7 Reasons to Establish a Postnuptial Agreement
Enough people have heard of the contracts of prenuptial agreements having a negative reputation. While these contracts may not represent romance, they remain very practical, considering the latest divorce rate reported by the CDC is 2.7 per 1,000 people.
Pre- and postnuptial agreements protect your financial interests and future. In the event of divorce or death, you want to know how your financial situation will be handled. Establishing that during the marriage will help protect the family’s assets in case of death or avoid a difficult, costly divorce. At The Platt Law Firm, we want you to understand the advantages of postnuptial agreements and how they work.
Prenups vs. Postnups
Pre- and postnuptial agreements are legal contracts that detail how debts and assets will be managed during a divorce or after death. They can also specify the financial responsibilities of each spouse during the marriage. Neither contract can address plans for a couple’s existing or future children, nor do they go into the routine details of the marriage.
Two differences exist between the contracts. First, couples establish prenups before marriage, and the contract goes into effect when the couple is officially married. Postnups are often established by couples who have been married for five or more years. The spouses usually acknowledge a need to clarify their joint and individual financial situations. After a couple establishes a postnup, the courts decide whether it will be enforced.
Postnuptial agreements serve to define the couple’s current financial situation, the spouses’ rights in a future divorce or what happens to the marital property if a spouse dies. Couples who want to pursue a postnuptial agreement have a slightly more difficult task since many assets become joint property when you marry. However, this makes it all the more important to establish a postnup.
Advantages to Postnuptial Agreements
1. Creates a Space for Important Discussions
Discussing marital finances often feels intimidating. However, establishing a postnuptial agreement can open the floor to valuable conversations about the joint and individual financial situations of a couple. These discussions can foster greater understanding and trust in a relationship.
2. Smooths Out Points of Disagreement
By detailing how you want your finances settled in case of divorce or death, you and your partner smooth out potential disagreements. For example, you might not have considered which spouse would pay alimony, how to divide property or how to repay the family for significant financial gifts. With a postnuptial agreement, you give yourself and your spouse time to come to an agreement on how to best manage these situations.
3. Manages Your Financial Assets
Postnuptial agreements protect and manage a couple’s assets during their marriage and in case of divorce. This becomes particularly important in complicated financial situations, where one spouse receives an inheritance or if one or both spouses own a business. Your postnuptial agreement can help you address inheritances, shares in a business, property and investments.
4. Offers Financial Stability and Independence
In instances where a spouse decides to leave work to remain at home, they may become concerned about their financial independence. Couples can address it in their postnuptial agreement, for example, giving a designated amount of earned income to the stay-at-home spouse. This stability empowers stay-at-home spouses and ensures that they don’t stay in the marriage for fear of financial instability.
5. Re-establishes Your Relationship
Disagreements about earnings, assets, inheritances and perceived responsibilities can cause an irrevocable rift in a relationship. According to Heather L. Locus in her Forbes article, “Money and communication are typically two out of the top three reasons people get divorced.” If you feel that your marriage has suffered due to finances, then establishing a postnuptial agreement can indicate that you still want to make the relationship work.
6. Defines Financial Expectations
Successful marriages require effective communication to thrive, and postnuptial agreements help couples define their financial expectations during the marriage. Couples may avoid conflicts that arise over differing ideas of responsibilities, thereby avoiding resentment. This also reassures spouses that they have compatible ideas on financial responsibility.
7. Protects Children from Previous Marriages
While pre- and postnuptial agreements do not address issues around child custody and child support, they can protect children from previous marriages. For example, a postnuptial agreement can detail what happens to assets if one spouse dies. The couple may have agreed that certain assets would go to a child or children from a previous marriage rather than to the surviving spouse.
Establishing a Sound Postnuptial Agreement
If you want to pursue a postnuptial agreement, find a lawyer who understands family law. Their knowledge and expertise will help you navigate the complicated nature of your finances, especially when it concerns tax law. A lawyer will also craft your postnuptial agreement to your specific needs and goals.
Because postnuptial agreements have to meet certain conditions, working with a lawyer well-versed in family law will be invaluable as you navigate the process. You need to have a written agreement voluntarily entered into by both parties. All relevant information must be disclosed at the time of execution. A court could nullify the contract if any relevant information is missing. The terms of the agreement must not be unconscionable, unjust or one-sided, and both parties must sign the agreement.
The Best Solution for Everyone
Every couple has different goals when it comes to their postnuptial agreement. Teaming up with an experienced lawyer will help you find the best solution that justly benefits both parties. At Platt Family Law Firm, we take a tailored approach with our clients to create a customized postnuptial agreement that works for your unique situation. If you and your spouse want to pursue a postnuptial agreement, contact Platt Family Law at 404-255-3434 or through our website to schedule an appointment today.