What is the role of a postnuptial agreement?

What is the role of a postnuptial agreement?

Most California residents know someone with a prenuptial agreement, or is at least familiar with the concept. These agreements allow a couple to make important economic decisions before entering into marriage.

People are less familiar with postnuptial agreements. Postnuptial agreements are a more recent concept, but they are similar to prenups. Postnuptial agreements also establish a legally-binding economic agreement between spouses; however, it is created after their marriage takes place.

What can you determine with a postnup?

Couples regularly employ postnuptial agreements to determine:

  • Which spouse is responsible for certain debts
  • Future financial priorities
  • The fate of a small business in the case of divorce, incapacitation or death
  • How assets should be allocated to children in a blended family
  • Property division in the case of divorce
  • Retirement account division in the event of divorce
  • How infidelity would impact a divorce settlement
  • Alimony/spousal support payments
  • Who would be awarded the family home in divorce

Many couples find the process of establishing a postnuptial agreement a valuable opportunity to explore important financial topics. You can fully delve into your current financial state and establish goals for your financial future. Clearly establishing each spouse’s responsibilities can also relieve tension and help create a smoother path with both of you on the same page.

The limitations of a postnuptial agreement

California courts will not allow you to determine issues of child custody or child support with a postnuptial agreement. Agreements that limit or deny spousal support may also be determined invalid.

Unlike prenuptial agreements that are assumed valid, postnuptial agreements are presumed invalid. This makes them much more likely to be thrown out by the court. If you and your significant other know that you would like a marital agreement before marriage, a prenuptial agreement is preferable.

However, many couples do not consider a marital agreement until later on in their relationship. A postnuptial agreement could be the best option in this situation; it may significantly benefit each of you as individuals and as a united married couple.