When two people decide to get married, they become a pair in the eyes of the law. This means they share retirement benefits, can decide to pay their taxes together, and may even see changes to their health and life insurance policies. One legal change that happens when a couple marries is that they begin to acquire marital property, which is any asset acquired during the marriage using joint funds. Postnuptial agreements can help ensure that this property is evenly distributed in the event of a divorce and prevent long legal battles over who gets what.
What Is a Postnuptial Agreement?
A postnuptial agreement is a legally binding document created by a couple during marriage that indicates who will get which financial assets if a divorce occurs.
While postnuptial agreements have traditionally held a social stigma as many consider them a precursor to divorce, they are useful in preventing conflict between couples and can provide peace of mind to those who worry about protecting their assets.
Requirements for a Postnuptial Agreement
Postnuptial agreements have similar requirements to other contracts. In order for a postnuptial agreement to be valid in the eyes of the law, it must:
- Be presented in writing and signed by both parties
- Be entered into voluntarily by both parties
- Include a complete and honest disclosure of each party’s income, assets, debts, and respective values
- Include terms that are not one-sided or unjust
- Allow both parties ample time to review the terms of the agreement
- Follow the terms of Colorado law
Some specific examples of assets that must be disclosed in a postnuptial agreement include:
- Any property owned separately or together
- Information about bank accounts owned individually or mutually
- Any investments that either party has made
- Any information regarding businesses owned individually or mutually
- Information about debts such as loans, mortgages, etc.
In some situations, one or both spouses will give up specific rights when a divorce occurs. For example, one may give up the right to certain property, or to having their legal fees taken care of by the other spouse. Any right being waived must be listed clearly in a postnuptial agreement.
What Can Postnuptial Agreements Cover?
Postnuptial agreements can be beneficial to both parties in a marriage, not only the party with more assets or money. Some specific examples of the terms that can be included in postnuptial agreements are:
- The division of marital assets, such as banking accounts, bonds, and stocks in the event of a divorce
- The division of each spouse’s debts, such as credit card balances, in the event of a divorce
- The division of retirement benefits, such as 401(K) plans and pensions, in the event of a divorce
- Whether each spouse will retain the property they brought into the marriage in the event of a divorce
- The division of real estate purchased jointly after marriage
- Whether either spouse will remain listed as a beneficiary on the other spouse’s life insurance post-divorce
- Which spouse will receive spousal support and which spouse will pay it, how much the payments will be worth, and how long it will be paid
Who Are Postnuptial Agreements For?
There is a common misconception that postnuptial agreements are only beneficial for the wealthy. This is untrue; anyone who wants to protect their assets in the event of a divorce will benefit from a postnuptial agreement. Some people who may benefit greatly include:
- People who own their own businesses
- People marrying someone who has a large amount of debt
- Anyone who has assets, such as land or vehicles, that they want to separate legally from their marital property
- People who want to ensure their children will receive their assets in the event of their death
Ultimately, postnuptial agreements are used for three main purposes:
- Dividing assets and ensuring spousal support. Postnuptial agreements can include provisions regarding alimony and spousal support, as well as the division of assets owned prior to, and acquired during, the marriage.
- As a legally binding means to waive spousal rights in the event of death. Some couples decide to create a postnuptial agreement to ensure that their assets will be divided and passed on when either of them dies. The agreement can allow each spouse to waive their rights to the other spouse’s assets in the event of their death, so their assets can be given to their children.
- Creating a template for a divorce agreement. Postnuptial agreements are often created to make decisions regarding the division of assets when each party is in a level state of mind. In the event of a divorce, the agreement will already exist and can be incorporated into the couple’s divorce decree, speeding up the divorce process and preventing legal back-and-forth.
Is There Anything That Could Invalidate a Postnuptial Agreement?
Postnuptial agreements need to be completed accurately and within the confines of Colorado law for them to be executed in the event of a divorce. If the agreement does not meet these standards, the court may reject the agreement. The court has the power to reject the agreement in its entirety, or only the inaccurate or unenforceable parts of the agreement. Some examples of what might get a postnuptial agreement thrown out by the courts include:
- If either party did not have legal representation but wanted it while creating the agreement
- If the agreement failed to include a waiver of rights
- If the disclosure of assets from either party was falsified or incomplete
- If the agreement includes terms that the courts can’t enforce, such as punishing either party if they opt for divorce, terms related to child custody, or anything illegal
- If the agreement was signed when the couple already knew they were going to get a divorce
- If either party signed the document while they were under duress
Benefits of Postnuptial Agreements
Although some of the benefits of postnuptial agreements, such as having power over your assets, are obvious, there are others that may not be immediately considered. These benefits are some of the main reasons that people decide to create postnuptial agreements.
Ensuring Financial Security
Postnuptial agreements can ensure that each spouse retains their assets and does not become financially bankrupt in the event of divorce. This can be beneficial for even the strongest of marriages and can help alleviate stress that could cause harm to a relationship.
What You’ll Pass On
A postnuptial agreement can ensure that a person’s assets are passed on to their children or however they desire if they die before their spouse does. Without such an agreement, it would be up to the spouse to distribute assets, and the deceased party’s children may not receive money or items intended for them. Creating a postnuptial agreement can give someone peace of mind and comfort knowing that their loved ones will be taken care of.
If a couple creates a business together after they get married, they can use a postnuptial agreement to determine which spouse will remain in control of the business in the event of divorce. This can save a lot of time during divorce proceedings because valuing a business is difficult and expensive work.
Contact an Attorney Today
If you and your spouse are considering a postnuptial agreement or need legal counsel pertaining to divorce law, contact the Law Office of Greg Quimby, P.C. today. Our law firm is dedicated to protecting our clients and their loved ones, and we provide cost-effective, results-driven representation. Reach out for a free consultation at (719) 212-4227 or through our online contact form.