Who needs a post nuptial agreement?
What happens when a couple starts negotiating a prenuptial agreement too close to the wedding date and cannot agree on all the terms? Or they have been married for many years and disagree on how to manage their financial assets in the future? A post nuptial agreement can be used to settle a couple’s financial issues. Sometimes it turns into a blueprint for divorce, but it can also offer stability to a marriage where the main conflict is money and who it belongs to.
Postnup agreement v. prenup agreement
A couple can accomplish many of the same goals with a post nuptial agreement as with a prenuptial agreement. In New York State, a postnup can be signed at any time during a marriage and is effective from the date of signing. Like a prenup, a postnup sets up guidelines for marital finances, defines the couple’s separate and marital property, and creates settlement terms in the event of divorce or death of a spouse.
A postnup takes effect, of course, after the wedding. This makes it different from a prenup in two ways: the period it governs and the designation of separate property. A post nuptial agreement governs from the date it is signed, and cannot be post-dated to the time of the wedding. Financial decisions that a couple makes after getting married but before signing a post nuptial agreement, such as using inheritance to buy a home or pay off marital debt, may affect what can be claimed as separate property or marital property.
Separate property during the marriage
In a post nuptial agreement, any property one spouse wants to designate as “separate” must have been kept separate from marital assets during the marriage. If it is a mix of marital and separate property, the other spouse may sign a waiver agreeing to treat the “mixed” property, or part of it, as separate property. This is unlike a prenup, in which any asset or property a couple designates as separate can remain separate and not be divided if the couple divorces. But once the wedding has taken place, the event of the marriage defines what is separate and what is marital: most property acquired by one or both spouses after they marry is
marital property. Inheritance, gifts and personal injury awards are separate property, if they are kept separate.
Other uses for post nuptial agreements
A postnup can also be used to divide assets after one spouse’s death or if the future of the marriage is in question. So if one spouse incurs a major illness, or children from a prior marriage become insistent about “their rights,” a postnup can map out what funds will be used for hospitalization or long-term care and what assets are kept separate for children to inherit. If one spouse develops a substance abuse problem or has an extramarital affair (but still wants to stay in the marriage), a postnup can set terms of property use and division that may protect the other spouse from dissipation of assets or a financially devastating divorce.
In some ways, a post nuptial agreement is easier to discuss than a prenup, since there is no tension or fear that one person might call off the wedding. In the postnup process, the couple has already made the commitment to become partners for life. On the other hand, there is no final date—the wedding date—to compel the parties to finish the agreement. The deadline is consensual and fluid, and the process may be more protracted. But a post nuptial agreement can provide important financial protection and peace of mind, even for marriages that last a lifetime.
Copyright (c) 2016 Kelly & Knaplund