What is Postnuptial Agreement
A postnuptial agreement is a contract created by spouses after entering into marriage that outlines the ownership of financial assets in the event of a divorce. The contract can also set out the responsibilities surrounding any children or other obligations for the duration of the marriage.
A postnuptial agreement is also known as a "post-marital agreement" or "postnup."
BREAKING DOWN Postnuptial Agreement
Similar to a prenuptial agreement, postnuptial agreements allow a couple to alleviate tension caused by financial concerns. Entering into this style of contract will allow spouses to establish an equitable distribution of assets if the marriage dissolves.
Marital agreements, including postnuptial ones, are often considered taboo or not in the spirit of love or companionship. Critics argue such contracts indicate the couple expects the marriage to fail. However, if a contract can remedy financial discomfort, the couple could choose to enter into an agreement in hopes of keeping marital harmony.
Although laws can differ by state, there are five basic elements to a postnuptial agreement:
- It must be in writing. Oral contracts are not enforceable
- It must be entered into voluntarily by both parties
- It requires full and fair disclosure of relevant information at the time of execution
- Terms must not be unconscionable or unjust or one-sided in nature
- Both parties must sign the agreement
Items Typically Covered by Postnuptial Agreements
Beyond the basics, there are several other matters that most postnuptial agreements address. First, the agreement will lay out what happens to marital property in the event of death to one spouse. This is important because a surviving spouse may waive certain property rights they would otherwise inherit. Secondly, a postnuptial agreement establishes certain terms that have been agreed to by both parties in advance of a separation. By agreeing to these terms in advance, both parties can avoid the time and cost of divorce proceedings. The disposition of property, other marital assets, custody, alimony and support and the like are agreed to by the marital partners upon separation. This part of the agreement is typically incorporated into the final divorce decree. A postnuptial agreement will also seek to establish spouses' rights in a future divorce. These agreements address not only the marital property; they will also often limit or waive alimony.
Items Not Covered by Postnuptial Agreements
Items that aren't enforceable through a postnuptial agreement include issues related to child custody or child support. Neither can a postnuptial agreement attempt to include terms that attempt to regulate routine aspects of a marital relationship.