What Are Post-Nuptial Agreements?
In addition to prenuptial agreements, couples can also enter into postnuptial agreements. Postnuptial agreements are very similar to pre-nuptial agreements but they become effective after the couple is married. The New Jersey Uniform Premarital Agreements Act ("UPAA") applies to such agreements. N.J.S.A. 2A:34-23. The Supreme Court of New Jersey has recognized the enforceability of these agreements. In, Johnson v. Johnson, 272 N.J. Super. 104 (App. Div . 1994), the Appellate Division held that the public policy of this state is to maintain the right of parties to enter into such agreements.
Couples may enter into these agreements for various reasons. For example, couples may reinvent a premarital agreement that they now deem heavy-handed in light of changed circumstances. Or, for some, a time may come in the course of a new marriage where it makes sense to enter into a formal agreement to address new circumstances that have arisen since the marriage ceremony.
The Legal Effect of Post-Nuptial Agreements
The legal validity of postnuptial agreements is a more complex issue, as their enforceability depends on state law. In some states, laws relating to marital agreements are behind the curve in terms of addressing the validity of postnuptial agreements. Although one may think that the same principles surrounding the formation of prenuptial agreements would apply similarly to postnuptial agreements, this is not the case in every state.
States that enforce postnuptial agreements generally consider several factors when determining whether such an agreement is valid – many of the same factors courts consider when determining the validity of a prenuptial agreement.
In jurisdictions that follow this multi-factor analysis, the validity of an agreement would appear to turn on each circumstance involving both the husband and wife. For example, the agreement should be written; signed by both the husband and the wife; the wife should understand the agreement; the wife should be aware of the husband’s general financial circumstances; the agreement should not be the product of fraud, duress or mistake; the agreement should be entered into voluntarily; the terms of the agreement should be fair; and if the agreement restricts the waiver of alimony, the waiver should be in exchange for fair consideration.
Factors that may be considered when determining whether a postnuptial agreement is valid may differ from state to state, so it is important to review the law of the appropriate state to determine what factors apply.
Reasons To Enter Into A Post-Nuptial Agreement
Common reasons for postnuptial agreements include the following:
Financial change during marriage
Postnuptial agreements may be appropriate for couples who, during a marriage, experience a change in financial circumstances (for example, one spouse receives an inheritance, one spouse starts or purchases a business, two professionals achieve a great deal of success in their careers, or one spouse receives a substantial bonus or raise – among many other scenarios).
Adultery
A postnuptial agreement may help address child custody and support issues in situations in which one spouse has engaged in an affair. In some cases, the facts of the relationship become harmful to a spouse’s reputation. Even if the spouse who had the affair is not legally entitled to a greater share of the marital estate, the child-custody and child-support outcomes may be affected by the affair. Additionally, the person without spousal or child support may seek out a postnuptial agreement in order to give up rights that he or she may be otherwise entitled to.
How To Draft A Post-Nuptial Agreement
This begins with one of the spouses suggesting the idea, and the other spouse agreeing to it. From this point on the process is almost identical to that of a prenuptial agreement. The parties will normally exchange documentation demonstrating their assets and liabilities, and each will be independently counseled by their own attorney. Even in the simplest of situations we would still recommend involving counsel to help identify the issues and arrive at an equitable resolution.
The parties will then discuss amongst themselves the results of their investigation and what terms the husband and wife would be agreeable to. As with a prenuptial agreement, once the terms have been agreed upon the Attorney’s should draft them into formal language.
Dangers and Pitfalls
One of the most difficult issues to deal with in executing a postnuptial agreement is that one of the parties generally already has an attorney-client relationship with their attorney. No matter how you slice the cake the attorney who drafted the agreement for the spouse (the husband or wife) did not represent the other spouse (i.e. the wife or husband) in the prenuptial agreement. The other spouse does not have the same information nor does he or she have the type of information available because he or she was not privy to the discussions and advice the party who executed the agreement received from their counsel. This is a perfect recipe for a divorce litigation disaster.
Further, after execution the parties are likely to have different memories about what was discussed, what led to the execution of the agreement and what was or was not a priority at the time. This is why I always recommend that each spouse not only acquire separate counsel, but that if mediation or another form of alternative dispute resolution ("ADR")/collaborative law is selected that the parties should really not be communicating directly with one another about their issues. Further, the final agreement should not only be seen by each attorney involved , but by qualified independent accountants who can ensure that the provisions of the agreement which each party does wish to use are in fact fair not only to the each party but also to their children. Further, if the partnership between each party is essentially business, then the execution of the postnuptial agreement memorializes that part of the relationship and gives the court a very specific set of numbers should the marriage ultimately fail.
That said, the postnuptial agreement should not be done in haste, but only when each party is on the same page and has taken the time to communicate with their counsel and advisors, understanding the implications of terminating the contract due to divorce, death or any other reason. To be able to enforce a prenuptial agreement, there is no requirement of the husband and wife that the postnuptial agreement be fair, reasonable, encompass everything they intended it to be, etc. But, such issues do apply to the enforcement of a prenuptial/postnuptial agreement. The clients must take this seriously and avoid the mistakes that other parties made in entering into an agreement and not fully understanding what they were doing and wind up in costly and years long litigation.
Prenuptial Agreements vs. Post-Nuptial Agreements
A prenuptial agreement is generally entered into before the marriage occurs. It would not be a valid contract if entered into after the marriage ceremony, but it could be a valid postnuptial agreement if the parties choose to enter into one after the marriage. While similar, prenups and postnups have been treated differently (at least in the past) by the courts. Postnuptial agreements have been more scrutinized. In fact, they have historically been considered disfavored because they amount to a dissolution of the marriage contract. (By contrast, a prenup establishes a deal before any marriage has occurred.) Enforcement of an agreement is often going to depend on whether the agreement was fair and whether each party had sufficient counsel or advice before execution of the agreement. A prenup executed before discovering the fraud, wrongful conduct, undue influence or unfairness can arguably be enforced where a subsequent marital contract, the postnuptial agreement, cannot. Postnuptial agreements are generally considered marital agreements and are subject to the principles of contract construction and interpretation. Like contracts, courts will enforce them unless there are no unreasonable restraints on trade. Some issues that come up with postnups: Postnuptial agreements should be carefully drafted as a divorce may occur, even years later, and there could be significant issues that are predetermined in a postnuptial agreement that are not in the best interests of the parties. Premarital agreements are even more carefully crafted with an eye toward the divorce and a plan for the future if there is indeed a divorce. In both premarital and postnuptial agreements, the parties must fully disclose their assets, income and expenses. Unlike a divorce, this is usually not requested in a marital negotiation where the parties may purposely hide or conceal their true earning potential or assets. There isn’t the same duty of disclosure. The type of agreement: premarital or postnuptial, usually won’t change what wealth is available to pay for attorneys. Generally, people with assets enter into these agreements because they have wealth, so obviously funds will generally be available to retain counsel and to honor the contract. Like a divorce, postnuptial agreements are not cheap and depend on the quality of counsel. These contracts are also not agreed to where either party is under duress.
Consult a Lawyer
A continuing misconception seems to be that if a prenuptial agreement was not prepared and signed before the wedding that there is no way to have enforceable terms. The reality is that ever since 1983, under Pennsylvania law it has been possible to sign what is called a postnuptial agreement.
If you are already married and either you or your spouse have suggested the idea of a postnuptial agreement, you should seek immediate legal advice. A family law attorney can discuss the issues and terms of your proposed postnuptial agreement. You should also be aware that there may be issues that require consideration which are unrelated to the proposed agreement, such as whether or not you should obtain a Divorce Protection Order.
It takes time to locate and interview prospective attorneys so it is wise to start looking immediately. Characteristics that are commonly found in family law attorneys include an understanding of family law autonomy, readiness to advise second parents, willingness to assess the value of existing assets and future inheritances, and ability to instill confidence. These attributes make for a thoughtful lawyer and facilitator. When summarizing a referral, other lawyers often suggest that their colleague possesses these qualities. Women frequently defer to other women’s opinions directly . This is sometimes an incorrect reflex because being a woman does not always guarantee family law expertise.
It is appropriate to ask prospective counsel for references. Family law practitioners map out their own specialties and those who can afford the luxury of a subspecialty, such as adoption, may be less skilled in handling routine litigated matters. Those who are truly focused on a particular type of family law matter may not be as aware of changes in other family law areas. Additionally, general family law practitioners often decide that they prefer to limit their practice to one area of family law, such as litigation or civil practice.
Hiring a qualified attorney will be one among many of the costs paid by your family. You should formulate questions that give voice to the various factors that are important to you. Good attorneys accept clients with different payment styles. Some will take a flat fee while others will invoice their time.
A good attorney will be able to tell you whether you actually need a post-nuptial agreement at all. The circumstances that create the need for a post-nuptial are often symptoms of problems at the marital core. When clients retain our firm to prepare their agreements, we often find that a few powerful counseling sessions with a marital therapist can maximize the probability of a successful marriage.