Until relatively recently, it seemed that prenuptial agreements (prenups) were only for movie stars, pop stars, and the fabulously wealthy. They were customarily associated with rich people who wanted to protect their assets in the event of a divorce, especially when they were marrying someone less well-off. But as divorce has become more commonplace, more couples are now considering a prenup as a sensible, just-in-case precaution.
The increasing popularity of prenups is echoed by the tremendous growth in postnuptial agreements (postnups) for married couples. When a couple marries, the law says that they have a moral, legal, and financial duty to care for each other. A postnup cements these obligations in a legal agreement that formalizes asset division if a separation occurs.
Although prenups and postnups are very different in some ways, they have one major factor in common: they’re both designed to address and deal with the consequences of a divorce or separation.
It may not sound like the most romantic thing to do if you’re about to get married, but should you and your partner be thinking about what a prenup covers? Alternatively, if you’re already married, under what circumstances is a postnup a good idea?
One thing is for sure - prenups and postnups aren’t for everyone. To find out whether they suit you and your relationship, along with the relevant dos and don'ts, read on to learn more.
A postnup typically covers the primary assets accumulated during the marriage, like property, financial investments, pensions, vehicles, expensive electronic goods, and so on. It’ll often include specific items. In a sample scenario, the Colorado residence may belong to the husband, while the investment apartment and associated income are assigned to the wife. The agreement may also cover household expenses, health insurance, spousal support, and outstanding debts.
Any agreement must be made in good faith, so both parties must commit to making a full and transparent disclosure of all assets, debts, earnings, and so on.
Anyone considering a postnuptial agreement should be aware that several areas are excluded. References to child support, custody, and visitation rights are all off-limits in a postnup - and this is also the case with a prenup.
Postnuptial and prenuptial agreements share many characteristics. Both are usually concerned with various practical and financial considerations after a divorce or separation. However, there are some significant differences, most specifically concerning timing, coverage, and validity.
One of the most significant differences between a prenup and a postnup is the timing. A prenup becomes valid as soon as the couple is married, whereas a postnup can be signed at any time - two months, two years, or two decades after the wedding day.
With a postnup, the couple can agree that it applies from the signing date forward, or they may choose to use it retroactively to any date in the past, as far back as the wedding day.
Although they cover similar ground, prenups and postnups can differ in terms of their coverage. A prenup typically looks at assets and property owned before marriage. In contrast, a postnup has to consider many factors that didn’t exist before the union: shared property, new businesses, and so on.
One significant difference between a prenuptial and postnuptial agreement involves legal status. California courts mainly accept that a prenuptial agreement is valid from the date of signature. However, a postnuptial deal isn’t valid until it’s been approved by the courts. For a postnup to be considered legal, you’ll have to follow some specific steps.
You might consider a prenup if there’s a significant wealth difference between the two sides in a marriage. Once couples understand what a prenup is, many see it as a practical and pragmatic measure that can help them avoid excessive confrontation and expense, should the worst-case scenario unfold. Other advantages of a prenup include the ability to make specific provisions, such as leaving a particular property to a child from your first marriage.
You might not think you need a postnup, but it has many practical and useful applications. It can provide additional security in marriage, reflect changing circumstances, address specific issues in a relationship, clarify family inheritance matters (especially with children from prior marriages), and help prepare the ground for a divorce.
Whether you’re drawing up a prenup or postnup, it’s important to remember that California is a “community property” state. Any assets accumulated during the relationship (excluding gifts or inheritances) are considered marital (or community) property. Legally, this property must be split equally in the event of a divorce. Thus, if a husband stayed at home to raise the children while the wife built up a multi-million dollar company, he could be entitled to 50% of the business if they divorce.
A postnup can also clarify the extent to which an individual’s pre-marital assets become both partners’ property. And finally, note that post-separation, any income, and earnings are considered separate property.
There are several legal requirements for a prenuptial agreement. By law, it must be fair and proportionate and written in clear and legally acceptable terminology. Both parties must understand what they’re signing, and neither side can be forced or coerced into signing anything. Those same requirements apply to postnuptial agreements, too.
You may think it’s possible to put together a prenup or postnup agreement on your own. Still, you’re far better off using a lawyer who has substantial experience drawing up such documents. A professional attorney will ensure that your agreement is appropriately worded, covers all the relevant circumstances, and fully stands up to legal scrutiny.
Every individual prenuptial and postnuptial agreement should be considered an important legal document. Because it can have such profound consequences for you, your children, your family, and your future, there’s no margin for error. That’s why many couples enlist the help of specialist attorneys when drawing up their prenup or postnup: the security, certainty, and peace of mind provided is worth every cent.