When Married Couples Should Consult a Postnuptial Agreement Lawyer

Marriage involves more than sharing a home and building a life together. It also means making financial decisions that can affect both spouses for years. When circumstances change, consulting a postnuptial agreement lawyer can help a married couple understand their legal options and put important financial decisions in writing. A postnuptial agreement allows spouses to address certain financial matters after marriage, helping them set clear expectations and reduce the risk of future disagreements.

What Is a Postnuptial Agreement?

A postnuptial agreement is a written agreement that married people use to set out the terms in relation to certain financial matters. It can cover property, debt, business interests and what happens to the assets in the event of divorce.

A prenup is drawn up prior to marriage. A postnup is one that is drawn up after the couple are already married. One might consider having a postnup if your finances have changed, you’ve acquired new assets or you just want to be clear about your position.

The rules around these agreements are different in different parts of the country. Couples should get legal advice prior to signing, as an agreement that doesn’t meet the requirements could be challenged at a later stage.

1. When One Spouse Receives an Inheritance

An inheritance can have a massive impact on a family’s finances. One spouse may receive money, property, investments or other assets from a relative. Even if the recipient anticipates that the assets will remain separate, the way in which the inherited property is treated will depend on a number of factors, including the relevant local law and how the assets are actually dealt with.

For instance, putting the inherited money into a joint account or using it to buy property jointly can alter the nature of the ownership. A postnuptial agreement can be used to determine how the inherited assets are to be managed and whether or not some of the property should remain separate (if permitted by the law).

Getting advice as early as possible can help a couple to understand their options prior to the inheritance getting muddled in with the rest of their marital finances.

2. When a Spouse Starts or Expands a Business

Owning a business can give rise to financial and legal issues in a marriage. The business may grow, take on debt, purchase property, have new partners etc. All of which can have an impact on both spouses even if only one of them is actually running the business.

A postnuptial agreement can be used to clarify how business interests are to be dealt with, who is liable for certain debts, and what happens to the ownership in the event of a change.

Business owners should get legal advice prior to signing any major contracts, prior to bringing in investors, and prior to making any significant changes to the business. A lawyer can go through the agreement with the existing ownership documentation and tell you whether the terms are appropriate.

3. When the Couple’s Financial Situation Changes

A big rise in income, a new job, a major purchase etc can all lead to a couple rethinking their finances. One partner may be earning a lot more than the other; the other may be working significantly less (to look after the kids, to look after a relative, etc.).

These changes will have an impact on your savings, your retirement plans, your household outgoings and what you expect from each other in terms of financial support.

A post-nuptial agreement is a way for couples to sort through these issues. It can be used to deal with property, debt and all the other financial issues.

The aim is to get an arrangement that both spouses can understand rather than one based on assumptions which may well lead to problems down the line.

4. When One Spouse Has Significant Debt

Debt can have an effect on a family’s financial stability. Credit cards, personal loans, business loans and so on can all be a source of concern in terms of who is liable and the impact on future financial security.

A postnuptial agreement can be used to set out how the couple wishes to deal with certain debts (subject to the law). It will generally not be able to discharge a spouse’s existing liability to a lender or prevent a creditor from enforcing a valid claim.

Before you sign, you should look at your current debts, work out who is legally liable on each one and consider the implications of future borrowing.

Keep proper records and get legal advice to avoid any confusion as to what the agreement can and can’t do.

5. When Trust Needs to Be Rebuilt

Financial disagreements can arise following a major breach of trust. One partner may discover there’s a hidden debt, find out that money has been spent without any prior discussion, or be concerned about the management of the joint assets.

A post-nuptial agreement can be a useful tool to establish clear financial expectations as you go through the issues. It can set out the agreed financial arrangements and can be a useful mechanism to get both parties to think about their respective responsibilities.

But signing a contract in itself won’t resolve all the relationship issues. Both partners should have sufficient time to consider the terms, to ask questions and to obtain independent legal advice if they wish.

An agreement should never be used as a means of pressuring a spouse into giving up their rights. Both parties must be in and of the agreement and fully understand what they are agreeing to in order to produce a fair and legitimate document.

6. When Children or Family Responsibilities Change

Having kids, merging families, or taking on new caring roles can all have an impact on a couple’s financial priorities. You’ll need to think about the cost of housing, the cost of education, the amount of savings you have and what you’re going to do if one of the partners is forced to leave work or work reduced hours.

A postnuptial agreement can be of some assistance in relation to certain property and financial issues arising out of the changes. Parents should be aware, though, that a spouse’s agreement will generally not be able to override child support rules or a court’s power to protect the child’s interests.

Couples should also check that their existing estate planning documents still reflect their wishes. It’s worth reviewing them with the appropriate professionals to ensure that all elements of the family’s financial plan are in line with one another.

For general information about estate planning, the American Bar Association’s public resources offer useful background on property and estate-related legal topics.

7. Before Signing, Understand the Legal Requirements

Couples shouldn’t wait until there’s a dispute to find out if a postnuptial agreement is appropriate. Getting advice prior to drafting or signing gives both parties the opportunity to understand their rights and their obligations.

A lawyer can tell you which terms are permissible, highlight any problems that need to be addressed and assist in drafting a document that is compliant with the relevant requirements.

Depending on the jurisdiction, important considerations may include:

• Full financial disclosure: Both spouses may need to provide accurate information about their assets, income, and debts.
• Voluntary consent: Each spouse should understand the terms and sign without improper pressure.
• Independent legal advice: Separate lawyers can help each spouse understand their individual rights and potential risks.
• Clear written terms: The agreement should describe the intended financial arrangements in specific, understandable language.

These safeguards are important, but they do not guarantee that an agreement will be enforced. Courts may review the circumstances in which it was prepared and signed.

How to Prepare for a Legal Consultation

Before you see a solicitor, each spouse should gather their financial records. These would be things like bank statements, the deeds to any property, any loan agreements, investment records, business ownership documents and so on. You’d also want to have a good idea of your regular income and your regular expenditure.

It also helps to work out what the main issues are that the agreement should address. One partner may be keen to protect their business; the other may be looking for very clear rules on joint expenses and financial obligations.

Couples should be asking questions about the proposed terms, the possible limits, future changes and what happens once they’ve signed. They should also be asking whether any existing agreements or estate planning documents need to be looked at.

Being well prepared for the consultation will of course help to keep the discussion on track and will enable both partners to make informed decisions.

Conclusion

A post-nuptial agreement is a practical way for a couple to deal with financial changes, protect certain interests and set out what is expected. It can be useful after an inheritance, a business has grown, there’s been a significant change in income, new debt has come in or there’s a change in the family circumstances.

The best time to get advice is before it becomes a full-blown disagreement. The couple can get a good understanding of their options and the terms, and then make an informed decision as to whether a postnuptial agreement is appropriate for their situation. A qualified lawyer can of course go through the requirements and advise on whether a postnuptial agreement is right for them.