Post-Nuptial Agreements And The Protections That They Offer
A postnuptial agreement is a written contract executed after a couple gets married, or have entered a civil union, to settle the couple’s affairs and assets in the event of a separation or divorce. It is normally “notarized” or acknowledged and is usually the subject to the statute of frauds. Like the contents of a prenuptial agreement, provisions vary widely, but commonly includes provisions for division of property and spousal support in the event of divorce, death of one of the spouses, or breakup of marriage.
There may be many reasons to obtain a postnuptial agreement.
Postnuptial agreements only came to be widely accepted in the United States in the latter portion of the twentieth century. But Arizona has permitted them for a long time, as more fully described below. For many years, US jurisprudence followed the notion that contracts, such as a postnuptial agreement, could not be valid when executed between a husband and wife.
It was only in the 1970s that postnuptial agreements were met with wide acceptance in the United States. The motivating factors considered to be behind this acceptance was the increase in divorce during the 1970s, along with the implementation of “no fault” divorces, granting divorces for any reason. Upon the wave of legislative and statutory changes, postnuptial agreements began to find acceptance in American jurisprudence.
Within the body of law in the US, there are typically three kinds of postnuptial agreements:
- An agreement that will provide for the assignation of marital property at the time of death of one spouse. These agreements typically have the surviving spouse waiving any rights to property they would have had the right to inherit under a will or statutory scheme.
- Agreements that are for all purposes separation agreements. In Arizona, we call these “Property Settlement Agreements.” These agreements are entered into to avoid the time and cost of divorce proceedings. The disposition of property, other marital assets, custody, alimony and support and the like are agreed to by the marital partners upon separation and the agreement later, usually, incorporated into the final divorce decree.
- The kind of postnuptial agreement that most people think of when they hear the phrase “postnuptial agreement,” are agreements that are an attempt to affect rights in a future divorce, usually limiting or waiving alimony and or support and the division of marital property, which includes property obtained before and after the marriage.
Some states address postnuptial agreements in their statues. Others do not. Arizona has held via a series of court decisions in Roden v. Roden, 29 Ariz. 398, 242 P. 337 (1926), In Re Estate Of Harber, 449 P.2d 7(1969) and Spector v. Spector, 531 P.2d 176 (1975), that postnuptial agreements are valid. Arizona has declined to address postnuptial agreements via statute, but has addressed the issue of prenuptial agreements via case law decisions.
Further below, the Arizona standards will be addressed in greater detail. But for now, it is important to understand some general information about postnuptial agreements.
Of course, you should always consult with an Arizona postnuptial agreement attorney before you attempt to negotiate with your spouse regarding the outcome of a potential divorce. There are lots of traps for the unwary, so sound advice from a good Arizona postnuptial agreement attorney will be invaluable. Postnuptial Agreements are written agreements by spouses made after a marriage. So in a way, they are like prenuptial agreements, but they are entered into after the marriage takes place. Their intent is to try to “fix” something that is going wrong in the marriage, so that the marriage can go forward.
This is a relatively new area of law in many states, but not in Arizona. The development of the law relating to these agreements is now starting to accelerate and is reminiscent of how the law of prenuptial agreements (those made before a marriage) developed three decades ago. Postnuptial agreements are also referred to as Post marital Agreements or Post-nuptials. It is likely that Arizona will enact statutes that address postnuptial agreements, but as of yet, the state has declined to set for specific statutory standards, instead relying on our case law from long ago.
As recently as twenty years ago in many states, prenuptial agreements were not enforceable. They were considered to be against the public policy of encouraging marriage and the full union (including economic) of two people entering into marriage. In addition, courts and legislatures were concerned with the possibility of coerciveness and unequal bargaining — since in prenuptial agreements there is generally a large inequality in financial assets of the parties, or their parents.
Since that time, most states have accepted the legality of prenuptial agreements, but require certain safeguards for the contracting parties. The rules vary from state to state, but generally, the parties to a premarital agreement must make a knowing waiver of the marital rights they are waiving in the prenuptial agreement. In addition, the agreement must be fair and reasonable at the time it was entered into and at the time it comes into play (at divorce or death). It must not have been entered into through coercion or force. There must be complete financial disclosure in order for a prenuptial agreement to be valid. These are general standards. However, Arizona has specific standards that will be addressed below.
There is generally more latitude in making restrictive previsions in a prenuptial agreement than in a postnuptial agreement. The theory is that a couple can decide not to marry if they do not like the terms of a pre-nuptial; a couple is already married when they are developing a post-nuptial, so the law believes there is more at stake, and the couple is not bargaining at “arm’s length”.
Case law and statutory law is now in the process of being developed regarding the validity and enforceability of postnuptial agreements. There are some variations from state to state, so that it is very important for couples to review the laws of their state before they enter into one. Factors indicating enforceability would be that the negotiation process is not coercive, there has been full financial disclosure, and that the parties each have a separate reviewing attorney. In addition, a very important factor in maintaining the validity of a postnuptial agreement is that a contracting party is not secretly motivated to better the terms of an (imminent) divorce.
In Arizona, the standards applied to postnuptial agreements are the same as those applied to contracts in general. The court in the Harber case cited above made clear that Arizona adopts the proposition that marital partners may in Arizona validly divide their property presently and prospectively by a postnuptial agreement, even without its being incident to a contemplated separation or divorce. There are built-in safeguards: that the agreement must be free from any taint of fraud, coercion or undue influence; that the parties acted with full knowledge of the property involved and their rights therein; and that the settlement was fair and equitable.
But contracts are not easy things to draft. You should not attempt to draft any contract, let alone such a significant one as a postnuptial agreement, without the assistance of an experienced family law attorney in Arizona.
For more information on Post-Nuptial Agreements, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (602) 788-1395 today.