Exploring the Idea of a Postnuptial Agreement
Many of you will remember the scene from the 1990s film, Liar Liar with Jim Carey where he defends his client’s charge that her pre-nuptial agreement is not legal. “Pre-nups” are widely known, but have you heard of POST-nuptial agreements? While “pre-nups” are obviously put into place pre-marriage, “post-nups” are agreements a couple decides to have in place after they are legally bound to one another. It’s no secret all marriages are filled with a multitude of decisions, many of which may test the couples’ ability to work together; marriage takes work. As a young engaged couple, it can be hard enough to look past the stress of planning a wedding, much less a year or ten later! It’s believed “post-nups” evolved out of this need to possibly protect oneself AFTER marriage.
A common disagreement I see with the couples I work with in one capacity or another is a resentment that arises when one spouse stays home for a period of time while the other spouse pursues a career, mostly to care for the children. For the stay-at-home spouse, this means lost wages, lost network of colleagues/other professionals, lost benefits (especially retirement) and lost job experience. “Post-nups” can be put into place to protect the spouse who chooses to stay home. It may be this is out of necessity if there is a special needs child or a child with learning disabilities. Another situation I see is one spouse stays home for a period to care for an aging parent(s). In much of the work I do, a POST-nuptial agreement would have been a smart move on the couples’ part and, in some cases, may have saved the marriage.
It is fair to say no one enters a marriage with the intension of divorce, but the reality is approximately 40 to 50% of marriages will end this way. Even the strongest relationships will be tested, and there is no way to predict what will happen in the future; you cannot control your spouse…amen? Although it may seem to be a lot easier to ignore this statistic and bank on staying with your spouse for life, to be honest, this is just not what I see many times in my office. Being prepared may be a better choice to consider! It is not an easy conversation and may spark some heated conversations, but it is smart conversation.
Whether your dream is to start your own business, travel the world, or be a stay at home parent, these will all involve a financial plan in one way or another. These decisions can have a significant impact on your life and that is okay, but there is more to think about than developing a weekly family schedule, meal plan, and household finances. Postnuptial agreements can help alleviate a lot of the financial stress that couples experience from certain lifestyle choices. It provides couples with the opportunity to define the allocation of current and potential future assets. Many postnuptial agreements may include some of the similar items that a prenuptial agreement would: which spouse will obtain the responsibility of taking care of the financial debts, how will the spouse be compensated for staying home and how much, who will pay child support in divorce, what to do about the marital home in divorce, what is the plan to get the spouse back to work, and much more.
Though we cannot draft legal documents, The Financial Knot uses cash flow planning to assist married couples in understanding how post-nuptial agreements may impact their future; we work with your attorney. We can illustrate different scenarios for couples to understand the best way to structure the agreement. By having this visual, couples can move forward in confidence! Considering a post-nuptial agreement? We can connect you with an attorney you can trust. Call our office today at (803) 403-1308 and get started.
“Daring greatly means the courage to be vulnerable. It means to show up and be seen: to ask for what you need, to talk about how you’re feeling, and to have the hard conversations.” Brene Brown