In a fragile economic climate, it is particularly wise to consider what protection you can put in place to guard against unforeseen circumstances that could have a dramatic impact on your personal finances. While taking out medical insurance policies and finding ways to reduce grocery bills can be helpful, one consideration that is available to married couples is that of writing a postnuptial agreement.1
What is a postnuptial agreement?
A postnuptial agreement is a contract made between two married people that specifies their preferences and protects their personal financial positions in the event that they get a divorce. Because a postnuptial agreement is written without any intent for divorce, it is possible to clearly and transparently discuss financial matters and agree on how property, assets, wealth and debts would be fairly divided in the event of a divorce.
When should a couple get a postnuptial agreement?
A married couple can get a postnuptial agreement written at any time after their wedding day. Some may write one soon into the marriage, while others will wait until a significant financial milestone, such as receiving an inheritance or changing their job, has a dramatic enough impact to warrant putting individual financial security in place.
Why would couples choose a postnuptial agreement instead of a prenuptial agreement?
Both prenuptial and postnuptial agreements are designed to protect an individual’s assets and shield them from liability for debts incurred by their spouse.
A prenuptial agreement is usually put in place before a marriage in cases where both parties entering the marriage either have considerable personal wealth or assets that they wish to protect, or when one person’s individual wealth is considerably greater than that of the person they are marrying.
Typically, a postnuptial agreement is drafted when a couple’s financial position at the point of marriage is equitable but changes dramatically after marriage, prompting them to consider whether a divorce would have a major personal impact on their financial security.
What is in a postnuptial agreement?
A postnuptial agreement will be tailored to suit a couple’s unique circumstances but will typically detail:
1. The preferred split of marital property. This includes all jointly acquired wealth, assets, property and debt. In Colorado, marital property is divided fairly rather than equally, so when an agreement has already been made in a postnuptial agreement, it can dramatically improve divorce outcomes.
2. Identification of individual property. This will include possessions, assets, properties, retirement accounts, business investments, wealth and debts incurred by either party prior to or during the marriage that are not to be considered marital property and will remain the property of the sole individual during a divorce.
3. Pet ownership. If the couple has a pet that they are both very attached to, they can use this to agree on who would be best placed to maintain ownership and financial responsibility of it.
What cannot be included in a postnuptial agreement?
Postnuptial agreements can only be used to determine how financial and property issues would be handled in a divorce. They cannot be used to make agreements related to any children of the marriage and must never include provisions for custody, child support or visitation rights.
This is because in the event of a future divorce, both parents and, if necessary, the court, would decide what custody arrangements and financial obligations would be appropriate and in the child’s best interests based on the specific circumstances of the case.
Making sure that postnuptial agreements are legally enforceable
Postnuptial agreements must be in writing and signed voluntarily by both parties in order to be legally enforceable. They must be notarized by a family lawyer who will also confirm that both parties entered into the agreement of their own free will and that the agreements made are fair and equitable.2
A lawyer will ensure that the postnuptial agreement breaks no laws and explain to their clients that declarations of income and lists of assets and liabilities provided by each party must be honest and accurately valued.
The court may rule in a later divorce that the postnuptial agreement is legally unenforceable if it later transpired that either party had failed to reveal all of their debts and assets or that one party was coerced into signing against their will.
Talk to us today
If you and your spouse wish to write a postnuptial agreement to outline your financial responsibilities and safeguard your financial independence, contact the helpful and experienced team at Lewis & Matthews, P.C. today.
We can help you create a rational, fair and transparent financial account that will protect individual interests without harming your married relationship, placing you in a favorable position for the future regardless of the outcome of your marriage.
