Couples prepare for possible financial issues when they enter a prenuptial agreement before their marriage. But spouses may also address financial matters and, in a way, develop insurance against possible divorce conflicts by entering a postnuptial agreement after they marry. A postnuptial agreement should be considered in particular circumstances.
Postnup agreements
A postnuptial agreement is a legal contract that is drafted and signed after, even years after, marriage. It usually covers financial matters, division of assets such as retirement accounts, estate planning and other issues that the couple never dealt during their engagement though a prenuptial agreement.
Postnuptial agreements can help reduce the possibility of a costly and bitter divorce by dealing with these matters and other issues such as spousal support.
Inheritance
A couple may want to agree on who is entitled to an inheritance received during marriage. Any increase in an inheritance received by a spouse may be marital property that could be divided in a divorce.
Stay-at-home spouses
Spouses sometimes give up careers and remain home to raise children or care for relatives. Postnuptial agreements may provide for a stay-at-home spouse who lost some of their earning power during this period and allow them time to reenter the job market.
Children
More families have become commingled with children from earlier relationships. But these children may be left out of an inheritance if their parent dies because their estate will likely go to their surviving spouse. Postnuptial agreements can help provide for children from earlier marriages or relationships and assure they receive a share of their parent’s inheritance.
Gifts
Spouse’s parents often loan money for buying a home or other large purchases and an anticipate repayment. A postnuptial agreement can remove this awkward issue from divorce negotiations and assure reimbursement.
Wealthy spouses
Spouses who entered the marriage with substantial pre-marital assets should consider a postnuptial agreement. These can help that spouse keep their holdings if there is ever a divorce.
Business interests
It is difficult to place a value on a business where one or both spouses are principal officers or owners. This difficulty increases over time. Placing a value on a company may be a costly and lengthy process.
A postnuptial agreement can identify the business as a separate asset for one spouse which may be made up by other assets. It can also set forth a process for placing a value on that business.
Each spouse should have their own attorney advise them and help negotiate these agreements. They can also assist couples with drafting a fair agreement that meets their needs.
