Most everyone has heard of prenuptial agreements, where a couple decide before they get married what will happen if they get divorced or if one of them dies.
But did you know that there are also post-nuptial agreements? These are pretty much the same as prenuptial agreements, except that they’re signed after the marriage, rather than before.
There are a number of reasons why a couple who don’t have a prenup might want a postnup:
- A couple who are contemplating a divorce might want to negotiate the terms in advance, so if it happens, it will be less contentious.
- A couple who are trying to reconcile might want to settle their financial and legal arrangements to make it easier to concentrate on the emotional issues, or to work through marital problems such as overspending.
- Couples with substantial property might use a postnup as an estate planning tool.
- Spouses who have separate property, and are thinking of using it for the marriage (such as to buy a house), might want a postnup to make sure they retain their separate property rights.
- A spouse who has children from a previous marriage and who receives a windfall (such as an inheritance) might want a postnup to make sure the children are able to share in the wealth.
- Some companies, such as hedge funds and certain family businesses, require their executives to have postnups. The goal is that if the marriage dissolves, the non-employee spouse won’t have access to sensitive company information and won’t end up as a part-owner of the company.
Prenups are widely accepted in the U.S. Postnups are newer and their legal status is a little less clear, in part because people who sign postnups aren’t negotiating over future arrangements but are bargaining away legal rights they already have as a result of being married. However, a growing number of states are accepting the agreements.
This past July, a postnuptial agreement was approved by the highest court in Massachusetts. In that case, the agreement stated that in the event of divorce, the wife would give up any interest in some $5 million worth of Florida real estate that the husband owned through his family’s businesses.
The court said that judges should carefully scrutinize postnups, but this one was okay because it was negotiated by separate lawyers for each side, there was a full financial disclosure, and it was fair given that the husband was obligated to pay the wife $5 million.
The court noted that postnups could actually save failing marriages in some cases, and could help protect the interests of children from prior relationships.