What is a Postnuptial Agreement? Jocelyn M. Russo

No one enters a marriage with the thought of getting divorced; however, the reality is that 50% of all marriages in the United States will eventually end in a legal separation or dissolution.  A postnuptial agreement can help protect your property in the event of a divorce, as well as during the marriage.

While most individuals are familiar with a pre-marital agreement – an agreement executed between prospective spouses prior to marriage and effective upon marriage, most individuals are not familiar with a postnuptial agreement. A postnuptial agreement is executed between spouses or partners during the marriage and affecting marital rights and obligations incident to an ongoing marriage.

Postnuptial agreements are legally enforceable contracts.  Like a premarital agreement, a postnuptial agreement can outline how a couple’s income and assets are to be addressed (and divided) in the event of a legal separation or divorce. A postnuptial agreement can also address the character of assets even without a divorce, impacting one spouse’s obligations to another with respect to specific property or money. However, several requirements must be met before the Court will enforce a postnuptial agreement.

A postnuptial agreement must be a writing; both parties must voluntarily enter said agreement, and both parties must provide a full and accurate disclosure of assets and debts.  Although not required, it is highly recommended that each spouse receive separate legal counsel from their own lawyer, to ensure that both parties fully understand the legal terms of the agreement.

A postnuptial agreement must be negotiated and drafted with great care. Under California law, married couples owe one another fiduciary duties.  Changing the character of property during marriage can raise a presumption of invalidity if one spouse is disadvantaged by the change.  To maintain the validity of a California postnuptial agreement, it is necessary that a spouse who is “disadvantaged” by the terms of the agreement fully understand the terms of the agreement and voluntary sign it. Generally, courts will uphold postnuptial agreements so long as the above-mentioned requirements are satisfied, and the postnuptial agreement is equitably constructed under fair and just circumstances.

It’s important to note that although a postnuptial agreement can be effective as it relates to the division of assets, a postnuptial agreement cannot control child custody or child support. By way of example, a postnuptial agreement cannot contain language stating that one parent (or both parents) will not be responsible for paying child support. Parents have a legal duty to support their child(ren) and as such, it is against public policy (and unenforceable) to contract otherwise.

There are several benefits to a postnuptial agreement. However, below we have listed the most common reasons why married couples choose to enter into a postnuptial agreement.

  1. Business Success

If an asset (one spouse’s business) is created during the marriage, it is characterized as community property. As a result, each spouse is entitled to one-half of the value of the business-owning spouse’s interest during the time of dissolution.

It is common for a business to “take off” during the marriage – meaning, at the start of the marriage, one spouse’s business was producing minimal income; however, years later, during the marriage, the business becomes extremely successful. A postnuptial agreement allows you the option to agree that your business (or your spouse’s business) is characterized as your/their separate property.  This will impact the obligations one spouse owes to the other regarding the provision of information and the management of such property.

  1. Debt

Debt incurred during the marriage is characterized as community property. As a result, both spouses are equally responsible for the debt incurred.  A postnuptial agreement allows both spouses to agree that certain debt incurred during the marriage will be assigned as one spouse’s separate property, which will impact the handling of the debt as between the spouses.

  1. Never Signed a Premarital Agreement

Some couples plan to enter into a prenuptial agreement, but either run out of time in which to execute the document before the marriage, or decide not to enter into a prenuptial agreement because one or both parties feel too much pressure.  A postnuptial agreement allows the married couple to include the terms they would have included in their premarital agreement, without the time constraints associated with a premarital agreement.  Unlike a premarital agreement, a postnuptial agreement can be entered during the marriage at any time.

If you are considering whether a postnuptial agreement is right for your particular situation, contact our experienced family law attorneys at Bremer Whyte Brown & O’Meara, LLP to learn more.

Leave a Reply