If you and your spouse entered into a prenuptial or premarital agreement, you might feel confident that you are both protected should you ever face divorce. A prenuptial agreement is an essential document for a couple with numerous, complex assets. However, a prenuptial agreement should not be the end of your preemptive divorce planning.
Understanding Prenuptial Agreements
A prenuptial agreement is a written contract entered into by a couple before they marry. The document lays out the financial agreement the couple has agreed to that will come into play should they ever get a divorce. In New York, the agreement may contain:
- Provisions controlling their wills and estates, so that children from prior relationships will retain their inheritances
- Designation of what will be marital or community property and what will be considered separate property should the couple divorce and how it will be distributed
- The spouses' rights in family businesses
- Details about how debts will be divided in the case of divorce
- Spousal rights to life insurance
- Each person's right to buy, sell, transfer, or lease rental property
- Whether alimony or spousal support will be payable to either spouse and the amount and duration of such support
Prenuptial agreements cannot contain provisions about actions the spouses must take during marriage, such as household chores or sexual behavior or suspension of rights to prosecute a crime (for example, domestic violence). In most states, prenuptial agreements cannot decide issues of child custody and support. In New York, agreements can include provisions about this, but they are not completely enforceable unless a court determines they are in the child’s best interest.
To be valid, a prenuptial agreement must be:
- Signed by both spouses before the wedding
- Signed without duress (an agreement signed minutes before a wedding would generally be considered to be under duress)
- Created by parties who are over age 18
- Created in a manner that is not unconscionable, which usually requires both parties to have their own attorneys
- Created without fraud
Unlike other states, New York does not require complete financial disclosure. However, any disclosure that is made must be truthful.
Understanding Postnuptial Agreements
Postnuptial agreements are essentially the same as prenuptial agreements, except they are entered into after the couple is married. All the same requirements apply. A postnuptial agreement can be created at any point in the marriage – two days into it or 40 years. If the couple has a prenuptial agreement in place, a postnuptial agreement can be created to modify it in part or in total. A postnuptial agreement must be executed in the same way as a prenuptial agreement.
When Should You Create a Postnuptial Agreement?
There are a variety of reasons to consider creating a postnuptial agreement. If you don't have a prenuptial agreement, a postnuptial agreement is a very important document to execute. A postnuptial agreement will clarify your financial positions should the marriage end and make it clear what is separate versus marital property. Perhaps you didn't have time before you married to create a prenuptial agreement, or maybe you weren't able to negotiate all of the nuanced provisions necessary. Regardless of the reason, a prenuptial agreement wasn't signed, it is a good idea to enter into a postnuptial agreement after you are married.
Even if you already have a prenuptial agreement in place, you can create a postnuptial agreement at any point during your marriage. Circumstances may have changed, or you may simply feel that after a certain number of years of marriage that it's time to update and renegotiate your agreement.
Factors that may indicate you should create a postnuptial agreement include:
- One of you has inherited money or property since the prenuptial agreement was executed
- It has come to light that one of you has a child from a previous relationship (or from a contemporaneous extramarital affair) who needs to be provided for
- There has been marital misconduct. For example, if one spouse has cheated on the other, a postnuptial agreement can help solidify trust and help the parties feel secure about their positions should the marriage end. Other marital misconduct could be simply financial – one spouse mishandling funds. A postnuptial agreement could help the other spouse to feel comfortable moving forward.
- You started to divorce but reconciled. A postnuptial agreement can help you clearly spell out your financial rights and provide protection should the marriage eventually fail. A brush with divorce can open your eyes to the financial complications it brings and helps you realize it's time to establish some protections
- One of the spouses has become liable for a significant amount of debt since the prenuptial agreement was executed
- It has come to light that one spouse's financial position is not as it was presented or implied at the time the prenuptial agreement was executed.
- One of you has started a business or joined a business entity since the prenuptial agreement was signed.
- You have had children together since the prenuptial agreement was created and want to create some guidelines for custody and support as well as perhaps renegotiate the distribution of assets.
- One spouse has left their career to stay home with children, changing the financial dynamic of the relationship and the financial needs of the parties
Melania Trump Renegotiated Her Agreement
Renegotiating a prenuptial agreement is not an uncommon situation. Melania Trump reportedly renegotiated hers with President Donald Trump after he was elected. It has been reported that the renegotiation was why Melania remained in New York City for so many months after the inauguration.
The Trump team claimed she stayed in New York so that son Barron could complete the school year in the same school. However, a new book reports that instead, she refused to move until the postnuptial agreement could be renegotiated and signed. The book says that one of the key segments in the new agreement was a provision that stated that Barron would be treated equally with the other Trump children when it came to inheritance and business opportunities.
Other Celebrity Postnuptial Agreements
It has been reported that Matt Lauer renegotiated his postnuptial agreement in 2006 after his wife withdrew her divorce filing (his marriage eventually did end in divorce). It has also been rumored that Beyonce and Jay-Z had a prenuptial agreement when they married and then later entered into a postnuptial agreement after their wealth reached staggering heights and after their marriage hit an alleged rough patch.
A postnuptial agreement is a resourceful move to make for high net worth couples. Even if you already have a prenuptial agreement, there have likely been significant changes to your financial life and personal situation since you signed it. A postnuptial agreement allows you to consider your current circumstances and create a fair agreement should your marriage ever end.