What Is a Postnuptial Agreement? | Family Finance
Postnuptial agreements, the less common but equally powerful cousin to prenuptial agreements, can be highly customizable to meet a couple’s unique needs.
The document serves as a tool of protection, with either spouse standing to benefit. In recent years, attorneys report an increase in the number of mothers paying child support the number of women being responsible for alimony, according to a 2018 survey by the American Academy of Matrimonial Lawyers. And a 2010 survey confirmed that the vast majority of attorneys are noting an increase in clients seeking prenuptial agreements.
But after getting engaged, wedding planning can be overwhelming no one’s rushing to talk about the division of assets before walking down the aisle. For couples who wish they’d gotten a prenuptial agreement or who have had a change in financial circumstances since getting married, a postnuptial agreement might be the way to go.
What Is a Postnuptial Agreement?
A postnuptial agreement allows a married couple to protect themselves their assets in the case of a future divorce.
“Postnuptial agreements are less common than prenuptial agreements but are becoming more popular,” Arthur D. Ettinger, a partner chair of Greenspoon Marder’s New York Matrimonial Family Law group, wrote in an email. “Spouses might wait until after their marriage to create a postnuptial agreement for a variety of reasons or even because they wish they had made a prenuptial agreement from the outset. A postnuptial agreement can also modify terms in a previously executed prenuptial agreement.”
What Is a Postnuptial Agreement vs. a Prenuptial Agreement?
The two documents can achieve similar goals. However, Joel W. Anders, an attorney in Washington, D.C., says the terms in a postnuptial agreement can be a bit tougher more realistic than those included in a prenup.
“People are now married they have a little more insight into the dynamics of their lives. They have stronger opinions on what they’d like to see happen if they go their separate ways,” Anders says. “With the postnup, you’re already into a reality check. Some of the gloss has worn off, day-to-day life is different from the vision of what day-to-day life might be like.”
Reasons to Get a Postnuptial Agreement
Postnuptial agreements can serve many purposes. While certainly not always the case, one more widely known reason to get a postnuptial agreement is in cases of marital issues.
“If there is infidelity, it might give people an incentive to get a postnuptial agreement,” says Gabriela O. Asrow, a partner at Hoffenberg & Block in Chicago. “It gives them financial incentive protection if it occurs again or the peace of mind that they’ve already figured out how they’re dividing up their assets upon the divorce if the infidelity occurred again.”
“Another reason is that it doesn’t make sense for the parties to get divorced financially – either it costs too much or it makes better sense for them to stay married so they can file taxes jointly, but the marriage is essentially over they’re living separate lives,” she adds.
Other common reasons to pursue a postnuptial agreement might include:
- Regretting not having had a prenuptial agreement. Maybe you ran out of time before the wedding, or maybe the realities of marriage have begun to sink in. A postnuptial agreement can work like a prenuptial agreement for those who wish they’d had one.
- One spouse plans to open a business. A postnuptial agreement can protect the business any business partners.
- Financial circumstances have changed. Maybe one spouse became financially irresponsible during the marriage, or maybe one spouse won the lottery. Whatever the case, a postnuptial agreement can put plans on paper for carrying debt future payments.
- One spouse stopped working during the marriage. In the case of a future divorce where one spouse gave up job skills a salary to stay home raise the couple’s children, a postnuptial agreement can ensure the nonworking spouse will be taken care of.
- In cases of prior children. Postnuptial agreements can work as an estate planning tool to pass assets on to children from previous relationships.
- It’s time to make an estate plan. More broadly, postnuptial agreements can help achieve a range of estate planning goals.
What Is Typically Included in a Postnup?
Each postnuptial agreement is different can be tailored for each couple.
The agreement typically includes decisions about each spouse’s assets, alimony maintenance expectations, plans for other payments like the other spouse’s legal fees child support.
The physical document can be three pages long, covering just the basics, or 30 pages long, covering a range of scenarios, Anders says.
How Do I Get a Postnup?
Some states require that each spouse be represented by a different attorney, so it’s important to understyour state’s requirements then find the correct representation.
Prospective clients can expect to provide a list of all of their assets to their attorney then go through discussions about goals concerns.
Experts say a prenuptial or postnuptial agreement can be useful in the majority of marriages, but the first step is talking with an attorney to see if such an agreement will achieve your goals.
“A postnuptial agreement might be appropriate for anyone,” Asrow says, “they just need to talk to an attorney to see if it would suit their needs.”