Postnuptial Agreements Explained
Postnuptial agreements are similar to prenuptial agreements, except they are entered into after the marriage. The law views postnuptial agreements between spouses as untimely prenuptial agreements. Thus, it is not inappropriate and, indeed, quite common for a couple to enter into a post-nup assuming
Every State gives postnuptial agreements legal significance except South Carolina, in its recent ruling in Lee v. Lee, 803 S.E.2d 739 (S.C.App.2017). In this case, the couple entered into a postnuptial agreement in order to determine the alimony rights of each to the other upon their divorce. This is a common reason for a couple to enter into a postnuptial agreement. The Court of Appeals for South Carolina, however , held that the State’s law did not authorize such agreements. Id. at 746. However, the South Carolina Supreme Court recently overturned the lower court’s ruling in Mallinckrodt US, Inc. v. Medtronic, Inc., 804 S.E.2d 329 (S.C. 2017). In Mallinckrodt the Supreme Court held that the common law authorized postnuptial agreements provided certain requirements were met. Thus, couples now have the option of executing a postnuptial agreement in the event that (i) a prenuptial agreement was not executed prior to the marriage or the couple does not wish to pathologize their relationship by executing a prenuptial agreement; or (ii) help identify separate property in the event of divorce, inheritance became part of an equitable distribution dispute.
The Legal Process for Reaching a Postnuptial Agreement
A postnup agreement generally starts off like a prenup — both parties voluntarily agree to the terms and conditions of the agreement. However, since you’re already married, there is no requirement for any type of consideration such as an exchange of assets.
In most cases, neither party will be the dependent of the other, so issues like spousal maintenance (alimony) can be cut up easily, as long as the terms are still fair. However, if you have children from a previous marriage or you plan on having children in your new marriage, those issues need to be handled much more carefully. If you end up in court, a judge may look at a split of your assets that puts the health care of a child in jeopardy and strike down your entire postnup agreement because the welfare of the child always trumps all other concerns.
In the end, drafting a postnup agreement follows that same basic flow of drafting a prenup: you negotiate the details, review them with legal counsel and sign the deal.
Once the postnup agreement is signed, most courts will require one more step — ratification. This is essentially a judge’s approval of the agreement. While some disputes are resolved at arbitration or private mediation, ratification is almost always done through the public court system. It’s like finalizing your divorce with a judge. After asking a few questions about the agreement to make sure it’s fair and in accordance with state laws, the judge will sign off and finalize your deal.
Tips for Choosing a Lawyer
When it comes to creating a postnuptial agreement, choosing the right lawyer to draft your agreement is of paramount importance. This individual will provide essential guidance and expertise throughout the process. While you may feel overwhelmed and unsure of whom to turn to in determining your next step, finding and selecting a skilled family law attorney can be simplified by asking a few key questions.
The first thing you’ll want to consider is whether or not your lawyer understands your unique situation. Every marriage is different, and your attorney needs to fully comprehend your circumstances and any challenges you are currently facing or may encounter in the future. Your attorney should be able to identify your needs and what you intend to accomplish with your new agreement.
You’ll also want to select a lawyer who specializes in family law. An attorney who does this type of work day in and day out will have a much deeper understanding of current trends within family law. Furthermore, a lawyer who routinely handles divorce and divorce-related agreements is in the best position to ensure your postnuptial agreement will hold up in court. Many courts will scrutinize these types of contracts, especially if it is being used as evidence in a divorce. For this reason, postnuptial agreements require a careful approach.
In addition to experience, you should also examine the reputation earned by a prospective attorney. A lawyer with a strong reputation—a positive name within the community—will have demonstrated professionalism and care in their work. It’s a good idea to reach out to peers, family or friends for recommendations based on their experiences. You should also examine any testimonials, feedback, and performance measures the lawyer may publish on their website.
Finally, be sure to consider the communication style of a prospective family law lawyer. If you’re the type of person that prefers to take some time to think things through, you don’t want to select an attorney who will continually pressure you to make snap decisions. It’s best to find someone who will respond promptly to phone calls and emails, and one who will continue to keep you informed throughout the entire process.
Negotiating with your Spouse
When negotiating post-marital agreement terms, your goal should be to reach an agreement that satisfies both you and your spouse. Approach this process with a healthy attitude and an open heart, and you will have a much greater chance of reaching a satisfying resolution. When you begin the process of creating a post-nuptial agreement with your spouse, broach the subject in a light and non-threatening way. The most ideal time to talk to your spouse about a post-nuptial agreement is on a lazy weekend, when neither of you have to work. When you have their full attention, educate your spouse about what a postmarital agreement is, and why it is relevant to both of your lives now, as well as in the future. Approach the concept in a logical, unemotional manner. If your spouse sees that the idea puts you on edge, he or she is likely to become defensive in response. This will lead to a contentious situation, which can make the process of creating a post-nuptial agreement frustrating and unsuccessful. All important decisions in life deserve to be made in a calm, rational fashion. Be prepared for your spouse to feel insulted at the suggestion, but don’t take it personally. Remember, this is just a business transaction of sorts, and it does not reflect on your relationship with your spouse outside of the realm of this financial contract. Look at the situation as an opportunity to use this agreement to determine how best to divide your joint assets should you decide to divorce someday in the future. After the initial introduction of the concept of a post-nuptial agreement, spit the details with your spouse. It is a good idea for both partners to write down their assets and liabilities, so you can have a detailed view of what everything is worth. Once this is done, sit down together and draft an agreement that explains how those assets would be divided in the event of a divorce. Then, both partners should sign the eventual draft of this agreement in order to make it legally binding. Though you will inevitably encounter some tensions while negotiating the terms of your post-nuptial agreement, try to keep the discussion respectful and refrain from criticizing your spouse’s ideas and suggestions. This will minimize the chances of a fight, and allow you to keep an open line of communication. Effective negotiation is possible if both partners agree to create a safe environment in which to discuss their concerns and desires without the other taking offense.
Typical Provisions in Postnuptial Agreements
Similar to prenuptial agreements, postnuptial contracts contain various clauses to address concerns and responsibilities between the spouses. These contracts are especially popular among couples who are remarrying and, therefore, have complicated financial records and concerns. Common clauses include discussions on asset division, debt responsibility and spousal support.
One of the most common areas of discussion is property and asset division. The agreement often lists all the assets owned by both parties, then states how the assets will be divided in the case of divorce or death. For instance, the agreement might designate that the husband gets the retirement plan, the wife gets the home and both parties keep their cars .
Also covered in a postnup is the area of debt. When divorcing, if the couple has accumulated substantial debt, the spouse with the more ability to pay the debt can be left with the additional burden. This allows the couple to make agreements outside of the court system concerning debt repayments.
Spousal support is another common area where a postnuptial agreement can be helpful. The couple can agree to the amount of support, how often it will be paid and how long the support will last.
Other clauses can include child custody, financial obligations, business division and more.
Examining the Agreement
A post-nuptial agreement is not simply a matter of drafting the agreement and having it signed—it is critical that both parties are fully represented by their own attorney, have adequate time to review and understand the terms of the agreement, and that any concerns or questions about the contract are dealt with and ultimately resolved before the agreement is considered complete. The review process should be fully open and transparent, allowing for frank discussion and feedback, where needed.
Through this process, final adjustments will be made to the agreement to address any concerns or suggestions by either party and to address any other relevant issues. For example, it may be necessary to make modifications to ensure the agreement is clear, concise, and does not leave any room for differing interpretations. Or perhaps there are specific circumstances either party wishes to account for that have not yet been addressed but are deemed important.
The goal here is to finalize the agreement in such a way as to ensure it is completely agreed upon by both parties, and that once it is signed, you can feel secure that there will be no problems down the road if it needs to be enforced. Both parties need to make sure they clearly understand the terms and sign the agreement with full knowledge of what they are agreeing to. After this review period, both parties should retain copies of the signed agreement for their own records.
Amending Your Postnuptial Agreement
Like any other contract, postnuptial agreements should be reviewed periodically to ensure that they continue to reflect the needs and desires of the parties. Studying the financial provisions in place with an eye towards changing or removing terms that are no longer applicable or that may be causing confusion is a good idea. Life events that signal a need to review your marital agreement include the birth of children, a significant change in job income or career path, the purchase or sale of a major asset, or the realization that one or more changes (resulting in compliance issues) have been made to the spousal responsibilities that, but for an order, would result in a modification of support terms . The question of updating this kind of agreement will often depend upon the particular thrust of the document. For example, if a couple simply delineates the changes made as to spousal roles, the agreement need not change. On the other hand, revision may be advisable periodically. Even if the agreement was only signed just a few years ago or month ago, the contract should be re-examined in light of real life and the inevitable changes – some for better, some not so much – that occur over time.