A postnuptial agreement is exactly what it sounds like: a contract that both spouses review and sign (with legal guidance) after they have already married. If they do it before marriage, it’s called a prenuptial agreement.
Of course, if you’re interested in entering into one of these agreements, you have much more leverage (and potential for success) if you do it before the wedding. When you’re working out the details of a prenuptial agreement, you always have the option of walking away from the relationship if it turns out your future spouse doesn’t want the same things as you. Once you’re married, laws kick in right away that will dictate how your assets and debts are divvied up should the two of you get divorced — unless you sign a postnuptial agreement first.
Without a Prenup or Postnup, Your Spouse can Override Your Will
This is true to an extent. In Colorado, a spouse can set aside the deceased person’s will to the tune of 50%. This means that should you specify in your will that, “50% of my assets go to my sister, and 50% of my assets go to my friend,” without a prenup or postnup, your spouse can take half of what your sister would have received and half of what your friend would have received.
Most prenups and postnups negate that provision of the law, ensuring that your assets will go exactly where the will dictates.
The same is true of property. In Colorado, an appreciation of property value (for example, invested funds) during the marriage is considered marital property. Say you have $1 million invested when you get married and it makes $2 million in the stock market over the course of the marriage. When you get divorced, your spouse will be entitled to half of the earnings. That is, unless you have an agreement that states otherwise.
Examples of Postnuptial Agreements in Action
Postnuptial agreements mostly come into play when unplanned circumstances arise. Say you win Powerball and are about to deposit over $150 million in the bank. That changes your life situation significantly, and you may wish to approach your spouse and work out some kind of agreement.
In one situation, a couple discovered they had been Common Law Married [LINK: Previous Post on Common Law Marriage] for years without realizing it. When they found out, they chose to get an agreement in place; for these two, the process felt very similar to the creation of a prenup because the idea that they were married was so new to them.
In another case, a disgruntled husband told his spouse (a man), “If you sign a postnuptial agreement, I’ll work on this failing marriage with you. Otherwise I want a divorce.” I was suspicious of this from the start (who would blackmail a person they wanted to be married to?), and as it turned out, as soon as the postnuptial agreement was signed, the unhappy husband filed for divorce.
Postnuptial Agreements Aren’t as Common
In general, I don’t see as many postnuptial agreements as I do prenuptial agreements. Mostly I think this is because once you’re already married to someone, you can’t force the person into signing a contract. If the marriage is going well, you wouldn’t think about signing a postnup… and if the marriage isn’t going well, chances are your spouse can see the handwriting on the wall and won’t want to sign.
If possible, I always recommend getting a prenuptial agreement in place, though some circumstances are ripe for a postnuptial agreement. If you are considering getting a postnuptial agreement, let’s talk. Call our office at 303-449-1873 to set up a complimentary consultation.