Most people are familiar with the concept of a prenuptial agreement, which both parties sign before a marriage. The prenup is a vehicle designed to protect assets that individuals bring to the marriage. The postnup, on the other hand, is a document that is entered into by both parties after the marriage, specifying the division of marital property.
Postnups are designed to protect each spouse's rights to marital assets gained during the marriage. This type of agreement isn't for every couple, but in some circumstances, it can be an investment in the future.
It's not romantic to view marriage as a business contract. However, if married couples can overcome the awkwardness of discussing how assets will be divided in the event of divorce, the conversation could save money and hassle. Situations that might warrant a postnuptial agreement include:
- If you have children from your first marriage and have subsequently remarried, your estate becomes more complicated upon your death. In this case, a postnup can specify certain assets that are to be held in reserve for your children, thereby protecting their inheritance.
- In families that can manage it financially, one spouse may opt to leave the workforce to care for the children. By doing so, this spouse usually loses ground in career advancement and lifetime earning power. Creating a postnup that reflects this could ensure that in the event of divorce, the non-working spouse receives marital assets that offset this earning imbalance.
- During the course of a marriage, a spouse may anticipate collecting an inheritance. If this inheritance is sizable, it may make sense to protect it from the division of property calculations that are inevitable in divorce.
- During the course of a marriage, some families accumulate valuable art or other collectibles. In other cases, treasured family heirlooms are brought into the marital home. If divorce does happen, the fate of these items will have already been determined.
It's possible that your particular circumstances lend themselves to a postnuptial agreement, but determining how property will be divided in an as-yet hypothetical situation could be confusing. If you and your spouse feel that you have assets that should be addressed before divorce becomes reality, consider meeting with an experienced divorce attorney who can help you understand what to expect.