If you are in a marriage and realize that you might want to make changes to protect your financial future, then it is not too late. While not as common as prenuptial agreements, postnuptial agreements can offer couples similar financial advantages. Postnups are perfect for protecting people from an ugly divorce or from suffering from the potentially harmful effects of the Community Property Law that dictates California Divorce Proceedings.
As romantic as “Happily Ever After” sounds, the reality is that most marriages are subject to significant financial stress at one point or another. For some couples, postnuptial agreements are the right choice for reducing stress from financial uncertainty and allows couples to make decisions regarding their financial future with a clear and level head.
As many couples are beginning to understand their benefits, postnuptial agreements are becoming increasingly common. At Lonich Patton Ehrlich Policastri, our attorneys have significant experience in working with couples to draft and execute postnuptial agreements.
What Is A Postnuptial Agreement?
A postnuptial agreement is a financial agreement between spouses that is created after marriage in order to protect the interests of both parties. In California divorce proceedings, assets and debts accrued during a marriage are legally required to be split somewhat equitably after a divorce. Many spouses who want to alleviate the stress of the potential equal division of property realize that a postnuptial agreement can provide the necessary financial adjustment for a better future.
How Is A Postnup Different Than A Prenup?
Unlike prenuptial agreements, postnuptial agreements are entered into after the marriage. They cover many of the same issues commonly covered in prenuptial agreements, such as asset protection, debt division, and spousal support.
Postnuptial agreements are perfect for couples who have a significant financial event that occurs during their union. For example, a large inheritance, new business ownership, or an accumulation of debt can all be a good reason to get a postnuptial agreement.
Sometimes spouses are unaware of certain financial details of their spouses and discover it during the marriage. A postnuptial agreement is ideal for easing concerns in these types of situations and alleviating potential financial burdens. Additionally, postnuptial agreements are sometimes favorable for couples who do not wish to have delicate conversations about their financial affairs while caught up in the romance of an engagement but would still like to legally protect their financial interests.
On the other hand, postnuptial agreements are often more difficult to enforce, as the risk for one spouse to be coerced into signing the agreement is higher. This makes hiring a postnuptial lawyer all the more imperative for a secure financial future.
Drafting Effective Postnuptial Agreements
Many people are hesitant to enter into a postnuptial agreement because they believe that they adversely impact one spouse while benefiting the other. However, postnuptial agreements are often created in the best interests of both spouses. Another often overlooked facet is that postnuptial agreements can protect assets as well as shield spouses from debts. When drafting a postnuptial agreement, it is vital that all steps are meticulously completed in order to strengthen its effectiveness. Additionally, while not required, it is highly advisable to hire a postnuptial attorney so that the agreement is drafted with the necessary attention to detail.
Another important step in drafting the agreement is to clearly communicate your intentions with your partner in order to ensure that you are both on the same page. While the conversation may seem intimidating, this is a necessary step to guarantee its effectiveness.
It is pertinent to make sure that all financial assets and property are accounted for. Typically, individuals with higher net-worth require more time for aggregating the financial documents and drafting the legal documents, thus resulting in steeper legal fees. The cost associated, however, should be considered a necessary investment to protect your financial interest.
When Is A Postnuptial Agreement Beneficial?
One of the more stressful aspects of a marriage is the intertwining of financial assets. If individuals engage in big risks, such as borrowing money or accumulating other types of debts, then it might be in their best interests to draft a postnuptial agreement.
For example, if one spouse wants to borrow a significant amount of money to start up a business and the other spouse does not want to share in the debt that is created should the business fail, a postnuptial agreement can be drafted to shield one spouse from the debt burden in the event of a divorce. Additionally, postnuptial agreements can benefit spouses who already owned the business prior to the marriage. In these circumstances, postnuptial agreements can protect both the accumulation of wealth and debts.
Situations in which one spouse engages in lavish spending are often common in postnuptial agreements. Postnuptial agreements can offer the benefit of reducing anxiety around debt accumulation and can offer at least one spouse protection from the burden of being in debt.
Another common example is in which one spouse receives a large inheritance and wants to invest it in an existing family business, but he or she wants to ensure that if there is a divorce the value of the inheritance will be protected. These are commonly drafted in order to help familial relationships outside of the marriage and ensure the person granting the inheritance that their assets will be given to the intended recipient. This type of agreement is often helpful for easing the stress of family members as they can ensure that their inheritance will stay within the family.
A postnuptial agreement can also be drafted so that real estate and community property is divided equitably rather than equal split, as prescribed by California law. This ensures that the property will be divided per the wishes of the spouses at the time of drafting the agreement, as opposed to in the middle of a contentious divorce.
Another situation in which a postnuptial agreement might be the best choice is when affairs or significant stress affect the stability of a marriage. It’s important to remember that this decision does not mean that the couple is giving up their marriage, but is taking necessary steps to ease the burden of an uncertain financial future.
A postnuptial agreement can help ease the apprehension of a potential divorce and can help couples focus on making progress in their marriage. If the marriage does not end up working out, then couples who draft the postnuptial agreement often find that the divorce proceedings are significantly less contentious and timely.
Postnuptial agreements are commonly drafted by individuals who have children from a prior relationship. Postnuptial agreements are perfect for people wishing to protect their children’s financial future and can often benefit both parties in these types of situations.
How To Create A Postnuptial Agreement Without An Attorney
Technically, anyone can create a postnuptial agreement. In California, postnuptial agreements must comply with the following conditions:
- Both parties must sign the agreement without coercion.
- The agreement must be written and both spouses must notarize the written agreement.
- The agreement must be clear, transparent, and fair.
While the process seems straightforward, the wording of the agreement must account for all financial assets and include a detailed and fair plan for the division of property. Any overlooked detail can raise a red flag and can increase the possibility of the agreement being declared invalid.
Why You Need An Attorney To Create An Effective Postnup
Since the legal relationship between people changes once they are married, it is vital to have an experienced attorney draft any postnuptial agreement. Courts carefully scrutinize postnuptial agreements to ensure that they were entered into voluntarily, without coercion, duress, or undue influence. A poorly drafted agreement can be declared invalid in many cases. Having an attorney help you with the drafting process can prevent this from happening.
Our attorneys are prepared to help clients create targeted, legally binding postnuptial agreements. While we work with couples to create postnuptial agreements, we always recommend that they have them reviewed by legal counsel. This can make it more difficult for either spouse to later challenge the agreement.
Why Should You Choose LPEP for Your Postnuptial Agreement?
At Lonich Patton Ehrlich Policastri, our attorneys have the experience and resources needed to create legally binding postnuptial agreements that will withstand the review of a judge. Since we specialize in protecting individuals with high net worth, we highly recommend that any postnuptial agreements are reviewed by legal counsel. This process adds a further layer of protection to the postnuptial agreement and makes it more difficult for the validity of the agreement to be challenged later.
As one of the largest firms in the Bay Area, we have the resources you need to create a strong family and estate plan. Our attorneys take a genuine interest in our clients’ needs, take the time to understand their objectives, and provide strong representation in a timely, effective, and efficient manner.
If you have any questions about postnuptial agreements or would like to discuss your unique legal situation, contact our California Certified Family Law Specialists today. Our board-certified and specialized attorneys have decades of experience involving complex family law. Call today to set up a free consultation in which we will discuss how to best protect your financial future.