Post-Nup – The Agreement After Marriage

Postnuptial agreements, sometimes referred to as “postnuptial agreements,” “postnuptial agreements” or simply “marital agreements,” are contracts made between couples after the wedding date. Although less common and less well known than prenuptial agreements, which are signed before the wedding, they are gaining popularity.

While prenuptial agreements are the most common avenue by which couples attempt to address property issues, if the couple did not enter into a prenuptial agreement, or if the prenuptial agreement is no longer satisfactory due to changed circumstances, then it may be A postnuptial agreement is desirable. .

Postnuptial agreements can address a variety of issues: how assets acquired by the couple after marriage should be allocated, who should have what degree of ownership or control of a business, spousal support, or how infidelity should be handled. There are some issues that cannot be addressed through a post-wedding agreement, such as child custody arrangements or child support.

Common use of postnuptials

asset protection

Probably the biggest unrecognized reason spouses enter into postnuptial agreements is to protect marital assets from the reach of creditors. Property acquired by each spouse after marriage becomes, in the absence of agreement, marital property. Even property acquired before marriage can become community property if it is “commingled” with community property or placed in joint accounts.

Both spouses have a half interest in any and all community property. This half interest is where credits can wreak havoc. A creditor who is entitled to recover a debt generally “puts himself in the shoes” of the debtor or, in other words, has the same rights as the debtor. This means that the creditor “steps into the shoes” of the spouse who originally incurred the debt and is entitled to satisfy the debt using his or her interest in the community property. Thus, the creditor can theoretically recover up to half the value of the community property to satisfy the debt of one of the spouses.

Under Nevada law, creditors cannot access a spouse’s separate property. With a postnuptial, a couple can agree in writing that certain assets are the separate property of one spouse rather than community property. By agreeing to have some property separate from the non-indebted partner’s property, rather than marital property, the couple can prevent creditors from “going after” that property. This is especially important if one spouse is more “debt prone” than the other; For example, if the husband is starting a business, a community-owned house may be assigned as the wife’s separate property, thereby insulating her from the husband’s business creditors.

Separate Property

In addition to protecting assets, couples may set aside property acquired after marriage as the separate property of one spouse simply to protect the position of the spouse in the event of a divorce, or if the property has special value to one spouse. Couples can also make the reverse agreement that separate property becomes community property. Unlike couples in prenuptial agreements, a spouse may, in a postnuptial agreement, waive their right to retirement and survivor benefits under federal law.

As mentioned above, premarital property that would normally be the separate property of a spouse can, when commingled with community property, be considered community property. For example, a business started by one of the spouses before marriage can become community property if the business is operated by both spouses. A postnuptial agreement can clarify that this business remains the separate property of the original spouse.

Control and Valuation of Companies

The example of a spouse who owns a business is becoming commonplace. Increasingly, a spouse brings ownership of a family business or starts a business. In such cases, it may be important that ownership and control remain in the family, or not be changed by a divorce. With a prenuptial agreement, an arrangement can be made about who will own or control the business, how the community property portion of the business will be valued, and how the other spouse will be compensated for the value of the business in a divorce.

Valuing a business and agreeing on compensation terms is an excellent use of a postnuptial. We’ve seen hundreds of couples’ businesses go under during a divorce. The couple is overly emotionally charged and can’t agree on who will run the business, how to value the business, and what the terms of the spouse’s purchase are. Without an agreement, the business becomes involved in a divorce tug-of-war. Most companies cannot survive.

Infidelity

If infidelity by one spouse has occurred in the marriage, or the couples wish to deter such infidelity, the couple can agree on financial penalties to be imposed on the cheating party. Therefore, a cheating spouse may agree to give some particular real or personal property to the other spouse, or establish a trust for him or her, as a sign of his or her remorse for the infidelity, and of her commitment to her spouse and the spouse. continuation. of marriage A postnuptial agreement can also provide for such measures if one party is unfaithful in the future, again showing a spouse’s dedication to the marriage. These clauses will be enforceable if they impose penalties for infidelity during the marriage.

Legality of Post-Nups

Post nups are enforceable. Under NRS 123.070, a couple may enter into any agreement with each other regarding property that they could enter into with anyone else, and NRS 123.220 grants authority for a couple to enter into a marriage agreement making property acquired after the wedding separate property. , as we will discuss in depth. Other Nevada laws provide authority for other terms in a postnuptial agreement, including assignment of a spouse’s earnings, giving a spouse complete management and control of community property, and assignment of income and resources when a spouse is disabled.

written requirements

Some postnuptial agreements are required to be in writing, including those that separate some postmarital property rather than community property. However, oral postnuptial agreements have been enforced on other issues, and even Nevada courts have found that couples have altered their property relationships by their conduct, without an “express” contract, written or oral. In light of this, it is advisable for couples to formalize any “arrangements” they come to regarding property, finances, and business in a written agreement, so that their intentions cannot later be misconstrued by a court.

Postnuptial contracts cannot eliminate or alter the legal duties of one spouse for the maintenance of the other during the marriage, Cord v. Neuhoff, 1978. In addition, such agreements cannot deal with issues of child custody or support, either during the marriage or at the time of divorce. Including provisions on these issues in an agreement is dangerous because, after a legal challenge, if a court determines that the agreement was intended to be “integrated”, that is, “all or nothing”, then the presence of invalid provisions will invalidate the agreement. . full agreement.

Potential challenges

Postnuptial agreements are subject to the same performance conditions as other contracts. These contracts are subject to a higher level of scrutiny than ordinary contracts; hardness, lack of capacity, excess and misrepresentation. Thus, spouses owe each other a “fiduciary duty” that requires them to disclose all relevant information to each other when making an agreement.

Postnuptial agreements can be challenged as being harsh, although some of the circumstances that often give rise to claims of harshness in prenuptial agreements, such as the pressure of an impending marriage, are obviously not present in a postnuptial context.

The agreement cannot be “unconscionable”, that is, so unbalanced in its results as to be unfair to one of the parties. To avoid challenges on any of these grounds, both parties must be represented by attorneys and have sufficient time to consider the settlement.

Summary

Postnuptial agreements can correct defects in prenuptial agreements or achieve the same ends where one was not made. By clarifying property rights in a divorce, a well-done postnuptial wedding can potentially save the couple a lot of time, energy, and attorney fees that would be spent in a contentious divorce. Perhaps most importantly, a good post-nuptial can preserve a couple’s hard-earned assets from creditors.