Wondering what an effective postnuptial agreement entails? From putting the agreement in writing to ensuring that both sides voluntarily enter into it, there are certain steps you must take in order for you and your spouse to determine how to equitably distribute your assets in the event of a divorce.
Addressing these matters with your spouse in the first place, however, can seem daunting. Our secret to a successful postnuptial conversation? Approaching it from a place of mutual understanding and respect — which is much easier said than done. To take some of the uncertainty off your plate, we’ve put together a guide. Keep reading for our advice on navigating postnuptial conversations with success today.
First things first…what is a postnuptial agreement? A legal document that outlines the financial rights and responsibilities of each spouse in the event of a divorce or separation. Although it can be employed in a variety of marital situations, this type of agreement can be particularly beneficial for those who possess significant acquired assets, such as a business, or have complex financial holdings.
And since a postnuptial agreement gives both parties the chance to protect their individual assets/financial interests while clarifying the financial arrangements of any shared children, it’s known to prevent disputes and misunderstandings that can arise during the divorce process.
Naturally, starting a conversation about a postnuptial agreement with your partner can be a delicate matter, which is why a sensitive approach typically works best. We also suggest trying to reframe the conversation; rather than painting the agreement as a sign of mistrust in the marriage, try instead emphasizing how it can provide peace of mind and financial security for both parties. In fact, some marriage counselors recommend couples create a postnuptial agreement in order to build trust and strengthen a relationship.
Wondering if there’s a right time to bring up a postnuptial agreement? It may seem counterintuitive, but having the discussion proactively — meaning when both spouses are content in the union — will increase the likelihood that each partner will be open to addressing any issues that may arise down the line.
There are, however, certain situations that necessitate having the postnuptial agreement conversation as soon as possible, like when one partner has suddenly acquired significant assets. In this case, there’s an increased sense of urgency to ensure the assets of both parties are protected — whether or not a divorce is imminent.
Keep in mind that creating or having a postnuptial agreement does not mean that a divorce is inevitable; it's simply good financial planning, and gives couples peace of mind while maximizing financial security.
When discussing a postnuptial agreement with your partner, we recommend covering a variety of topics to ensure that the agreement is fair and comprehensive. Here are some of the key matters that should be on your to-do list:
Division of Assets
This includes discussing how property, investments, and other assets would be divided in case of a divorce. Make sure to get specific by reviewing any unique or unconventional assets, such as cryptocurrency holdings. You can also address things like inheritance either party has received (or will be receiving).
Spousal Support
Take the time to discuss any financial support that may be provided to one partner if divorce proceedings occur. This is especially important if either spouse is a stay-at-home parent, or made sacrifices in their career for the other spouse's benefit (for example, giving up their career to move abroad when one partner is relocated for work).
Estate Planning
As tough as it may be to think about, make a plan detailing what will happen to certain assets in the event of a partner's death. You can also address what might happen should one spouse be diagnosed with Alzheimer's disease, dementia, or similar medical conditions.
Divorce Proceedings
Talk through how you’d want to handle divorce proceedings should the need arise. Your postnuptial agreement can include things such as a mediation requirement, or a defined cooling-off period before either spouse is allowed to file).
Future Financial Decisions
Your plan for the future is just as important as any decisions you’ve made in the past. We suggest speaking with a lawyer to discuss your financial goals for tomorrow before incorporating them into the postnuptial proceedings.
Despite their differences, there is some notable overlap between prenuptial and postnuptial agreements. For starters, they’re both legal documents that outline the financial rights of each spouse in the event of separation and divorce. In addition, both of these agreements can be used to protect the assets of both parties, therefore preventing many potential conflicts before they arise.
Another similarity? Both agreements can be implemented to clarify the financial arrangements for any children from the marriage.
On the other hand, a notable difference between the two agreements is that spouses sign prenuptial agreements before getting married in the first place, while postnuptial agreements are signed after a couple has already said ‘I do.’
Prenuptial agreements are generally more common, and people tend to use them as precautionary measures. Alternatively, postnuptial agreements are more often used to address changes in assets, income, or any extenuating circumstances that arise during marriage, or in the event that a divorce is anticipated. However, postnuptial agreements are also useful for the couple who simply did not have adequate time to prepare a prenuptial agreement before tying the knot.
Wherever you are in the postnuptial agreement process, your approach to the ensuing discussions is critical in safeguarding your interests and facilitating your goals. And if you need a lawyer’s opinion, we’re always here to help.
Ready to hire an attorney to help create your postnuptial agreement today? Connect with us to get started!