Today, everyone knows that many marriages end in divorce. Some married couples plan for a worst case scenario with a postnuptial agreement, which is similar to a prenuptial agreement, but it's made after the wedding.
Each state has its own requirements for postnuptial agreements, so be sure to check your state’s laws. Generally, a postnup must meet the following criteria:
- written—an oral agreement dividing marital assets isn’t enforceable
- signed—both spouses have to sign the agreement and should have it notarized
- voluntary—one spouse can’t threaten, deceive, coerce, or physically force the other spouse to sign the agreement: If that occurred, the contract isn't enforceable.
- fair—a postnuptial agreement can’t be extremely one-sided or unfair
- full disclosure—both spouses must disclose information about their assets, income, debts, and property.
Postnuptial agreements are growing in popularity according to an American Academy of Matrimonial Lawyers 2015 survey. But this doesn’t mean that a postnuptial agreement is right for every couple.
When to Get a Postnuptial Agreement
Many couples contemplate a prenuptial agreement long before they walk down the aisle. Unlike a prenup, a postnuptial agreement happens after a couple is married. One spouse’s bad behavior or out of control spending during the marriage might prompt the other spouse to ask for a postnup. Even when the marriage is going well, couples may use a postnuptial agreement to define things, such as each spouse's separate property, financial responsibilities, or rights to the family business.
Postnups can address the same kinds of issues that would normally be in a prenuptial agreement, including:
- which spouse keeps certain property (property division)
- which spouse pays alimony, including how much and for how long
- which spouse is responsible for marital debts, like mortgages, credit cards, and loans, and
- how to divide property and assets if one spouse dies during the marriage
When Should I Avoid a Postnup?
Postnuptial agreements aren’t in every spouse’s best interests. For example, a lower-earning spouse may receive less property and alimony in a postnuptial agreement than if the case went to trial. A rich spouse, who wants to try and avoid alimony or dividing the family business, may try to use a postnup to protect income and assets in the future.
For Heidi Klum and Seal, a postnuptial agreement helped them avoid a nasty divorce battle, but Seal may have gotten the short end of the stick. The couple’s agreement reportedly prevented Seal from claiming rights to Heidi’s $70 million net worth. Seal was the lower-earner—given his net worth of $15 million. While the postnup allowed the famous couple to avoid a lengthy trial, it may have prevented Seal from getting what he would have been entitled to in the divorce.
What Should I Do Before Signing a Postnuptial Agreement?
If your spouse’s attorney has prepared a postnuptial contract for you to sign, be sure to review the agreement with your own lawyer. Your spouse’s lawyer can't advise you because it would be a conflict of interest. You should hire an attorney to review the agreement and tell you whether its fair. In some states, including California, courts are unlikely to enforce a postnuptial agreement where only one spouse was represented by an attorney.
Before agreeing to a postnup, read the agreement carefully. It’s easy to miss important terms if you just skim the contract. You can’t get out of a postnup by claiming you didn’t read it. If you're still uneasy about signing a postnup or don’t understand what you’re agreeing to, talk to your attorney about what's tripping you up. You can always negotiate the terms of a postnuptial agreement before signing, but once you’ve added your signature, it might be too late.
Will a Court Enforce My Postnuptial Agreement?
Most postnups withstand a courtroom challenge, which means you should expect a judge to enforce your agreement. But, like any contract, a judge will throw out a postnup that doesn't pass legal muster.
In certain states, like California and Utah, postnuptial agreements are sometimes difficult to enforce. In these states, once you're married, you have a heightened duty to your spouse with respect to your finances, property, and assets—you must treat each other the same way business partners treat one another under corporate law. Since postnuptial agreements are entered into between spouses—who have higher duties to one another than fiancés—judges will review these contracts with a fine-toothed comb and expect to see that the spouses made complete and total disclosures of all financial information to one another before they signed their agreement: any issues here will be fatal to the contract. You can avoid pitfalls by hiring your own attorney and encouraging your spouse to get a lawyer as well.
A postnup can’t cover things like child custody or child support, it can't encourage divorce, and can’t require a spouse to commit an illegal act or fraud. And if the agreement is unclear, extremely unfair, or was signed under duress (threats of violence or harm), a judge won't enforce it.
In the case of billionaire Frank McCourt and his wife Jamie, their postnuptial didn’t survive judicial scrutiny. The McCourts signed a postnuptial agreement at about the same time that Frank bought the Los Angeles Dodgers, the baseball stadium, and surrounding land. Jamie McCourt also owned several luxury homes. According to the McCourt’s postnuptial contract, the couple agreed that in the event of a divorce, Frank would keep the Dodgers and Jamie would take the homes.
During a lengthy and expensive divorce battle, Frank’s lawyer testified that he changed the agreement after Jamie had signed it. Under the original postnup, Frank and Jamie were supposed to share ownership of the Dodgers and the land. Because of the conflicting terms, the divorce court held that the entire McCourt postnuptial agreement was invalid.
Questions for Your Attorney
- How much will you charge to write a postnuptial contract?
- How much will it cost to review my spouse’s proposed postnuptial agreement?
- Is it legal for my spouse to offer me money in exchange for signing a postnuptial contract?
- If we sign a postnuptial contract in one state and then move to another, will the agreement still be valid?