Post-Nup – The Agreement After Marriage

Postnuptial agreements, sometimes referred to as “postnuptial agreements,” “postnuptial agreements,” or simply “marriage agreements,” are contracts that are 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 in 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 by a post-wedding agreement, such as child custody arrangements or child support.

Common use of postnuptials

asset protection

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

Both spouses have a half interest in any and all community property. This halving interest is where credits can wreak havoc. A creditor who is entitled to recover a debt generally “puts himself in the place” of the debtor, or in other words, has the same rights as the debtor. This means that the creditor “puts himself in the place” of the spouse who originally contracted the debt and has the right to satisfy the debt using his 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 assets separated from the non-indebted partner’s assets, rather than community assets, the couple can prevent creditors from “going after” those assets. 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 home may be assigned as the wife’s separate property, thus 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 spouse’s position 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 one spouse may, when commingled with community property, be considered community property. For example, a business started by one spouse before the marriage can become community property if the business becomes operated by both spouses. A postnuptial agreement may clarify that this business remains the separate property of the original spouse.

Control and Valuation of Companies

The example of a business-owning spouse 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 divorce. A prenuptial agreement can make an arrangement 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 postnup. We have seen the businesses of hundreds of couples collapse during a divorce. The couple is too emotionally charged and cannot 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 is caught up in a divorce tug-of-war. Most businesses cannot survive.

Infidelity

If there has been infidelity by a spouse in the marriage, or couples wish to discourage such infidelity, the couple may agree on financial penalties to be imposed on the cheating party. Therefore, an unfaithful 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 repentance for the infidelity, and of her commitment to his spouse and the continuation. 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.

Post-Nups Legality

Post nups are required. Under NRS 123.070, a couple may enter into any agreement with each other regarding property that they might enter into with any other person, 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 talk in depth. Other Nevada laws provide authority for other terms in a postnuptial agreement, including assignment of a spouse’s earnings, granting a spouse full management and control of community property, and assignment of income and resources when a spouse he is disabled.

written requirements

Some postnuptial agreements are required to be in writing, including those that separate some postnuptial property instead of 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” written or oral contract. In view of this, it is advisable for couples to formalize any “deals” 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 to support the other during the marriage, Cord v. Neuhoff, 1978. Furthermore, such agreements cannot address issues of child custody or child support, either during the marriage or at the time of divorce. Including provisions on these issues in an agreement is dangerous because, upon 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, excessiveness 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 harsh, although some of the circumstances that often give rise to allegations 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 “excessive”, that is, so unbalanced in its results as to be unfair to one of the parties. To avoid disputes 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 flaws in prenuptial agreements or achieve the same ends where one was not made. By clarifying property rights in a divorce, a post-nuptial wedding done right can potentially save the couple a lot of time, energy, and attorneys’ fees that would be expended in a contested divorce. Perhaps most importantly, a good post-nup can preserve a couple’s hard-earned assets from creditors.