of both a postnuptial agreement and divorce by providing insight on the impact that each option may have on their business, children, taxes, or support.
A financial advisor will help process a complete financial picture to help reduce sleepless nights about future money concerns and allow you to focus on making decisions that are best for yourself and your family.
By working with a team of professionals, it allows individuals the opportunity to process their options and make rational decisions that are in the best interest of themselves and their families.