What is a postnuptial agreement?
Prenuptial agreements are fairly common, but what is a postnuptial agreement?
Providing clarity and certainty for both spouses, this type of marriage agreement contract outlines the responsibilities concerning children and other obligations for the duration of the marriage.
What is a postnuptial agreement?
A postnuptial agreement is a document which defines the terms of a married couple’s financial relationship during and after the marriage.
Covering a range of financial issues, such as the division of assets and debts, spousal support, and inheritance rights, postnuptial agreements can be useful in providing a framework for financial decision-making in the event of a divorce or separation.
This type of contract can help to resolve potential conflicts related to money and property.
What is the difference between a prenuptial and postnuptial agreement?
A postnuptial agreement is similar to a prenuptial agreement, as both contracts protect spouses in the event of a marriage breakdown.
It’s a legal agreement entered into by a couple before they marry that outlines how assets and debts will be divided in case of divorce.
However, a postnuptial agreement is drafted once a couple is already married.
Postnuptial agreements can be useful for couples who did not create a prenuptial agreement before marriage, or for couples that need to make specific changes to their circumstances during their marriage.
Why is a postnuptial agreement important?
Each marriage is different, so what matters to one couple won’t matter to another.
Creating a postnuptial agreement is important for these circumstances:
1. Business assets
A postnuptial agreement can help protect a business by outlining how the business will be valued and divided.
It can also include provisions for how the business will be managed during the marriage.
2. Rebuilding a marriage
If a couple is experiencing financial stress or uncertainty, a postnuptial agreement can be used to help rebuild trust and provide clarity around financial responsibilities and obligations.
By setting out a clear plan for managing finances and addressing any financial issues, a couple may be able to work together to rebuild their marriage.
3. Estate planning
A postnuptial agreement can be part of a couple’s estate planning strategy to outline how property will be distributed upon the death of one or both spouses, and can help prevent disputes among family members.
4. Financial changes
Say one spouse had a gambling problem and squandered joint finances.
The other spouse may want to create a written plan for handling debts and future payments.
5. Only one spouse working
In a situation where one spouse gave up job skills and a salary to stay home and raise the couple’s children, a postnuptial agreement can ensure the nonworking spouse will be taken care of financially.
6. Protecting an inheritance
When one spouse expects a large inheritance, a couple may want to work out who’s entitled to the money in the event of a separation.
For example, if one spouse receives an inheritance during the marriage and wants to ensure that it remains separate from their spouse, they can specify these terms in a postnuptial agreement.
What should be included in a postnuptial agreement?
A postnuptial agreement typically contains the same information as a prenuptial agreement.
You can include the following information in your postnuptial agreement:
- Division of properties
- Distinction of debts and obligations
- Provisions for keeping family property within the family
- Distribution of assets to children from previous relationships
- Estate plans in the event of a will and deed of trust
- Directions for property distribution in the event of divorce.
Although a postnuptial agreement can address various marital financial and property matters, some things can’t be included, such as:
- Any provision that is illegal
- Changes to child support or custody arrangements
- The waiving of a spouse’s right to alimony (in most cases)
- Detailed provisions that encourage divorce, like handing over real estate
- Discussions of personal rights, such as religion, child-rearing, or lifestyle choices.
A postnuptial agreement should not be used as a means of circumventing legal protections that are in place to safeguard the rights of individuals and families.
How to get a postnuptial agreement
To get a postnuptial agreement, you’ll need to hire a lawyer to make the contract legitimate in court.
However, you can draft your own starting point using a postnuptial agreement sample template, like that provided by PandaDoc.
During the course of getting a postnuptial agreement, both parties need to disclose all of their assets and debts, such as details of bank accounts, investments, real estate, and other financial assets.
How much does a postnuptial agreement cost?
The cost of a postnuptial agreement can vary depending on different factors, such as the complexity of the agreement, the state laws, and the lawyer’s hourly rate.
If both parties are aligned on the agreement terms, and the elements are fairly straightforward, the cost can be quite low. However, complex and time-consuming postnuptial agreements can be costly.
And, of course, hiring separate lawyers increases the costs.
Discuss the cost with a postnuptial agreement lawyer before going ahead with a postnuptial agreement to ensure that you understand the fees involved.
Obtain quotes from several lawyers to compare their fees before making a decision.
Protect your assets and your relationships with a postnuptial agreement
Talking about finances before marriage can be daunting for many couples.
If you didn’t have such a discussion before walking down the aisle, a postnuptial agreement may be the answer.
Postnuptial agreements are not only for wealthy partners; they also provide protection for spouses in other circumstances.
For instance, if you may not be able to afford alimony.
While you need to have a lawyer present to make your agreement legitimate in court, you can create your own agreement without a lawyer (and for less expense!).
That’s just one thing PandaDoc could help you with.
To find out more about the personal and business agreements PandaDoc can assist you with, why not sign up for a 14-day free trial?