Defining a Postnuptial Agreement
A postnuptial agreement is not much different from a typical prenuptial agreement; except for one key aspect – the timing. While a prenuptial agreement is drafted before the marriage, a postnuptial agreement is drafted after the marriage has taken place. Like a prenuptial agreement, this type of agreement acts as a hybrid between a contract and a will. A well-written postnuptial agreement regulates financial terms, such as the division of property during a divorce, spousal support amounts, management of marital assets during the marriage and even the provision for medical coverage after a divorce.
What can be included in the agreement? The definition of separate versus community property, a description of the separate property, a definition of the commingling of the property, a list of community property assets, allocation of assets, money, real estate, retirement accounts, pension plans, debts, education and living expenses, as well as the budget, goals, and general finance information . It should include a premarital inventory, a well-defined list of assets and debts (including the date of acquisition, value and specific details such as motor vehicle identification numbers, addresses, etc.), as well as include other information or terms, and it should be fully disclosed to all parties involved.
The agreement goes into effect either upon the signing of the parties or when another outside event takes place, such as a child’s birth, the acquisition of a particular property, or the occurrence of a contingency. This agreement is subject to the laws of the state in which the parties reside at the time it takes effect.
State Law Requirements
A postnuptial agreement is generally valid in Washington State as long as it complies with several conditions. The same basic conditions for a postnuptial agreement are in effect in all states, but the laws regarding postnuptial agreements vary by state. As indicated above, Washington does allow postnuptial agreements.
Just like the premarital agreements above, a postnuptial agreement must be in writing and signed by the parties. In addition, the parties to the marital agreement must have entered into it voluntarily and not under any duress. One of the spouses may not be taking advantage of the other spouse, nor can one of the spouses find the terms so "unlucky" or unfair that it amounts to overreaching. Finally, there can be no fraud or misrepresentation involved. One spouse cannot hide or conceal the existence of property or income to the other party.
Advantages of a Postnuptial Agreement
One of the primary benefits of entering into a postnuptial agreement is that it provides you and your spouse with peace of mind. When children are involved, a postnuptial agreement can establish in advance the ground rules to be followed in the event of a divorce. For example, it may be harder to reach a parenting agreement if the parties haven’t reached an agreement prior to filing for divorce. The agreement also eliminates uncertainty and potential conflict over important matters such as financial assets, business ownership and guardianship of children.
Another major benefit of a postnuptial agreement is that it prevents the local courts from deciding issues of property division, spousal support, and premarital agreements. A comprehensive postnuptial agreement provides greater peace of mind, avoids future litigation, and allows the couple to decide for themselves who keeps what, how they share children’s costs, and other important issues.
Postnuptial agreements can also be advantageous for contracts with third parties, particularly family businesses and businesses owned by third parties and/or investors. A third party business owner can set any rules that they believe are necessary to protect business or enforcement of an agreement signed by both spouses.
In general, a postnuptial agreement can be a workaround for numerous requirements of Washington’s divorce laws.
Typical Provisions in Washington Postnuptial Agreements
Washington state postnuptial agreements are similar to prenuptial agreements. Like prenups, there are two categories of provisions typically included in a postnup: (1) spousal support and/or property division; and (2) separate and community property classifications.
For example, if a couple entered the marriage with separate property (property owned before the date of marriage) and/or acquired separate property during the marriage by gift or inheritance, a couple can designate that property as separate property. Once property is classified as separate property, the other spouse has no claim to it. A postnuptial agreement is also used to designate what property will be considered community (marital property).
A postnuptial agreement can be even more specific, designating the property rights for future property, whether it be an inheritance from a third party, or even acquired through effort (e.g., salary earned). It can designate the percentage share each spouse would be entitled to if the communitization of property occurs.
Unlike a prenup, which is prepared before marriage, a postnup can delineate property rights for situations that might occur after marriage. For example, consider the following clause: "If at any time during this marriage Husband becomes employed, he shall keep all wages he earns, including raises, stock options, bonuses, and other forms of compensation." This clause designates that the owner of the business (or those who are employed by that business) would retain that as their separate property.
In the realm of spousal maintenance (sometimes referred to as spousal support/palimony), a postnuptial agreement can be designed to forego spousal support in the future or limit and define the duration and/or amount of spousal support.
Sometimes a spouse may agree in a postnuptial agreement that they will prefer the other spouse to make decisions on behalf of an incapacitated husband or wife. This can occur with respect to financial issues, which, in turn, can avoid the necessity of Guardianship, which can be cumbersome. Please keep in mind that the legal requirements of a durable Power of Attorney, which have different legal rules from a postnuptial agreement.
In other instances, the terminology of a postnuptial agreement includes clauses of similar or identical provisions to a prenuptial agreement. These provisions can address fine-tuning certain areas of a couple’s property division in the event of divorce and/or fill in the gaps that are not covered by Washington state law.
Couples may elect to include clauses such as:
• Choice of law provision
• Choice of venue
• A sunset clause
• A matching provision (if one spouse has better credit)
• A waiver of the statute of limitations
• An indemnification provision
• No contest clauses
• A waiver for a jury trial
Keep in mind that a postnuptial agreement can be a binding contract, which cannot violate the law and can be set aside by a court for lack of capacity, improper disclosure, duress, or fraud.
It is important to work with family lawyers when including these clauses and provisions to ensure that the agreement will be enforceable if it is ever challenged.
Creating a Postnuptial Agreement
Here are some steps for drafting a postnuptial agreement, but first, consider the following: You should carefully seek legal guidance. Creating a mutually beneficial agreement can be a challenge; an experienced family law attorney can help you. Focus on your needs. Because Washington law doesn’t mandate the contents of a postnuptial agreement, you could include any provisions that you believe benefit you. Having this flexibility can help prevent future conflicts with your spouse. Be transparent. When creating a postnuptial agreement, make sure you fully disclose your financial information to your spouse (and vice versa), so that everyone is on the same page. When you have two spouses who are clearly aware of the other’s financial circumstances , disputes are far less likely to occur. In Washington state, you and your spouse can determine the contents of the postnuptial agreement ahead of time without court intervention. This means that the document can become legally binding as soon as each party reviews the terms and signs it. Because both of you must sign the document in order for it to be legally binding, you will need to make arrangements to meet with your respective attorney to review the document independently. While Washington state law does not explicitly require it, many attorneys recommend having a notary public onsite at this time. Once both parties have signed the postnuptial agreement, you should either file it with the Clerk of the Court or simply keep it securely stored until a divorce becomes necessary.
Common Issues and Considerations
One potential issue with Washington State postnuptial agreements is that although they are recognized by the state’s Revised Code, Washington courts have had limited experience with them. As a result, the state’s body of case law pertaining to them has not yet developed. Familiarity with the law can sometimes contribute to better outcomes. In general, agreement advantages include the ability to protect separate assets acquired prior to marriage as well as property or assets acquired jointly during the marriage. Other provisions that may be included in a postnuptial agreement pertain to spousal support and the division of property in the event of divorce or legal separation. The more specific the agreement is, the more likely it is to be enforced by the court.
When creating a postnuptial agreement, both spouses must be fully informed of their spouse’s financials. This includes assets and liabilities. Relevant documentation may include bank account statements, income tax forms or business ownership records. Additionally, the postnuptial agreement may not be the proper venue for provisions that pertain to minor children. While the document may contain a child support provision that addresses what’s to occur with those fees if the couple later divorce, it may not be the right place to include provisions that address the parenting plan. In Washington State, the parenting plan must be created separately and outside the realm of the postnuptial agreement.
When to Amend or Revise a Postnuptial Agreement
When a couple enters into a postnuptial agreement (on this blog we also call them marital agreements or marital settlements), they believe they have resolved issues that are critical to their marriage in the future. However, circumstances change. Relationships change. The rearing of children changes. The financial circumstances of the parties may change. The amount of time in the marriage may change. Some couples find themselves no longer in love and living separate lives, but still needing help understanding how the agreement affects their legal rights. They may need to make decisions about their own financial future and, perhaps, whether to stay married.
A well-drafted postnuptial agreement will anticipate changes and provide for them. For example, there may be a provision requiring a modification of terms when the youngest child reaches a certain age or when the parties’ martial income reaches a particular level.
However, when the parties’ life circumstances dramatically depart from the reasonable contemplation of the parties at the time of signing, it may be necessary to revisit the terms of the postnuptial agreement.
On the more benign side, perhaps the marital income has increased significantly or maybe the children have exhibited developmental challenges that require a reevaluation of parental roles and responsibilities. On the more serious side, perhaps a spouse has experienced a disabling medical condition or the parties have discovered the other has engaged in extramarital sexual relations. These situations, among others, may prompt a careful reevaluation of the terms of the postnuptial agreement, or even the decision to no longer be married at all.
We have substantial experience assisting clients with the review and reassessment of postnuptial agreements whether for purposes of reaffirming and upholding the terms of the agreement or for the purpose of drafting a revision.
Seeking Legal Guidance and Assistance
Couples seeking legal assistance and additional resources for creating a postnuptial agreement in Washington State have a variety of options available to them. One of the first steps is to consult with a qualified family law attorney who has experience in drafting and negotiating postnuptial agreements. These legal professionals can help guide couples through the process, ensuring that their rights and interests are protected.
In Washington, the Washington State Bar Association (WSBA) provides a Lawyer Referral Service, where individuals can be matched with qualified attorneys based on their specific legal needs. This service can be accessed online or by phone. In addition, the WSBA offers resources and information about family law in general, and couples can access these materials on their website.
The Washington State Department of Social and Health Services (DSHS) also offers resources relating to family law . While the DSHS deals primarily with cases involving child custody and support, it does provide links to various law-related resources.
For couples who have limited budgets, there are a number of legal aid organizations that provide free or low-cost legal assistance. Columbia Legal Services, Northwest Justice Project, and Five Corners Family Law Clinic for those residing in King County are just a few examples of legal aid organizations that help low-income individuals in Washington State.
Online resources are also available. The Washington LawHelp website provides free, unbiased legal information and self-help materials on a wide range of topics, including postnuptial agreements. While not a substitute for legal advice, these resources can help couples understand the issues and considerations involved in creating an agreement.
By leveraging these resources, couples in Washington State can navigate the complex process of drafting a postnuptial agreement and ultimately ensure that their financial and personal interests are safeguarded.