Post-wedding agreements, sometimes referred to as “post-nuptial agreements,” “post-marriage agreements,” or simply “marriage agreements,” are contracts made between couples after the wedding date. Although they are less common and not as well known as prenuptial agreements, which are signed before the wedding, they are gaining popularity.
While prenuptial agreements are the most common avenue by which couples attempt to address property issues, if the couple did not reach a prenuptial agreement, or if the prenuptial agreement is no longer satisfactory due to changes in circumstances, then it may be desirable a post-nuptial arrangement. .
Post-nuptial agreements can address a variety of issues: how property acquired by the couple after marriage should be allocated, who should have what degree of ownership or control of a business, spousal support, or how infidelity should be handled. There are some issues that cannot be addressed by a post-wedding agreement, such as child custody arrangements or child support.
Common use of Post-Nups
Asset protection
Probably the main unknown reason spouses enter into post-nuptial agreements is to protect marital assets from the reach of 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 “mixed” with community property or placed in joint accounts.
Both spouses have half an interest in each and every community property. This interest half is where credits can wreak havoc. A creditor who is entitled to recover a debt generally “puts himself in the place” of the debtor or, in other words, has the same rights as the debtor. This means that the creditor “puts himself in the place” of the spouse who originally incurred the debt and has the right to settle the debt using his interest in the community property. Therefore, the creditor can theoretically recover up to half the value of the community property to satisfy the debt of one of the spouses.
Under Nevada law, creditors cannot access a spouse’s separate property. With a subsequent wedding, a couple may agree in writing that certain assets are the separate property of a spouse rather than community property. By accepting that some assets separate the assets of the partner who is not in debt, rather than community property, the couple can prevent creditors from “going after” those assets. This is especially important if one spouse is more “debt prone” than the other; For example, if the husband is starting a business, a community-owned home can be assigned as separate property from the wife, thus isolating her from the husband’s business creditors.
Separate property
In addition to assets, couples may set aside property acquired after marriage as separate property of one of the spouses simply to protect the spouse’s position in the event of divorce, or if the property has special value to one of the spouses. Couples can also make the reverse arrangement for the separate property to become community property. Unlike couples in prenuptial agreements, a spouse can, in a postnuptial agreement, waive their right to retirement and survivors benefits under federal law.
As mentioned above, prenuptial property that would normally remain the separate property of a spouse can, when mixed with community property, be considered community property. For example, a business started by a spouse before marriage can become community property if both spouses operate the business. A post-nuptial agreement may clarify that this business remains the separate property of the original spouse.
Control and business valuation
The example of a business-owning spouse is becoming commonplace. Increasingly, a spouse brings with them ownership of a family business or starts a business. In such cases, it may be important that ownership and control remain in the family or that it is not changed by a divorce. With a prior pledge, an arrangement can be made about who will own or control the business, how the community property portion of the business will be valued, and how the other spouse will be compensated for the business value in a divorce.
Valuing a business and agreeing on compensation terms is an excellent use of a post-nup. We have seen the businesses of hundreds of couples go under during a divorce. The couple is too emotionally charged and cannot agree on who will run the business, how to value the business, and what the terms of the spouse’s purchase are. Without an agreement, the business becomes a tug of war of divorce. Most companies cannot survive.
Infidelity
If the infidelity of a spouse has occurred in the marriage, or the couples wish to discourage such infidelity, the couple can agree to have financial penalties imposed on the cheating party. Therefore, an unfaithful spouse may agree to assign some personal or real property in particular to the other spouse, or establish a trust for him or her, as a sign of their regret for the infidelity, and of their commitment to their spouse and the continuation . of marriage. A post-nuptial agreement may also provide for such measures if one of the parties is unfaithful in the future, again showing a spouse’s dedication to the marriage. These clauses will be enforceable if they impose sanctions for infidelity during the marriage.
Post-Nups Legality
Post-nuptials are executable. Under NRS 123.070, a couple can enter into any agreement with each other regarding property that they could enter into with anyone else, and NRS 123.220 grants authority for a couple to enter into a marriage agreement by making property acquired after the wedding separate property. , as we will discuss in depth. Other Nevada laws grant authority for other terms in a post-nuptial agreement, including the allocation of one spouse’s income, the granting of full administration and control of community property to one spouse, and the allocation of income and resources when a spouse has been disabled.
Written requirements
Some post-wedding agreements must be in writing, including those that separate some postmarital properties rather than community properties. However, oral post-nuptial agreements on other issues have been enforced, and Nevada courts have even found that couples have altered their property relationships by their conduct, without an “express” contract, written or oral. In light of this, it is advisable for couples to formalize any “understandings” they reach regarding property, finances, and business in a written agreement, so that their intentions are not subsequently misinterpreted by a court.
Post-nuptial contracts cannot eliminate or alter the legal duties of one spouse for the maintenance of the other during the marriage, Cord v. Neuhoff, 1978. Furthermore, these agreements cannot address issues of custody or support of children, neither during marriage nor during divorce. Including provisions on these issues in an agreement is dangerous because, after a legal challenge, if a court determines that the agreement was intended to be “integrated”, that is, “all or nothing”, then the presence of invalid provisions will invalidate the full agreement.
Potential challenges
Post-nuptial agreements are subject to the same enforceability conditions as other contracts. These contracts are subject to a higher level of scrutiny than ordinary contracts; coercion, lack of capacity, lack of awareness and misrepresentation. Therefore, spouses owe each other a “fiduciary duty” that requires them to disclose all relevant information when reaching an agreement.
Post-nuptial agreements can be challenged on the basis that they were made under duress, although some of the circumstances that often give rise to allegations of duress in prenuptial agreements, such as pressure from an imminent wedding, are obviously not present in a postnuptial context. .
The agreement cannot be “inconceivable”, that is, so unbalanced in its results that it is unfair to one of the parties. To avoid challenges for any of these reasons, both parties must be represented by attorneys and have sufficient time to consider the agreement.
Resume
Post-nuptial agreements can correct defects in prenuptial agreements or achieve the same ends where one was not made. By clarifying property rights after a divorce, a well-done post-nuptial can save a couple a lot of time and energy and the attorney’s fees that would be spent in a contentious divorce. Perhaps most importantly, a good post-nuptial can preserve the hard-earned assets of a couple of creditors.