Postnuptial Agreements

After marriage, spouses are free to enter into an agreement dividing property and assets both during the marriage and in the event it terminates. This martial contract is sometimes referred to as marital property agreement or postnuptial agreement.

A postnuptial agreement can be useful when the circumstance of one spouse's financial situation changes. For instance, if one of the spouses stands to inherit a large amount of property and assets, a postnuptial agreement can clearly define the property as separate and make provisions for its disposal, if any, when the marriage ends.

Uniform Marital Property Act

The Uniform Marital Property Act (UMPA), which is either effective in or similar to many state laws, sets out the requirements for making a marital property agreement or postnuptial agreement. The Act provides that spouses can vary the characterization of their property from state laws. The agreement must be in writing and signed by both spouses. The agreement cannot attempt to change any duty to support children of the marriage.

Provisions Of Postnuptial Agreements

The UMPA lists several issues that spouses can cover in the agreement. These rights include:

  • the rights in any of their property;
  • the management and control of any of their property;
  • the disposition of any of their property on divorce, death, or any other occurrence they choose;
  • the modification or elimination of spousal support; and
  • the obligation to make a will or trust to carry out the agreement.

Enforcement Of Postnuptial Agreements

A postnuptial agreement is valid and will be enforced by the court if:

  • each spouse made fair and reasonable disclosure to the other of their financial status;
  • each spouse has entered into the agreement voluntarily and freely; and
  • the division of the property in the agreement at the time of divorce is fair to each party.

At what point during our marriage is it too late to enter into a postnuptial agreement?

It is never too late for you and your spouse to enter into a postnuptial agreement.

Why do we need a postnuptial agreement?

A postnuptial agreement will supersede state laws if you divorce. Without an agreement, state law controls the division of property and spousal rights and benefits. By entering into a postnuptial agreement, you and your spouse will control those issues.

What items should we cover in our postnuptial agreement?

The agreement should set out:

  • how marital debts will be paid;
  • a determination of the ownership of your home (separate property or jointly owned);
  • a determination of the ownership of all other property (furniture, jewelry, art, real estate, etc.);
  • what amount will be paid for alimony or spousal support; and
  • a determination of the status (marital or separate) of property either spouse comes into by gift, inheritance, windfall, etc.

TIP: Each spouse should attach a list of their assets and debts to the agreement.

Can we change our postnuptial agreement?

Yes. The agreement can be changed, modified or revoked at any time as long as the changes are in writing and signed by both parties.

Can we have more than one postnuptial agreement?

Yes. Spouses can execute as many agreements as they want. Several different agreements can cover different issues without making any other agreement invalid. For instance, if the first agreement covers debts and expenses and the second covers inheritances, the agreements can be enforced together.

TIP: If the second agreement changes or modifies provisions in the first agreement, the second agreement is controlling.

I signed a postnuptial agreement because my spouse threatened to divorce me and take our children if I didn't sign. Is the agreement valid?

No. You entered into the agreement under duress. It cannot be enforced against you if your marriage ends.

SIDEBAR: A postnuptial agreement is only valid if each spouse entered into it voluntarily and freely.

My spouse wants us to enter into a postnuptial agreement. Do I have to disclose my financial worth?

Yes. Both parties must disclose their net worth in order for the agreement to be valid.

If I know my spouse is wealthy, do I have an approximate knowledge of his net worth?

No. Your spouse's reputation of wealth is not the same as having a general knowledge of finances. For instance, you should have an approximate idea of his annual income and the kind and amount of property owned. Unless you generally know what you are potentially giving up by signing the postnuptial agreement, the agreement is invalid.

According to our postnuptial agreement, my spouse gets twice as much cash as I do if we divorce. Isn't this so unfair that the agreement is invalid?

No. Although a postnuptial agreement must be fair and equitable, an unequal division of property does not automatically invalidate the agreement.

According to our postnuptial agreement, a lake house that my spouse inherited, and any increase in its value, is my spouse's separate property. However, its value has tripled during our marriage due to our remodeling efforts. Is the agreement regarding the lake house still fair?

No. An agreement might be considered fair at the time it was executed but if circumstances have changed, it might be unfair when the marriage ends. In this situation, the remodeling efforts resulted in the large increase in the lake house's value. The agreement is no longer fair in this regard and that portion of the postnuptial agreement will not be enforced against you.

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