Many people think that a prenuptial agreement and a postnuptial arrangement are of equal value. As long as you have one of them signed, you’re covered if disaster strikes your marriage. Unfortunately, that’s just not true.
A prenuptial agreement is the best possible agreement, for the courts prefer a statement of who came into the union with what that is drawn up before the union, not after the fact. Certainly, a postnuptial agreement is better than no agreement at all, but many clients are under the misconception that they are as “covered” with a postnuptial as with a prenuptial agreement. The harsh reality is that the courts tend to assume that a prenuptial agreement is always valid, but they have the opposite reaction to the postnuptial agreement-the assumption is, in the majority of cases, that that type of agreement is not valid.
The other problem that often arises in terms of these types of asset protection agreements is that romance gets in the way. If this were a business merger, hardly anyone would argue that it’s necessary to at least consider the possibility that at some point the partnership may sour and the relationship may dissolve. When it comes to matters of the heart, hardly anyone likes to think this way. However, the reality is such that every marriage is a contractual agreement, a merger of sorts and should be treated as such on a certain level.
When you consider that more than half of all marriages end in divorce, it isn’t being alarmist or an overreaction to consider having a prenuptial agreement in place. Should the marriage end, at least the people going through it aren’t also having the compounded agony of fighting over “questionable” properties and belongings-both tangible and intangible-during their divorce.
Here’s what most people forget: Everyone has some property-tangible or intellectual-something of value or worth that they bring with them when they enter into a domestic partnership. However, most people fail to make a list of these items, putting those items into dispute once the relationship ends. At that point, the tug of war becomes costly and draining-emotionally, physically, and financially. Wedding gifts from relatives are particularly tricky, as once given, they became property of both the husband and the wife. Later on, those antique tea cups from grandma could set off a bigger fight than financial assets. It is good practice to itemize and list even the most easy-to-forget “things.”
Postnuptial agreements are harder to enforce than prenuptial agreements, because the courts follow the logic that married people have a fiduciary duty to each other. Still, people enter into postnuptial agreements that, if properly drafted and maintained, will hold up in court. The following suggestions should help get you started:
1. Have your client make a list of the assets that he or she has amassed since the marriage occurred-specific things that the client feels belong to him or her. This could be the assets of a new business started by your client, a benefit package earned at a corporation, or regular yearly bonuses.
2. Gifts received after the marriage from friends or relatives that both spouses have enjoyed the use of, such as an expensive vase, a Persian rug, or the cappuccino machine, should be listed.
3. Note any items purchased with your client’s personal funds (that is, not money from a joint checking or savings account). These items could include the patio furniture, a CD player, or a PalmPilot, for example.
4. Make certain that your client continues to supply you with a list of new items he or she has received or purchased. It might be wise for you to do an annual “checkup” with those clients who have postnuptial agreements to make sure all items are included. Naturally, you can include language in the wording of the postnuptial agreement that allows for any new additions. You may also find it helpful to provide addendums to the postnuptial agreement for absolute clarity.
No one size fits all and these arrangements should be discussed with an expert family law lawyer. If you’re considering cohabiting, marriage, or divorce, it may be time to give me a call so we can discuss assets and liabilities.