Post-Nuptial Agreements

What Are They? How Do They Differ from Pre-Nuptial Agreements? What Are the Benefits and Drawbacks of a Post-Nup?

Many people are familiar with and understand how prenuptial agreements work. The parties to a marriage agree in advance how debts and assets will be divided in the event the marriage eventually falls apart. There’s another type of legal agreement, known as a “post-nuptial” agreement, with many similarities to a pre-nup but some differences as well. What is a post-nuptial agreement? How does it differ from a pre-nuptial agreement? What are the advantages and disadvantages of entering into a post-nuptial agreement?

What Is a Post-Nuptial Agreement?

As the term suggests, a post-nuptial agreement is one that is executed after the parties are married. It’s essentially a contract between the spouses and, as such, must comply with the legal requirements for enforceable contracts.

As a general rule, the validity and enforceability of a pre-nuptial or post-nuptial agreement arises only in the event of a divorce. For many reasons, courts look more closely at the terms and surrounding facts when considering the validity of a post-nuptial agreement. With a pre-nuptial agreement, courts typically assume that if either party did not like the terms of the agreement, the wedding would have been cancelled or at least postponed. With a post-nuptial agreement, that option is no longer available. Because of concerns that one of the spouses may have unequal bargaining power, courts take a closer look.

The parties to a marriage tend to use pre-nuptial and post-nuptial agreements for distinctly different purposes. In virtually all instances, the purpose of a pre-nup is to identify how the marital estate will be allocated in the event of a divorce. Some parties may use a post-nuptial agreement for the same reason—maybe they just ran out of time before the wedding or maybe they didn’t see the importance of such an agreement before they got married. But in many instances, the purpose of a post-nup is to come to an agreement about the division of marital property and obligations in anticipation of divorce. The parties may be experiencing difficulties and acknowledge the likelihood of a divorce. The post-nuptial agreement can simplify the divorce process.

Can Parties Orally Agree to the Terms of a Post-Nuptial Agreement?

There are no states that recognize the validity of an oral pre-nuptial or post-nuptial agreement. To be enforceable, the post-nup must be in writing and must fully disclose all income, debt, assets, and liabilities.

What Are the Advantages and Disadvantages of a Post-Nuptial Agreement?

There can be many good reasons to wait until after your marriage to come to an agreement about the potential division of marital property:

• The parties are typically more mature and better able to discuss financial issues and come to compromise, if necessary.
• Post-nuptial agreements rely on actual data, not projections of future income, assets, and debt. Accordingly, they can more accurately reflect the couple’s true financial picture and may allow for a fairer allocation.
• A post-nuptial agreement can take the needs of children and other beneficiaries into account.

On the other hand, a post-nuptial agreement almost always creates the assumption of a divorce. Generally, if the parties are not having problems, there will be little inclination to consider a post-nuptial agreement.

Furthermore, as stated above, it’s common for the parties to a post-nuptial agreement to lack equal bargaining power. For example, if one spouse provides most or all of the marital income or owns most of the marital property, the other spouse may easily be taken advantage of. In some jurisdictions, a court might void a post-nuptial agreement if it finds that the parties had unequal bargaining power.