Monday, January 19, 2009

Getting Unstuck With A Postnup - Part 2

Although not as familiar to most people as prenuptial agreements, postnuptial agreements are becoming increasingly common throughout the country. In a recent poll by the American Academy of Matrimonial Lawyers, nearly 50% of attorneys questioned reported an increase in the number of postnups from 2002 to 2007. Interestingly, 58% of the respondents most frequently draw up the agreements as a result of a request made by both parties, rather than it coming from either a husband or wife individually. So what’s it all about?

If there has been full financial disclosure and the terms are not unconscionable, a postnup can be tailored to a couple’s unique circumstances. For example, it can be used to determine who owns or gets to keep which assets, to set a budget for household expenses and savings, or to remove a business from the table in the event of a divorce. Couples also have used them to decide such things as how often the mother-in-law gets to visit, how many boys-only weekends the husband gets to take, pet visitation, and the dividing up of cemetery plots in the event of divorce. There are, of course, limits. Under New York law, postnups can't be used, for instance, to determine questions involving child custody and support. 

Typically, however, postnups address any, some or all of the following subjects pertaining to money and financial issues:

  • They describe how marital debts will be paid.
  • They resolve what will happen to marital property, particularly wit reference to appreciation, gains, income, rentals, dividends, etc.
  • They decide who will own or occupy the marital residence in the event of death or divorce.
  • They specify the status of gifts, inheritances, and trusts that either spouse receives, whether before or after marriage.
  • They clarify what will happen to each type of property, whether jointly or individually owned, such as real estate, artwork and jewelry.
  • They spell out alimony, or provide for a waiver or property settlement instead of alimony.
  • They detail death benefits, setting out what will be provided for in each spouse’s will.
  • They decide on medical, disability, life or long-term-care insurance coverage.

Although couples can use a postnup as a roadmap for an eventual divorce, the very process of working through these issues can help save a relationship. “Postnuptial agreements, where valid, can be a good tool for addressing and solving problems spouses might be experiencing in their marriage," said Gaetano Ferro, president of the AAML. “Having a written document with expectations and obligations clearly set forth reduces the areas of disagreement for spouses and can remove a good amount of stress from everyday married life.”