Postnup Agreements On the Rise
The poll found that 51 percent of divorce attorneys questioned had noticed more couples signing the agreements, which function as contracts clarifying which spouse owns which assets or property.
Postnuptial agreements are similar to prenuptial agreements in that they determine who gets what after a divorce, among other provisions.
A previous AAML survey found that attorneys had also seen a rise in postnups from 2002 to 2007.
So, why bother working out a contract after you’re already married? “I find that there are two basic reasons,” says AAML President Kenneth Altshuler. “One is there’s been a dramatic change in the financial circumstances of one party. If you win the lottery, or somebody all of a sudden inherits a large sum of money, or someone inherits a business from their family.”
In a perfect world, the couple might hope to share the new asset in perpetuity during a long and happy marriage. In reality, divorces happen and spouses can save an expensive and acrimonious court battle in the unfortunate event that they separate if they make it clear exactly who owns what.
The spectre of divorce can actually spur the signing of a postnup — the other reason Altshuler cites. “Typically there’s got to be something not going overly well in the marriage,” the attorney says. “All of a sudden, they start thinking, ‘Wow, if this doesn’t work out, this is going to become a major problem. Let’s talk about now what will happen so we avoid fighting about it we get a divorce.’”
See reminders in the news of high-profile split-ups doesn’t hurt, either. When Tom Cruise and Katie Holmes pulled the plug on their marriage, word of a prenuptial agreement leaked out. Other couples might think such a contact is a good idea — and find it’s not too late, even if they’re already married.
Postnups don’t have to be strictly about money. “It can really cover anything,” Altshuler says. “Property, assets, debt.” Custody of children isn’t something that can be contracted either before or during the marriage, but the couple can square away some of the financial questions of child rearing. “You can contract college expenses, trust funds, inheritences, how step-children will be protected,” he explains. “If you get an inheritance and you have children from a prior marriage, you want those children to benefit from that inheritance. That’s a good example of a postnup.”
Notably, 36 percent of the attorneys that the AAML surveyed noticed an increased in women seeking out the postnuptial agreement. Altshuler chalks the increases up to more financial sophistication and savvy between couples overall, and for women specifically as their education level and earning potential now frequently surpasses that of their spouse.
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Ultimately, a postnup can lay out any terms a couple wants it too, as long as it’s signed in good faith and doesn’t totally leave one partner out in the cold. “It has to be fair and not fraudulent and not coerced,” the attorney says. “If it’s something so blatently unfair that it shocks the conscience, it’s not going to be enforcable,” like leaving a stay-at-home spouse in a long marriage with nothing at all.
The idea of contracting assets might seem cold to a young couple in love, but a bit of cold calculation in the present can save a lot of trouble down the road.
“We deal with contracts all the time; what’s wrong with having a contract with my husband or wife?” Altshuler says. “It’s just to resolve or avoid future disputes between a married couple.”