Prenuptial agreements are becoming more popular every year among engaged couples of all ages. Often, engaged couples entering a first marriage at a young age and without significant employment history overestimate the value of these agreements.
It is essential to seek the advice of counsel to determine if, based on your circumstances and marital financial goals, a premarital or postnuptial agreement is appropriate for your needs. These contracts are intended to help couples dictate the terms of their finances in their future relationship instead of defaulting to the terms California sets for all marriages, which in some instances may conflict with the couples’ goals. Because married couples cannot enter a premarital agreement, they may enter a postnuptial agreement to achieve similar results.
If you still want the benefits offered by premarital agreements, you may consider the alternative: a postnuptial agreement. These contracts provide similar benefits without the restriction of having to occur before you are legally wed. However, they must be approached with caution, given the fiduciary relationship that binds married couples as opposed to unmarried couples.
Choosing a postnuptial agreement may benefit you whether or not you are concerned about a future divorce. A postnuptial agreement can also be a good tool for understanding your financial responsibilities to one another and help you in setting your long-term marital financial goals. Below, you will learn about what these contracts may do for you, their requirements, and techniques for developing them effectively.
What Is a Postnuptial Agreement?
Postnuptial agreements, also known as post-marital contracts or “postnups,” are contracts between married partners that may dictate various terms regarding their financial and property rights. They are flexible tools that can address ownership issues within the marriage and provide advance determinations for considerations that may arise if the couple divorces or legally separates. They may also be used to address issues of support in the event of divorce.
While these contracts have their limits, they can give couples the freedom to change the specific terms of their financial relationship long after they first get married. They may also be used to supersede premarital agreements that are outdated or no longer reflect the couple’s preferences.
What Can a Postnuptial Agreement Include?
Post-marital contracts may address many concerns, including:
- Property ownership and the division of debts and assets: The agreement may define certain assets or asset classes as separate or marital property when they would not otherwise be considered as such, altering who may make decisions about those items and whether they are eligible to be divided in a divorce.
- Spousal support: The agreement may determine whether either spouse should be eligible for spousal support (also referred to as alimony) in the event of a divorce, how much those payments may be, how long they will last, and how they will be calculated.
- Protection of the parties’ business interests: If either partner owns part or the whole of a premarital business, a postnuptial agreement can dictate whether the other partner will be given any ownership or control over the company and to what extent they may have the right to company profits.
- The rights of the surviving person after one party’s death: The postnuptial agreement may also include estate planning provisions, allowing couples to clarify the surviving partner’s rights regarding the decedent’s separate property and share of the marital estate.
California law imposes two critical restrictions on what may be included in post-marital contracts. First, according to CA Family Code § 1620, “Except as otherwise provided by law, spouses cannot, by a contract with each other, alter their legal relations, except as to property.” This means that you cannot use a postnuptial contract to alter the terms of your relationship, such as your responsibilities to each other, except regarding your assets.
Second, a postnuptial agreement may not be used to dictate how child support or custody is awarded. These matters are to be determined at the time of the dispute with the child’s best interest in mind. Since the best interest of the future children cannot be decided in advance, these contracts may not make determinations regarding them.
California Postnuptial Agreement Requirements
California law views spouses similarly to business partners with significant fiduciary duties towards each other. In particular, California Family Code § 721(b) states, “This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.”
This makes validity and enforceability concerns in postnups more significant than they would be in premarital contracts. For a postnup to be considered legally binding, it must meet, among other things, the following criteria:
- Both partners signed the agreement voluntarily, and with a complete understanding of the obligations it imparts
- Both parties received full and fair disclosure of the property and financial obligations of the other person
- Both parties either received independent legal counsel regarding the contract or expressly waived this right in a separate written agreement.
- The terms of the agreement do not violate law or public policy
If these criteria are met, the post-marital contract will likely be considered valid and enforceable in court.
How to Approach a Postnuptial Contract in Your Marriage
Before writing your post-marital contract, it is critical to understand how to approach the development process to achieve the best possible results. These techniques can help you create an agreement that satisfies both you and your partner without wasting time or risking questions of enforceability.
- Communicate openly with your spouse about finances. A significant benefit of addressing concerns related to a divorce in a postnuptial agreement is the opportunity to communicate openly about financial matters and collaborate with your spouse. Take this time to find satisfactory compromises without the emotional impact of a looming divorce affecting your decisions.
- Have a goal in mind. Postnuptial contracts may address many issues, which can lead you to feel overwhelmed. Have a few specific goals for the agreement to ensure your contract focuses on what matters to you and your partner and helps avoid unnecessary distractions.
- Acquire independent legal counsel. Both you and your spouse should consult with independent attorneys to ensure that you receive a fair and unbiased legal understanding of the agreement. This will significantly reduce the risk of validity concerns and ensures you both understand the agreement’s impacts before signing.
Experienced Legal Counsel for Postnuptial Agreements
A post-marital contract is an invaluable financial and legal tool for couples who are already married. If you are considering a postnuptial agreement, you will benefit from receiving expert legal counsel from a qualified family law attorney. You may learn more about how a postnup could help your relationship by scheduling your consultation with Madigan & Lewis, LLP. Our experienced attorneys are dedicated to providing strategic, responsive, and solution-oriented legal representation to clients seeking comprehensive and enforceable postnuptial agreements. Call 650-482-8480 or reach out online to begin the process.