If a prenup discussion doesn’t seem appealing, a conversation about postnuptial agreements is probably as enjoyable as diffusing a bomb.
That said, postnuptial agreements can serve a legitimate purpose and improve a marriage, rather than wreck it.
So if you believe a postnup is just what your marriage needs, or are worried it’s exactly what it doesn’t need, read on for answers to all your questions about postnups.
What Is a Postnuptial Agreement?
A postnuptial agreement is basically a prenuptial agreement, only you sign the dotted line after you have married. So, yes, it’s a contract in which you and your spouse will decide how to split up your assets in the event of a divorce.
Are People Who Get Postnuptial Agreements Hoping to Break Up Their Marriage?
No. There are actually a lot of good reasons to write out a postnuptial agreement. There is even an argument that a postnup can strengthen a marriage.
But just because there are good reasons for some couples to write out a postnup, that doesn’t mean it’s a good idea for you and your spouse.
Russell Marnell, an attorney who owns the Marnell Law Group in Melville, New York, says, “Postnuptial agreements are generally not used when the spouses are happily married and not contemplating a divorce.”
Here’s one way to look at it: A postnup might fix a broken marriage. But if the marriage isn’t in need of repair, and you try to forge a postnuptial agreement, you could damage your harmonious happy home. (In this case, you probably will need a postnuptial agreement.)
So when might a couple need a postnup?
Types of Postnuptial Agreements
The important thing here is to, as they say, read the room. If you suggest to your husband or wife that you both get a postnup, after never once hinting that you’d like a prenup or someday might want a divorce, there is a terrific chance that you’re going to hurt your partner’s feelings. But in some situations, a postnup may make sense.
- You talked about getting a prenup, but you didn’t. Now one of you regrets that. Sure, you may shake the confidence of the other partner if you bring up a postnup now that you’re married, but at least the conversation won’t have come out of the blue.
- One partner has been very financially irresponsible. Maybe you or your partner have committed financial infidelity, racking up gambling debts or credit card debt without the other person knowing. And now they know – and are thinking of leaving the marriage. The irresponsible one might suggest a postnup as a way of protecting the other partner – so that in case of a divorce, the other spouse won’t be responsible for the debts. This is a situation where a postnup might save a marriage.
- One of you has children from another marriage. Maybe you’ve been worried ever since you said “I do” that if you would pass away, your assets might all go to, say, your spouse’s children but not your own. A postnup might help protect your kids. That’s definitely a valid reason to get a postnup, although it’s a shame you didn’t work this out before the marriage.
- One of you is about to stay home and raise the children. If you’re worried that you’re going to wind up penniless during a possible far-off divorce because you won’t be earning anything and will be losing valuable work skills, you might raise the idea of a postnup to your partner.
All of that said, a postnup is not a magic talisman that will protect you from getting burned in a lousy divorce. State laws vary when it comes to postnups. Nevada is very restrictive with its postnuptial agreements and won’t allow them to be used to decide alimony payments. Ohio simply doesn’t recognize postnuptial agreements at all. So it might be helpful knowing that from the get-go.
Also, a postnup may not protect you from a creditor coming after you for your ex-spouse’s gambling or credit card debts. That said, it can be used as a tool to get the court to make your spouse pay those debts or reimburse you.
What Is Typically Included in a Postnup?
Hopefully this is already clear, but the information you would find in a postnup is what you would find in a prenup. The main difference is that the prenup is signed before the marriage, and the postnup is afterward.
As Marnell puts it, “Most postnuptial agreements resolve the most significant economic issues that would exist if there were a divorce.”
But what’s actually in the postnup?
“Typically, the agreement could address the parties’ home, vacation homes, business, valuation dates of certain assets, retirement accounts, alimony and maintenance, paying the other spouse’s legal fees, expert fees, child support, estate waivers, insurance issues and so on,” Marnell says.
If you do have a postnuptial agreement drawn up, you should involve attorneys, says Shann Chaudhry, a San Antonio business and estate attorney.
That advice may sound self-serving, but most jurisdictions require lawyers to be involved with putting together postnups, he says, and the courts will do what they can to make sure that a postnuptial agreement is crafted with each individual’s “own free will and accord.”
Which makes a lot of sense. One can imagine a spouse feeling pushed into reluctantly signing a postnup.
Signs You Need a Postnup
There are a few clues that you might need a postnup. Every marriage is different, and so it’s impossible to be absolute in these cases.
Your marriage is in trouble. Plenty of people aren’t stunned when one half of the couple asks for a divorce. Often, you both see it coming. So if you’re fighting for your marriage but know that it may end, you may want to work out a postnup. And it may well be that suggesting a postnup doesn’t make the other person upset in the least. Because, again, that the marriage is in trouble is no secret, and ideally, a postnup protects both partners.
And you never know – if you work on a postnup together, you may create goodwill that ends up helping your marriage. Or, sure, you may both start to envision life without the other, and a postnup could hasten the end.
One of you, or are both of you, are really rich. If you have a lot of wealth to lose in a divorce, and you never got a prenuptial agreement, it might be a good idea to get a postnup. Again, it’s too bad you didn’t discuss this before the marriage.
Something financially significant has happened. Maybe one of you inherited a ton of money, and you’d like to protect it. Maybe you already have a prenup, but you want to add this to the prenup by way of a postnuptial agreement.
Chaudhry points out that some big inheritances may start off as your own – but turn into something that could be split up among two spouses later, if you aren’t careful.
“For example, in Texas – a community property state – if you inherited real property, like a residence, it would be your separate property,” Chaudhry says. “However, if you converted it into a rental property, the income of the property would be community property.”
That’s due to the upkeep, repairs, insurance and taxes both members of the couple will pay, Chaudry adds. But he says that a postnup could keep that inherited property in one person’s name.
Still, can you imagine having a really great marriage and telling your spouse, “I just inherited a house, and I’d like us to rent it out to bring in income, but I want to draw up a postnuptial agreement first, making it clear that if we ever divorce, it’s mine,” and having your partner not mind in the least?
That’s probably why, as Marnell says, postnups are rarely suggested when a marriage is going well.