Most people are familiar with premarital agreements, designed to protect individuals entering a legal marriage.
LGBTQ community members find themselves in an interesting position as it relates to premarital agreements because of the staggered way in which marriage equality came about. First, we had federal recognition in 2013, then state recognition in Pennsylvania in 2014 and, finally, nationwide recognition in 2015. As happy as we were to win the fight for marriage equality, the quickness with which it was ushered in did not necessarily allow for careful planning; hence considering a postnuptial agreement.
A postnuptial agreement is entered after the marriage and establishes how a couple’s assets are to be handled in the event of a legal separation. It’s a contract between the individuals stipulating not just how assets would be distributed, but also answers questions such as, Who stays in the marital home? How long does that person have to refinance, and if refinancing isn’t possible, when can the house be sold? Pre- and postnuptial agreements often afford more protection and assurance than the default state divorce code would prescribe.
What is a postnuptial agreement?
Postnuptial agreements became more reliably enforced by the courts in the 1970s, when divorces became more common, along with no-fault divorces, where one spouse does not have to provide a reason for wanting to dissolve the marriage. Prior to that, a marriage was considered a single legal unit, rather than two individuals, and could not enter into a contract with itself.
To make a postnuptial agreement valid and enforceable, it has basic requirements established by law. It needs to be written; — oral agreements are not enforceable. It needs to be voluntarily agreed to by both married participants. Any indication of coercion invalidates the agreement. Full disclosure of every element within the postnuptial agreement must be made. At the time of the signing, all assets and liabilities must be fully described with clear stipulations of how those will be handled. If one spouse is unaware of the full financial picture, the agreement will be declared unenforceable. In some states, such as Pennsylvania, the “fairness” criterion is not necessary, and a one-sided agreement with a large imbalance of asset distribution will be enforced. Lastly, the postnuptial agreement must be validly executed, usually by having both parties’ signatures notarized.
Courts do not view postnuptial agreements the same in every state, but in Pennsylvania, there is a trend of courts favoring and enforcing postnuptial agreements. The idea behind that is the individuals in the marriage know best how to fairly distribute assets in the event of a legal separation, and a fairly negotiated and executed agreement to that effect should take precedent over default state laws that were not designed for that particular couple.
Why have a postnuptial agreement?
Protections within a marriage can be just as important as those set up before a marriage takes place, and the reasons for them are not always financial. For example, if a couple finds their marriage in jeopardy due to infidelity but have come to an agreement to mend the relationship, a postnuptial agreement can be drawn up to include a stipulation that if the infidelity hasn’t ended or is ever repeated, the spouse who broke the marriage vows faces a penalty in a divorce. Moreover, financial pictures can change quickly through incurring debt, an unexpected windfall or inheritance, or if a venture with a business partner becomes wildly successful and you want to protect the company assets from a potential divorce. Other common provisions in a postnuptial agreement deal with contributions made towards real estate, the payment and duration of spousal support, the division of liabilities and marital debts and how assets will be passed on in the event of a spouse’s death.
For couples who have made the decision for one of them to leave their career path to raise children, a postnuptial agreement can protect the spouse who becomes the caretaker if, after years or decades out of the workforce, they decide to divorce. The caretaker has chosen to forego the investment in building a successful career and contributing into a retirement account in pursuit of raising a family and supporting the working spouse in their career. Reentering the workforce after such a gap is a challenge, and the lost earning power can make it difficult to start over. That safety net for the caretaker spouse can ease dread and uncertainty, and even strengthen a marriage.
There are situations when it is not prudent to sign a postnuptial agreement; namely, if adequate time has not been provided to review the postnuptial agreement, it is wise not to sign until and unless both parties have reviewed and fully understand all the terms of the contract. Postnuptial agreements are contracts, making them legally binding and enforceable by the courts.
Some people say it’s not romantic to think of marriage as a legally binding contract, but it is one. People are offended by a two-year Comcast contract but enter into a marriage, which is a contract that lasts in perpetuity, without anything in writing.
You already have one!
Keep in mind, everyone has a pre or postnuptial agreement. It’s whether you and your partner wrote it, or the Commonwealth of Pennsylvania did. Particularly for LGBTQ individuals, who typically marry later in life, the default state divorce code may not effectively provide for your relationship. Crafting one of these agreements can be an empowering process that benefits the relationship and provides stability around the legal and financial aspects of marriage, and that benefits both parties.