What is a Post-Nup?

Posted: 17 September, 2019

A postnuptial agreement, also known as “post-nup agreement,” “postmarital agreement,” or simply “marital agreement” are contracts between spouses after the wedding date.

Although they are less common than prenuptial agreements, post-nup agreements are gaining in popularity.

Postnuptial agreements can correct defects in prenuptial agreements or achieve the same ends where there is no pre-nup. By clarifying property rights upon a divorce, a well-made postnuptial can potentially save a couple time, energy, and divorce lawyers’ fees which would otherwise occur in a contentious divorce.

Postnuptial agreements can address a wide range of issues like:

  • How property acquired by the couple after the marriage should be allocated
  • Who should have what degree of ownership/control over a business
  • Spousal support
  • How infidelity should be handled

Keep in mind there are also issues which cannot (and should not) have any involvement with a postnuptial agreement. Avoid including things like child custody and child support.

It can be helpful to speak with a family law attorney when drafting a prenuptial or postnuptial agreement.

Common Uses of Postnuptial Agreements

The ultimate goal of any marital contract is to make sure both partners have protection in the event one partner dies, or they file for divorce. These contracts can also reduce the time and costs of hiring divorce lawyers to come to an agreement in court.

The following are common areas couples seek to clarify in postnuptial agreements.

Asset Protection

The most significant unsung reason for a postnuptial agreement 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 marriage can become community property if it is “commingled” with community property or put into joint accounts.

Both spouses have a one-half interest in community property. This one-half interest is where creditors can reap havoc on the family. A creditor has the legal ability to “step into the shoes” of the spouse who initially incurred the debt. Therefore they have the right to satisfy the debt using that spouse’s interest in the community property. Meaning they can own half your house if they choose.

Under Nevada law, the separate property of a spouse is not within reach of creditors. With a postnuptial agreement, a couple may agree in writing that certain assets are the separate property of one spouse. Because that property is not community property, the couple can prevent creditors from going after those assets.

This is especially important is one spouse is more likely to incur debt. For example, if the husband is starting a business, a community property home can become separate property of the wife through a postnuptial agreement. Then it becomes insulated from any of the husband’s business creditors.

Separate Property

Couples can set aside property acquired after marriage as the separate property of one spouse. This can be simply to protect one spouse in case of divorce. It could also be because a piece of property has particular value to one spouse.

Alternately, couples can make a reverse agreement changing separate property into community property. Unlike couples with prenuptial agreements, a spouse may waive their right to retirement and survivor benefits under Federal law with a postnuptial agreement.

Business Control and Valuation

As entrepreneurship increases across the nation, it is common to see one spouse inherit to start a business.

In such cases, it might be important to see that ownership remains in the family. Divorces can cause business failures or one spouse to sell their business to satisfy the divorce requirements.

With a pre-nup, a couple can arrange the following:

  • Who will own the business
  • Who will control the business
  • How community property portion of the business will be valued
  • How the other spouse will be compensated for the business value in a divorce

Valuing a business as well as agreeing on compensation terms is an excellent use of a post-nup. Our divorce lawyers have seen hundreds of couple’s businesses sink during a divorce. The couple becomes too emotionally charged and cannot agree on who will run the business, how to value the business and the terms of buying out the other spouse.

Without a prenuptial or postnuptial agreement, the business becomes caught in a divorce tug-of-war. Most business cannot survive.

Postnuptial Agreement After Infidelity (or Before)

Couples can agree to financial penalties imposed on the cheating party. You can implement this either to dissuade any such infidelity before it happens or after any infidelity has occurred.

A cheating spouse may agree to turn over some particular personal or real property to the other spouse. Other couples arrange to set up a trust for the other as a token of their regret and future commitment.

A postnuptial agreement can set terms for if a party is unfaithful in the future. These clauses will be enforceable if they impose penalties for infidelity during the marriage.

Legality of a Postnuptial Agreement

Postnuptial agreements are legally 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. NRS 123.220 gives authority for a couple to enter into a marital agreement making property acquired after the wedding separate property.

Other Nevada laws grant authority for other terms in a postnuptial agreement including:

  • Allocating a spouse’s earnings
  • Granting to one spouse complete management and control of community property
  • Allocating income and resources when a spouse has been disabled

Written Requirements for a Postnuptial Agreement

Some post-nup agreements must be in writing. Specifically, agreements that make postmarital property separate instead of community property.

Nevada courts have upheld oral postnuptial agreements on other subjects. They have even found that couples have altered their property relations by their conducts, without an express contract, written or oral.

In light of this, we advise couples to formalize any understanding they have concerning property, finances, and businesses. Having these understandings in writing can prevent courts from misconstruing things later.

What a Postnuptial Agreement Cannot Do

Postnuptial contracts cannot eliminate or change the legal duties of a spouse. Such agreements also cannot deal with child custody or child support, either during the marriage or after divorce.

Including these things can endanger the rest of your agreement. If one spouse legally challenges the agreement and they find an “all or “nothing” aspect of it, then the presence of that clause or intention can invalidate the entire postnuptial agreement.

Other Challenges

Postnuptial agreements are subject to the same conditions for enforceability as other contracts. These contracts undergo a higher level of scrutiny than ordinary contracts. They get examined for duress, lack of capacity, unconscionability, and misrepresentation. Both spouses owe each other a “fiduciary duty” when creating this type of contract. They must disclose all relevant information to each other when making an agreement.

Postnuptial agreements can be challenged on the grounds they were made under duress. Although some of the circumstances which often give rise to allegations of duress in prenuptial agreements, such as the pressure of an impending wedding, are not present in a postnuptial context.

The agreement cannot be “unconscionable.” Meaning they cannot favor one party so that the results become unfair to the other party. To prevent challenges on any of these grounds, both parties should have divorce lawyers represent them. They should also have adequate time to consider the agreement.