Postnuptial agreements (postnups) have been gaining in popularity in recent years – especially among wealthy couples. A postnup works similarly to a prenuptial agreement, except it is created after a couple gets married. Its primary purpose is usually to lay out the terms of asset division in the event of a divorce – often by waiving rights to which one or both spouses would otherwise be legally entitled.
So, how do you know whether a postnup is a good idea for you? Here are a few of the most common reasons that couples decide to pursue a postnup:
Breach of trust
If there is a breach of trust in a marriage – such as infidelity – a postnup can serve as a tool towards reconciliation. The aggrieved spouse may use a postnup as a condition for taking back their cheating spouse. On the flip side, the disloyal spouse may offer a postnup as an olive branch to demonstrate their renewed commitment to the marriage. This could include the offer of certain assets to the aggrieved spouse, which would not be considered marital property.
If one member of the couple comes from a wealthy family, their extended family may impose certain conditions on the marriage. For instance, a parent may require a pre- or postnuptial agreement in order for their child to be a beneficiary of family inheritance, or to receive interest in the family business.
The narrative around pre- and postnuptial agreements frequently focuses on the financial assets both parties stand to gain. But it’s equally important to discuss the financial pitfalls such agreements can help you avoid. A postnuptial agreement can put caps on extravagant spending and also protect one party from debt incurred by the other.
Provisions for children
Postnups may be especially valuable to consider if either member of the couple has been married before. If there are children from a previous marriage, a postnup can map out how they will be provided for.
Even if you and your spouse signed a prenuptial agreement, you can’t anticipate every new event in your life – and its impact on your marriage. If you purchase a new business while you’re married, for instance, you may wish to create a postnup to keep this asset from your spouse in the event of a divorce. Conversely, your spouse may want a postnup to protect themselves from any debts or liabilities associated with the business.
The most common stressor that married couples report in their relationship is finances. A postnup can go a long way in helping to relieve that stress – by ensuring that both parties are well cared for and protected. Remember that a postnup should serve the interests of both parties, so it’s important for you and your spouse to each have independent, separate counsel to represent you.