Five Reasons You Might Need a Postnuptial Agreement
Most people have heard of a prenuptial agreement, otherwise known as a “prenup” for short. This contract is written prior to marriage and defines the terms of a divorce so there is a positive outcome for both spouses in the event of dissolution. A postnuptial agreement is less heard of but equally valuable to couples. A “postnup” is similar to a prenup but written after the marriage takes place. Both agreements spell out how a couple will divide their assets in the event their marriage ends. If you’re already married and didn’t create a prenuptial agreement, you might be curious whether a postnup is right for you.
Here are five indicators that a postnup might be beneficial to you and your spouse:
You Have Children From a Different Marriage
In blended families, postnups can pre-determine the share of assets your spouse will receive in the event of a divorce or death. Blended families require unique considerations regarding estate planning and the division of assets. An agreement will ensure that your offspring will receive the inheritance you want. In most cases, without a signed postnuptial agreement spelling out these details, states automatically give the current spouses a share of your estate upon your death.
There is Wealth Involved
Most attorneys agree that postnups are must-haves for spouses who enter the marriage with significant pre-marital assets or expect to inherit significant future assets. In these situations, a postnuptial agreement can help ensure that each spouse exits the union with the holdings they brought in, in the event of a divorce. Creating this document when wealth is involved is a wise investment of time and money, and it can make things less complicated should the marriage end.
You or Your Spouse Own a Business
Businesses are no different from any other asset and will be considered in any financial settlement during the divorce process. When one person spends time and money on launching a business, it’s upsetting to know it could be at risk if there is a divorce. A postnup protects the income or assets you earn during the marriage, which is crucial for spouses who own their own companies. Without a postnup, an ex-spouse may collect a percentage of the business or its earnings. If this is a family business, this can be particularly problematic.
You Didn’t Get a Prenup, but Now Regret It
Many individuals feel that negotiating a prenuptial agreement is stressful. After all, why would anyone want to contemplate divorce while planning their happily ever after marriage? Some couples opt for a postnup simply because they’d rather have those awkward conversations after they say, “I do.” These negotiations might proceed more smoothly once newlyweds have settled into a marital routine and the wedding day is no longer front of mind.
Clarification of Property Ownership
Entering into a postnuptial agreement allows spouses to formally agree upon property ownership and whether those assets will be community or separate. This will help avoid confusion and even reduce potential future disagreements by establishing an up-front understanding. It’s also a good way to determine the ownership of property gifted to or inherited by one spouse after marriage.
In certain marital situations, a postnup is strongly recommended. With a contract in place, you and your spouse know who gets what, with little wiggle room for argument. Working together with a trusted lawyer can allow the process of creating a postnuptial agreement (relatively) pain-free.
For a deeper look at prenuptial agreements, check out Untying the Knot, and if you’d like a more detailed description of this process, check out Cindy Campbell’s new book, “Legal Things Parents Should Know.” Do not hesitate to reach out if you’d like to learn more about drafting a pre- or postnuptial agreement. Please call or email us at 866-566-9494 or Assistant@clcounsel.com.
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