Situations change over many years of marriage, especially in terms of finances. Many married couples start out with little in the way of assets or wealth but accumulate both over the course of a marriage.
Or sometimes an unexpected event, such as an inheritance, results in one spouse receiving a windfall they never expected.
What is a postnuptial agreement?
A postnuptial agreement could help in these types of situations. A postnuptial agreement is a legal contract stating how assets and finances will be handled if you and your spouse divorce.
The difference between a prenuptial agreement and a postnuptial agreement is that a postnuptial agreement is executed after marriage, rather than before.
California is a community property state. This means that marital property is divided fairly in a divorce. Fairly usually means equally. However, you can generally avoid that law through a postnuptial agreement which allows you and your spouse to decide these matters yourselves.
There are many items you can include in a postnuptial agreement. You can specify how community assets are divided. Community assets are assets acquired during marriage. Common examples include homes, personal property and retirement accounts.
If one or both of you own a business, your postnuptial agreement can decide who receives the business or what happens to the business. You can even use your postnuptial agreement to decide who gets the pets.
What a postnuptial agreement cannot cover
A postnuptial agreement can also address debt division. However, it cannot be used to address child support debt or wave away future support payments.
Typically, a postnuptial agreement is meant for financial matters. In addition to child support, child custody and visitation are not topics that are meant to be included in a postnuptial agreement.
There are several requirements for a postnuptial agreement to be legally enforceable. The agreement must be in writing and signed by both spouses.
Property division terms must be clear. Ambiguous or vague terms could cause the clause or entire agreement to be stricken.
You and your spouse must voluntarily sign the agreement. A postnuptial agreement requires both of you to be honest about your financial situations. If you believe the information in the agreement is not correct or feel pressured to sign the agreement, you should not.
Likewise, you should not coerce your spouse into signing the agreement if they are not comfortable. You should never hide or disclose assets.
Why you should consider a postnuptial agreement
Having a postnuptial agreement has several benefits. It allows you to protect your interests according to your wishes rather than being bound by California community property laws.
Additionally, your postnuptial agreement prevents you from going through costly, lengthy and stressful courtroom litigation.
But be aware that a court still retains the power to override the terms of a postnuptial agreement. For example, if a court finds the terms are inaccurate or too unfair to one spouse or the agreement was entered into involuntarily, it could revoke the postnuptial agreement.