Prenuptial agreements appear in media reports describing how celebrities agreed to divide their assets when they divorce. But many more couples can benefit from these property division contracts. If couples never entered a prenup before marriage, they may agree to a postnuptial agreement after they marry to serve as insurance if they ever split up.
A postnuptial agreement is like a prenup because these contracts govern how spouses will divide their property, the payment of spousal support and other issues if there is a divorce. But postnuptial agreements may be signed after marriage, even years later.
A postnuptial agreement also has the advantage that it can specifically address events that happened since marriage and which were not anticipated. These contracts are helpful if financial assets become entangled over the course of a marriage.
Dividing inheritances received by one spouse may be addressed in a postnup. This is important because Pennsylvania recognizes any increase in the value of the inheritance as belonging to both spouses even though an inheritance is usually the property of the spouse who received it.
Many couples must also deal with dividing gifts, such as money provided by one spouse’s parents for the purchase of their house. Couples can agree that a certain amount of money may be set aside for reimbursement.
Dividing business interests, which may not have been anticipated before marriage, can be especially vexing. Unlike assets such as bank accounts and retirements funds, placing a value on a business can be difficult, costly, and time-consuming.
A prenuptial agreement can provide options such as identifying the business as separate property allocated to the titled spouse. Or a spouse may provide more non-business assets in return for keeping the business.
Stay-at-home parents are often vulnerable during divorce because they gave up the ability to work or receive an education and have substantially less money. A postnuptial agreement can provide for an equitable division of assets and support for children from an earlier relationship.
These agreements require full disclosure about finances and assets. Postnuptial agreements cannot be signed under duress. Each spouse should have their attorney to advise them and help draft these contracts to assure that their rights are protected.