What is a Postnuptial Agreement?
What is a Postnuptial Agreement?
In the realm of family law, the terms "postnuptial agreement" and "prenuptial agreement" commonly arise in discussion, yet they often confuse the uninitiated. To clarify, the main distinction between a postnuptial agreement and a prenuptial agreement lies in the timing of their execution. Prenuptial agreements—a topic deserving its own detailed exegesis—are finalized before marriage. On the other hand, postnuptial agreements are executed after the marriage has commenced, typically in response to financial planning concerns or during a juncture in the marriage trajectory where the couple feels the need to set forth terms for distribution of assets and debt upon divorce or death.
The motivation behind a postnuptial agreement can be any number of things: second marriages that require an early discussion regarding potential estate issues; instances where parties undertake a relocation that might affect spousal support or child support obligations; financial windfalls for one or both parties resulting in an increased concern over how those assets may be treated in a future economic bifurcation; an effort to stave off divorce that seeks to address underlying issues or redistribute assets; or—a trigger for many people examining the issues in a postnuptial agreement—an infidelity that may increase a party’s concern over a future divorce settlement.
In most cases though , the impetus for a postnuptial agreement is a less dramatic, yet no less thought-provoking reality that forces the parties to examine the current state of their marriage and the potential outcomes of a divorce.
Like more traditional prenuptial agreements, a postnuptial agreement will address the equitable division of the parties’ assets and debts in the event of a divorce, as well as issues such as alimony, health insurance, college contributions and/or retirement contributions. A postnuptial agreement—even one that is contemporaneously entered into with a separation agreement—can be integrated along with the separation agreement into a final judgment of divorce to replace the need for a more lengthy equitable distribution litigation.
Advantages of a Postnuptial Agreement
A postnuptial agreement can be a powerful tool for individuals seeking to secure their assets and protect their interests during a marriage. By establishing a clear, legally binding framework for how assets will be divided in the event of divorce or death, postnuptial agreements can provide financial security and peace of mind to spouses.
One of the primary benefits of a postnuptial agreement is that it allows couples to make decisions about property division and other financial matters while they are still on good terms. This removes the need for potentially costly and contentious negotiations in the future. Moreover, a postnuptial agreement can help protect a spouse from financial harm in the event of divorce. For example, couples with significant assets may want to ensure that their pre-marital assets are protected in the event of a divorce. A postnuptial agreement can help to accomplish this objective.
In addition to asset protection, a postnuptial agreement can help prevent future conflict in a marriage by establishing clear guidelines for resolving disagreements related to finances. This can be particularly beneficial in blended families, where step-parents may have different views about the division of assets or the financial support of children from previous marriages. In such cases, a postnuptial agreement can help ensure that each family member’s voice is heard and that all parties are in agreement before problems arise.
Ultimately, the decision to create a postnuptial agreement should be made in consultation with a qualified family law attorney. If you are considering a postnuptial agreement, a knowledgeable lawyer can help you understand your options, educate you on the potential costs and benefits of entering into an agreement, and assist you in drafting and negotiating the terms of your agreement.
Key Components of a Postnuptial Agreement Form
In a postnuptial agreement, the agreement can be broad or narrow in scope. However, there are some essential elements that should be included in a postnuptial agreement form, such as:
- Full and Fair Disclosure: Both parties should make a full disclosure of all financial assets and liabilities. A postnuptial agreement that does not include a full and fair disclosure can be subject to being set aside or deemed invalid.
- Statement of Rights: A statement of rights is an integral part of a postnuptial agreement. Under Massachusetts G.L. c. 208, section 6, a fair and reasonable general statement of each party’s rights must be made in the agreement. For example: "The parties hereto give up their respective rights to vote on any matter, except pursuant to any majority vote at a duly called meeting of unitholders."
- Children: In a postnuptial agreement form, you must generally include language that specifically states the husband and wife shall contribute to the care, health, welfare, and education of any minor child of the marriage to the extent required by law. In Massachusetts, there is case law that when entering into a marital agreement, such as a postnuptial agreement, the children of the marriage are to be given consideration. For instance, in the case of Rosenthal v. Rosenthal, 71 Mass App. Ct. 78 (2008), the court overturned a postnuptial agreement because it was determined to be too heavy of a burden on the children of the marriage.
- Division and Waiver of Rights: You can state the property that each party possesses or shall come into possession in the future. You would also waive any alimony rights. Specific language should be used for waiver of alimony rights, such as: "Each Party knowingly, freely, and voluntarily releases, remits, and cancels forever any claim that he or she now has or may hereafter claim to have to support by way of a judgment for alimony or for separate support under G.L. c. 208, sections 13 through 26, as now or hereafter amended." However, you cannot waive any rights of child support.
Legal Aspects of Postnuptial Agreements
There are certain legal requirements that must be met for a postnuptial agreement to be valid and enforceable in California. It must be in writing and signed by both spouses. The parties must sign the agreement voluntarily. While there is no requirement for the agreement to be notarized, a notary can help authenticate the parties’ signatures for admitting them into court or recording.
Under California Family Code section 1615, a postnuptial agreement is not enforceable if the spouse against whom enforcement is sought proves any of the following: In addition, California does not allow spouses to contract away their right to child support or custody. No matter what the spouses agree to in their written agreement, if either spouse seeks child support or child custody, the court must consider the child’s best interests in reaching a decision, and may override the couple’s agreement if it is not in the best interest of the child.
Creating a Postnuptial Agreement Form
The drafting of a postnuptial agreement form is very similar to that of a prenuptial agreement. The primary difference is that a postnuptial agreement is entered into during the marriage, whereas a prenuptial agreement is entered into before marriage. As a general rule, postnuptial agreements must be in writing, signed by both parties and notarized. However, the parties to a postnuptial agreement may include any provision that would be permissible in a prenuptial agreement that is not void as against public policy .
Although postnuptial agreements are more flexible than prenuptial agreements because they are not entered into before the marriage occurs, if you and your spouse have determined that you wish to enter into a postnuptial agreement, it is best to involve a competent family law attorney in the process as early as possible. The help of a qualified family law attorney at the time of drafting the postnuptial agreement form is critical especially in complex cases where there is considerable property to divide, large amounts of debt or children from a prior relationship.
Common Errors in Postnuptial Agreements
Error 1: Failing to Disclose Financial Assets and Debts
One of the major reasons courts will fail to enforce postnuptial agreements is because one or both parties failed to disclose the full extent of their financial assets and debts. If either party makes outcome determinative disclosures in contracts and then fails to make equally clear disclosures of all of their other assets, a court might find that such behavior was fraudulent, and rescind the agreement.
Error 2: Using a Standardized Form
As we mentioned in our article on the different forms of postnuptial agreements, these contracts are unique to each party. The template you use for a pre-nup can be reused to create a post-nup. However, some people try to use the exact same form as their pre-nup for their post-nup. Any form that was created for a pre-nup might not be suitable for a post-nup already signed. In addition, when using a form the parties may not have answered all of the critical questions required for a post-nup.
Error 3: Neglecting to Comply with State Requirements
Each state has its own requirements for postnuptial agreements. You should always work with an experienced attorney to ensure that your post-nup fully complies with your state laws.
Error 4: No Separate Counsel
In most states, post-nups aren’t as strict as pre-nups regarding separate counsel. However, it’s a good idea for all parties to work with separate counsel so that it’s clear that the post-nup wasn’t created under duress or coercion.
Edit or Revoke a Postnuptial Agreement
Just as in the case of prenuptial agreements, postnuptial agreements can be modified, or even revoked after they are executed by written mutual agreement of the parties. As with the drafting and execution of a new postnuptial agreement, to be enforceable, such modifications must be made with the formalities required by law. In California, that means that the modifications must be in writing, signed by the parties and attested by two witnesses. However, both parties cannot subsequently modify or terminate such agreements without the consent of the other . (Family Code section 1695(d).) Of note, pursuant to California Family Code section 1615, there is a five year statute of limitations on actions for the enforcement of premarital and postnuptial agreements. Therefore, no action may be filed to seek enforcement of a postnuptial agreement without the prior filing of an application for leave of Court to file such an action upon a showing of good cause. The good cause determination is to be made without a hearing.