At first glance, prenuptial and postnuptial agreements may seem to differ in nothing more than their timing: a prenuptial agreement (also known as a “premarital property agreement” or “prenup”) is negotiated and signed prior to marriage; a postnuptial agreement (also known as a “marital property agreement,” “partition agreement,” or “postnup”) is negotiated and signed after marriage. Both agreements determine basically the same thing: how the parties’ estates are to be split in the case of death or divorce. There are, however some key differences to be aware of.
What is a Prenuptial Agreement?
A prenuptial agreement determines the rights and obligations of a couple and how the property of each individual would be divided in the event of death or divorce. They also determine the specific characterization of property as either community property or separate property, and the conditions upon which the specifics of each of these categories will be determined. While they are sometimes seen as unnecessary and pessimistic, a prenuptial agreement can also save a great deal of stress and money if a divorce does eventually occur.
People often think that asking for a prenuptial agreement is disrespectful or unromantic, but they may not be as taboo as you think. A recent survey of the American Academy of Matrimonial Lawyers (AAML) shows that sixty-three percent of divorce attorneys report an increase in prenuptial agreement during the past three years, with forty-six percent noting an increasing number of prenups being initiated by women.
In actuality the contracts have very little downside, even when viewing a prenuptial agreement solely as a plan in case of divorce. If a divorce does occur, the agreement will alleviate stress, save money, and ensure an equitable distribution of assets, ultimately benefitting both parties. Prenuptial agreements can also a cover an equally important (and potentially less uncomfortable) topic: how a couple’s assets will be divided in the case of an unexpected death. Seen from this perspective prenuptial agreements can be reframed positively, as a way to protect the transfer of assets to your spouse.
What is a Postnuptial Agreement?
A postnuptial agreement can cover nearly anything that a prenup can cover. The main difference between the two agreements is in their complexity. In the absence of an agreement stating otherwise, personal and business assets acquired by each party during the course of the marriage are community property. Since a postnuptial agreement intends to adjust ownership after the fact, it requires a thorough and specific accounting of all of these assets. This requires an analysis not only of each parties’ personal and business assets and liabilities, but their future earnings as well. Postnuptial agreements can be much more difficult than a prenuptial agreement, and due to their complexity often require much more time and effort to settle when divorce does occur, but they are no less useful or important.
Which is Right for Me?
That being said, the best agreement is the one that both you and your spouse are willing and able to sign. If the marriage has not yet taken place and both parties agree to do so, signing a prenuptial agreement is the best course of action. If the parties do not wish to sign a prenuptial agreement or the marriage has already taken place, a postnuptial agreements is significantly better than no agreement at all.
In general, couples with substantial assets and couples with children from prior relationships should strongly consider one of the two contracts, while they are less integral for couples with relatively few assets going into the marriage. There are always other considerations and exceptions to this general rule, however, so it is always best to discuss your options with an experienced estate planning attorney in order to ensure that you’re making the best choice both for you and for your loved ones. It is also important to consider a prenuptial or postnuptial agreement in combination with your estate plan as a whole, ensuring that these documents do not contradict each other or leave anything important unaccounted for.
We Can Help
Whether you are planning a wedding or have been married for years, a prenuptial or postnuptial agreement is always worthy of consideration. While you may feel like they are unnecessary or not right for you, it is always advisable to have an objective third party evaluate your situation and determine if these one of these agreements would be advisable for your unique situation. If you would like to meet with one of our attorneys to discuss a prenuptial or postnuptial agreement, please contact us with any questions online or by calling our office at 832.510.2900 to schedule a complimentary consultation