Almost everyone has heard of a prenup (also called a prenuptial agreement or premarital agreement). They are well known to be used by celebrities and the rich to protect their assets. Prenups are agreements soon-to-be-wed couples enter into that establish each person’s rights to property, assets, debts, and support in the event of a potential future divorce. Prenups can be effective tools for protecting assets, estate planning, or to satisfy wealthy family members looking at their future beneficiaries, but they are only used before the wedding.
What if you are already married and find yourself in a position where a prenup would have been nice to have? Don’t worry: a post-nup is an option that is available to you.
You may want to consider entering into a post-nup because it can provide similar protections that a prenup can provide. A post-nup (also called a postnuptial agreement), is an agreement entered into by spouses after the marriage, but still establishes a person’s right to property, assets, debts and support. Post-nups are not all that common in Arizona, but they are becoming more popular in recent years.
Here are a few reasons why couples consider post-nups:
– There has been an infidelity issue or there are marital problems and the parties alter their community property rights in an attempt to convince a spouse of their commitment and stay married.
– There are excessive and abnormal spending and debts and the other spouse wants to protect their assets.
– A spouse is involved in business planning, either starting, growing, merging, or acquiring business assets or debts and their business partners want to ensure that a divorce will not disrupt the businesses.
– Family members of one spouse require it before gifting property or listing a spouse as a beneficiary on an estate.
– Parties who previously entered into a prenup wish to modify the terms.
Entering into a post-nup is a serious contractual undertaking. Because the parties are married at the time of negotiations, they each owe a higher duty of fair dealing to one another than prior to being lawfully wed. That enhanced duty includes the requirement for consideration—an exchange of something of value as inducement to waive rights in a future divorce—that is not required for prenuptial agreements to be enforced. (In a prenuptial agreement, the marriage itself is the consideration and inducement).
We have seen many clients come into our office wanting a post-nup and, more often than not, the process of getting a post-nup becomes a harbinger for a divorce. That said, a post-nuptial agreement is a way to provide mutual security and peace of mind to a married couple and may eliminate financial stress. Although the “business of marriage” is not particularly romantic, it can and should be addressed separately from “the relationship” in most cases. The fact that you and your spouse are considering a post-nup does not mean your relationship is on the rocks.
For any post-nup negotiations, it is highly advisable to involve legal counsel to improve the likelihood that the agreement is enforceable and fair for both parties.