Whether a spouse regrets not obtaining a prenuptial agreement prior to the marriage or their financial circumstances have changed dramatically after taking their vows, a postnuptial agreement is a good solution that can help a married couple protect themselves and their assets.
What Is a Postnuptial Agreement?
A postnuptial agreement is a type of contract that spouses who are already married enter into to specify the ownership of certain financial assets should they eventually divorce. It can also list obligations and responsibilities related to any children the couple has.
Also known as a post-marital agreement or postnup, it is very similar to a prenuptial agreement but is signed after marriage instead of before. Although some people believe that these types of marital agreements go against the spirit of marriage, they can actually serve as a source of marital harmony and give both parties clarity about what would happen in the event of a divorce.
What Does a Postnuptial Agreement Entail?
Postnuptial agreement laws vary by state, but in general, these agreements must always be entered into voluntarily by both spouses and must be in writing. The terms cannot be unjust, one-sided, or unconscionable, and the spouses must fully disclose all of the relevant information at the time the agreement is executed. Finally, the agreement must be signed by both parties without coercion.
What is Covered By a Postnuptial Agreement?
A typical postnuptial agreement will address what happens to a couple’s property if one spouse passes away. In some cases, a surviving spouse may waive certain property rights they would have inherited.
It can also cover general terms related to separations. The spouses can avoid the time and expense involved in a divorce by agreeing on matters such as the division of property and other marital assets.
However, it is important to note that matters related to child support and child custody are not enforceable via postnuptial agreement, nor can such an agreement attempt to govern routine aspects of marital relationships.
Why Should You Get a Postnuptial Agreement?
Although a postnuptial agreement can be useful for all couples, there are certain circumstances in which it may be a particularly smart move.
To Divide Interest in a Business
Although an asset like a bank account is relatively easy to value in a divorce, assigning a specific dollar figure to a business where one or both spouses are principals is more challenging. A postnup can categorize a business as separate property that must remain with a particular spouse. Alternatively, the couple might agree that the other spouse will receive a more significant share of assets unrelated to the business to compensate for this.
To Protect an Inheritance
If one spouse is anticipating a large inheritance, a postnuptial agreement can be used to outline who will be entitled to the money in the event of a split. An inheritance one spouse receives during a marriage is not generally considered community property and is subject to the division of assets.
However, in cases where inheritances have been handled in a manner that leads them to become commingled with community property, such as the marital home, the inheritance could be considered community property.
With a postnup, the heir can ensure continued ownership of their inheritance. It may also protect increases in the value of the inheritance. In some cases, a relative who is leaving their assets to a married individual might insist that they obtain a postnuptial agreement to ensure the wealth stays on their side of the family.
To Rebuild a Relationship
Although improved communication and therapy are the best approaches to repairing damaged relationships, negotiating a postnup can help some struggling marriages. For example, in cases where an individual has been unfaithful, agreeing to postnuptial terms that are more favorable to the other spouse may signal their intention to work harder to keep the marriage intact moving forward.
A postnuptial agreement could also outline how a couple can remain married but separate themselves from one another financially or become independent of each other’s financial activity.
To Provide for a Stay-at-Home Parent
When one parent decides to stay at home and take care of their children, their earning power can drop dramatically. A postnuptial agreement can give them peace of mind by providing them with more favorable terms for the division of assets should the marriage end.
Get Help from Experienced Maryland Postnuptial Agreement Attorneys
To learn more about creating an effective postnuptial agreement, reach out to the experienced Maryland postnuptial agreement attorneys at Milstein Siegel. Our team can help you draft and enforce a postnuptial agreement that protects your interests.