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What is a postnuptial agreement?

| May 14, 2020 | Divorce, Firm News |

Prenuptial agreements have appeared in the news and are intended to ensure an equitable property division if a couple divorces. A postnuptial agreement is a similar legal contract that is executed after marriage. These also help couples, regardless of their income, agree to the fair division of their property and deal with other divorce matters.

Postnupital agreements have some advantages over prenups. First, a couple may address more specific issues because a postnup is negotiated and executed later in their marriage when their financial situation has evolved. A prenuptial agreement negotiated during their engagement may not have deal with growing incomes or the start of a business.

A postnup can provide additional spousal support or more generous property division for a spouse who gave up a career to relocate for the other spouse’s job or to raise their children. Spouses can also agree to waive retirement benefits and exclude certain property from marital assets, such as a forthcoming bonus, in return for other concessions.

A prenuptial agreement may also set out terms for child custody and support for the children born into the marriage. However, courts may invalidate terms that are not in the best interests of the children or conflict with the law.

The postnuptial agreement can address business matters. These include whether the spouses will share profit and losses, the nontitled spouse receiving a share of the business and its growth or whether that spouse will assume any obligations for its debts or losses during marriage.

Spouses can agree on marital assets that may used as business capital and whether the nontitled spouse’s property and standard of living will be protected if the titled spouse leaves their job for a new business venture. The type of methodology used for business appraisal to help avoid divorce litigation and business interruption should be included.

Discussing a postnuptial agreement, while initially uncomfortable, may encourage couples to address their finances, their needs and aspirations. It can help resolve issues absence the stress of a divorce.

A postnup must be signed without duress, be fair and reasonable and meet other requirements. An attorney can help negotiate and draft these agreements.