Postnuptial Agreement - Kit

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Postnuptial Agreement – Kit

This kit includes a sample agreement and general information that will assist you in preparing a postnuptial agreement.

While prenuptial agreements are a well known and almost universally accepted legal device used by couples in anticipation of their marriage to plan for death or divorce, postnuptial agreements can also be helpful as a means of setting up such a plan. In recent years, both law and popular practice have become more amenable to these kinds of agreements, and as a consequence they have gained a significant amount of attention as a viable and potentially valuable family planning component.

Included in this kit is a sample postnuptial agreement, as well as some background regarding these types of agreements that should help ensure that your agreement is both valid and binding.

Postnuptial Agreement – Information

In recent years, postnuptial agreements have gained popularity among married couples seeking a mechanism for predetermining the disposition of their property in the event of death or divorce. Traditionally, husbands and wives were forbidden from contracting with each other, making it impossible to reach these types of arrangements. But with changes in the law in the 19^th and 20^th centuries, these prohibitions have been largely removed, and postnuptial agreements have become a viable counterpart to the prenuptial agreement.

Why a Postnuptial Agreement?

There are several reasons why a couple might wish to adopt a postnuptial agreement. For example, a couple that did not sign a prenuptial agreement before marriage may later determine that they want to have some sort of financial plan in place in the event of death or divorce. Additionally, a major change in the financial circumstances of the couple, such as a major career change or inheritance, may alter the financial landscape, requiring a change to the terms of the couple’s existing prenup to reflect their current wishes.

While a postnuptial agreement may not be as strong of an option as a prenup (see below), it still may be better than having no agreement at all. Without such agreements, the state may either grant each spouse one-half of the marital assets (if they live in a community property state¹) or divide the assets based on an “equitable distribution” (if they live in a non-community property state). Any non-traditional or specific allocations that you wish to make should be covered by either a prenuptial or postnuptial agreement to avoid the standard distributions.

Prenuptial vs. Postnuptial Agreement

Given their long history, prenuptial agreements are generally given different treatment by the courts than are the newer and less established postnuptial agreements. Many states have adopted some version of the Uniform Premarital Agreement Act (UPAA), making the law very clear in terms of how prenuptial agreements in those states will be interpreted by a reviewing court. Postnuptial agreements, in contrast, generally do not have any statutory counterpart to the UPAA, and in many states are interpreted according only to common law. Consequently, a court’s interpretation of a postnuptial agreement can be difficult to predict.

A reviewing court will generally apply a different level of scrutiny to a postnuptial agreement than it would to a prenuptial agreement. There is an assumption that prior to marriage, the parties are more likely to have equal footing in terms of bargaining power, while after marriage, it is more likely that one party may be able to coerce the other. Consequently, reviewing courts are more likely to invalidate portions of a postnuptial agreement (or potentially the entire agreement) where it believes that the agreement is not a fair and reasonable representation of the wishes and interests of the parties.

Enforceability

While interpretation and enforcement of a postnuptial agreement may be unpredictable, there are steps you can take to give your postnuptial agreement the greatest chance of being enforced. In general terms, a court will review the agreement according to several criteria.

• Full Disclosure: It is vital that both parties make full and complete disclosures of their assets and liabilities. A failure to be forthcoming in this respect can lead to a judge’s determination that the entire agreement was reached unfairly or through misrepresentation, and that it should be set aside in favor of a court-determined distribution of property.

• Separate Counsel: A strong indicator of the fairness and reasonableness of a postnuptial agreement is that both parties were advised by separate and independent attorneys. Separate and independent means that both parties have their own counsel, and that neither attorney is beholden to or influenced by the opposing party (i.e., a wife may not be represented by an attorney working for her husband’s law firm).

• Fairness: First and foremost, a court will review a postnuptial agreement to ensure that the actual distribution of property is fair. For example, any agreement that leaves one spouse with a disproportionate amount of the couple’s assets, while leaving the other spouse with little or nothing to his/her name would likely be invalidated by a reviewing court.

• Child Support: Most courts will automatically reject certain types of provisions in postnuptial agreements as unfair. Provisions that limit the amount of child support a spouse would have to pay in the event of divorce are almost universally rejected by courts. It is therefore highly advisable not to include such provisions in your postnuptial agreement, so as to avoid creating a perception of unfairness that could color a reviewing court’s reading of the entire agreement.

It is important to note that enforcement of postnuptial agreements varies from state to state. You are advised to consult with a competent family law attorney in your state to determine the particular rules of interpretation of enforcement applicable under that state’s law.