What to Know Before Signing a Postnuptial Agreement
Most people have heard of a prenuptial agreement, which is a legal agreement signed by a couple before marriage that establishes rules for the division of the couple’s assets and debts in cases of divorce. Postnuptial agreements provide the same financial protection but are negotiated and signed after a couple is already married. Although it can be uncomfortable to talk about money or to consider the potential dissolution of your marriage, if you think about marriage as a long-term partnership, it makes sense to discuss appropriate and fair protection of each party’s assets for the future in the same way that you would for other relationships such as business partnerships.
When to Initiate a Postnuptial Agreement
Certain life changes or situations might come up where it’s in your best interest to think about a postnuptial agreement to alleviate uncertainty about your financial future. In fact, if you have a prenuptial agreement in place but some circumstances have changed, you might use a postnuptial agreement to modify your prenuptial agreement.
- Significant Changes in Financial Circumstances
If either spouse’s finances significantly increase or decrease, it’s a good time to initiate a postnuptial agreement. For instance, one spouse might inherit family money or property and want to make sure his children from a previous relationship receive those assets. Or a spouse who decides to start a business might want a postnuptial agreement in place to protect the rights and interests of business partners or profit sharers. Postnuptial agreements can also shield you from being held responsible if your spouse begins to accrue appreciable amounts of debt through unwise investments or lavish spending.
- Marital Issues
Combining finances can be one of the most difficult parts of any marriage. Some couples enter marriage without being aware of the debts or financial difficulties of their spouse. Infidelity or other marital issues can also cause stress in a marriage. A postnuptial agreement can provide some security to both parties, allowing them time to work on their marital issues without the added worry about finances. If divorce becomes inevitable, having a postnuptial agreement already in place ensures both parties’ assets are protected and can make the divorce process smoother.
What to Include
When preparing to enter into a postnuptial agreement, both parties must disclose all current assets and debts. Although postnuptial agreements are as individual and unique as each couple, they most often include instructions for how to distribute:
- Debts, including mortgages, insurance, educational loans, and credit cards
- Shared property such as cars, homes, or even family pets
- Other assets such as retirement accounts, investments, or inheritance
- Spousal support
Get Help Drafting an Effective Postnuptial Agreement
In California, postnuptial agreements have to meet several requirements to be considered legally enforceable, including that they must be:
- Written, not oral
- Fair to both parties
- Signed by both parties willingly, not under duress
- Clear and transparent
Unfortunately, a California court might declare a poorly written agreement with vague or ambiguous language invalid, thus putting both spouses’ desires in jeopardy. To ensure that your postnuptial agreement is legally binding and will withstand a family court judge’s review, you should work with an experienced attorney.
At Lonich Patton Ehrlich Policastri, our attorneys specialize in drafting effective postnuptial agreements that help protect your interests, using direct and detailed language. If you have questions about postnuptial agreements or want to discuss your specific situation, give us a call today at (408) 553-0801 to set up a free consultation. We have decades of experience navigating the complex landscape of family law and welcome the opportunity to discuss your options to successfully protect your financial future.