INTRODUCTION TO POSTNUPTIAL AGREEMENTS

Every couple who marries has a different perspective on whether a prenuptial agreement is a good fit for their situation. Though many people could benefit from such agreements before marriage, most couples presume they will never divorce and therefore do not need one. This does not always turn out to be true. Should the marriage end, the divorcing couple may wish they had negotiated a prenuptial agreement. But is that the end of the story? Is it too late? Hardly so. Read on!!

POSTNUPTIAL CONTRACTS: “WHAT’S IN IT FOR ME?”

Fortunately, thoughtful families who reconsider their situation after marriage — and without a divorce on the horizon — have an underused option to consider: A postnuptial agreement (also called a “mid-marriage” agreement).

A postnuptial agreement can be used to address the same matters as a prenuptial agreement– except it is entered after the couple is married. It can also be used to update a prenuptial agreement.

An oft-cited reason for entry into a postnuptial agreement, certainly not the only one, is a party’s switch to a fulltime parenting role after the birth of a child. Regardless of which party fulfills that role, it is a good time to review work-at-home circumstances and what happens to the newly dependent spouse if the marriage does not survive.

The ramifications extend beyond changing spending habits to account for only one income. Since the time during which a parent is home with the kids often coincides with the period of greatest career advancement, that decision can have a financial impact far into the future, even after the children are grown and a stay-at-home parent returns to work. Entering a postnuptial agreement can address this issue and make sure that both parties will enjoy financial equity.

Some couples use a postnuptial agreement to define and determine financial responsibilities for jointly or separately maintained property. Some use it to establish marital roles and responsibilities, either generally or specifically. We do not recommend using a postnuptial agreement to create a list of chores, or to determine matters that are, in some sense, minute details. Legal documents should be used carefully and wisely, and good lawyers will encourage parties to create legal responsibilities only when they are truly needed. Matters of lesser magnitude can be handled by a deliberately unenforceable house contract, if the parties want one.

A properly drawn postnuptial agreement can help parties eliminate, reduce, or mitigate future economic and social disagreements, thereby possibly averting or buffering a later separation or divorce.

Parties have the option of retaining a neutral professional to mediate the postnuptial agreement — just as they could have done with a prenuptial agreement. This model reduces friction and upset, because the parties are not receiving separate coaching and legal advice. Rather, they work together cooperatively, constructively, and in a problem-solving way, followed by the final advice of separate counsel. This process can serve the parties very well.

In Part 2, I will discuss a Case Study in Postnuptial Agreements and describe some important caveats and takeaways for your consideration.