Forget Prenups - Here's Why You And Your Spouse Should Have A Postnuptial Agreement, Instead
You've heard of prenups, but do you know what a postnuptial is?
Carly Rae Hobbins via Unsplash By Jeremy Brown
Expecting a baby? Now’s the time to plan for your divorce.
Yeah, it sounds grim. But, there’s a case to be had - making the best decisions on behalf of a forthcoming child — moving to a larger apartment, setting up a 529 account, etc. — is a big part of preparing for parenthood.
As couples can’t forecast the future and know whether their relationship will end, like nearly half of first marriages in the U.S, it’s also a good time to draw up a contingency plan to take into account the possibility of divorce and make clear headed decisions about the specifics on behalf of your future child.
And that’s where the postnuptial agreement, or postnup, comes into play.
Whereas a prenuptial agreement is a contract signed by both couples before the wedding that discusses the division of marital assets should the marriage fail, a postnuptial agreement is signed after a couple is married to establish rights and obligations each spouse has for everything from finances to care arrangements.
“This can include the division of assets and debts, spousal support, what happens after a spouse passes away and, in some cases, child support and custody,” says Andrea Vacca, a divorce attorney with the Vacca Family Law Group. “It allows a couple to be proactive and think things through when the marriage is intact and relatively stable.”
“Post-nuptial agreements are the ultimate risk-arbitrage,” says divorce attorney Russell D. Knight. “Even in your most personal relationship, you can have a clear and non-confrontational exit strategy. The mere relief from the anxiety of the unknown may strengthen a relationship.”
The major benefit of a postnuptial agreement, as Vacca stated, is that they’re done at a time when things in the marriage are good and both partner’s minds are clear.
If later on in life, a couple files for divorce, emotions are running too high to make a rational decision and it’s much harder to divide assets and that's to say nothing about what’s going to happen with the children.
“It’s much easier to do the right thing when you and your spouse are still in love and working toward a common goal, which is hopefully a life together forever,” says Tonya Graser Smith, a Board Certified family law attorney in Charlotte, NC. “Still, things happen. Life happens, so it’s best to plan ahead and post-nuptial agreements are a smart way to do that.”
The second scenario that might warrant a prenup, Vacca says, is when one of the partners in a marriage suddenly comes into a large windfall, such as an inheritance, and “he or she wants to be able to use those funds to benefit the family — to buy a new home, for example — but wants to be sure to receive those funds back if the marriage ends.”
The third, and perhaps most dire situation, comes in the wake of a betrayal, such as an affair or a financial betrayal.
A postnup would apply here, according to Vacca, if “the spouse who feels betrayed is willing to give the marriage more time, but wants a postnup to provide more security in the event of a divorce.”
The benefits of a postnuptial agreement are that, by and large, spouses can set the rules, regardless of the divorce statutes in their state.
For example, most states do not have a penalty for adultery in divorce, but if a couple drafts their own postnup, they can factor in a penalty for adultery.
In fact, according to Knight, most postnuptial agreements are actually drawn up for that specific reason.
Additionally, postnuptial agreements allow for a clearer picture of each other’s finances.
Knight explains that prenuptial agreements often get thrown out, because one party did not know what they were getting into at a marriage’s outset as they had no idea what the other person’s finances were.
However, once a postnup is drawn up and all marital assets are clearly outlined, it’s impossible to make that claim in court.
Many married couples are interested in a postnup in the hopes of working out such issues as child support and post-divorce parenting schedules when both parties are in a calmer and less reactive state of mind.
However, parents should be aware that, for the most part, postnups do not allow you to detail issues relating to children.
For example, you cannot specify custody arrangements in a postnup nor can you waive child support.
“The courts always look to the best interests of the child, no matter what the parents agreed to prior,” says Knight. “There is a clever way around this. You could get legally separated (if your state allows this) and enter into a parenting plan that outlines custody.”
That said, the laws vary state-to-state, so, if a couple is considering a postnuptial agreement, they should make sure to check with their attorney as to what can and can’t be enforced in their particular state.
For instance, in New York where Vaccas practices law, a postnuptial agreement can deal with issues related to living children, but it cannot deal with children who are not yet born.
“It’s my understanding that under California law, a postnup cannot address children at all,” she says.
Still, Vacca says that a postnup is worth considering for parents, because, even if they can’t get into details about child support, just having the agreement in writing will help manage the stress of the divorce and, by extension, make things much easier on their children.
“The less there is for your spouse and you to fight about,” she says, “the better off your children will be.”
Jeremy Brown is a writer who focuses on marriage, divorce, and family. For more of his marriage content, visit his author profile on Fatherly.