Ever heard that postnups aren’t enforceable? That’s not true—in many states, postnups are enforceable as long as you comply with your state’s laws. However, there are some common challenges that can get a postnup thrown out. These include claims of duress, lack of proper financial disclosure, unconscionability, and more. And, the good news is that there are some best practices you can follow to help boost the enforceability of your agreement. So, without further ado, let’s explore the common legal challenges that can invalidate a postnup.
Undue influence, coercion, and duress
Undue influence, coercion, and duress in the context of a postnup is when one spouse puts too much pressure on the other or manipulates their spouse in bad faith to sign the agreement. When a couple gets a divorce, the spouse who felt pressured to sign (and doesn’t like the terms of the agreement) may try to argue that the agreement was signed under undue influence, coercion, or duress to get the postnup thrown out. Each state has its own laws on this matter. For instance, what may be considered duress in Texas may not be the same in other states.
One way to help prevent an argument (though not guaranteed) is by hiring legal representation. Having a lawyer is a good way to show that one person wasn’t coerced into signing the agreement because they had an independent legal advocate advising them on whether or not to sign and what rights they had.
Lack of proper financial disclosure
Virtually all states require some form of financial disclosure. This means each spouse shares with the other the full values of their income, assets, debts, and future inheritances. Without proper financial disclosure, a postnup can be thrown out by a court. For example, if one spouse hides a huge investment account that they own and omits it from the financial disclosure form (whether on purpose or not), it could be grounds for invalidating the postnup.
Why is this? Because financial disclosure allows each spouse to understand what rights they are giving up in the agreement. If one spouse has millions of dollars, unbeknownst to the other, and in the agreement, they waive their right to the other party’s separate property or to spousal support, it could be construed as unfair and unenforceable by a court.
Unconscionability
In the context of contract law, unconscionability typically means the agreement shocks the conscience of the court, and no reasonable person would sign the agreement, therefore, it cannot be upheld. It’s not easy to have an agreement thrown out on unconscionability, it needs to be egregiously unfair. It could be unfair in the way it was constructed (the circumstances surrounding the agreement), or the terms within the agreement could be unfair.
For instance, the Supreme Court of Connecticut in Bedrick held a postnuptial agreement unconscionable because it was unfair at the time of divorce. The total amount of marital assets was nearly $1 million, but the agreement only allowed the wife a settlement of $75,000. “Marital assets” are accumulated during the marriage through joint marital efforts, so only allotting the wife $75k was egregious out of nearly a $1 million pot that, by law, she was entitled to an equitable distribution of. Plus, the agreement was last amended 18 years prior to the divorce, making it extremely outdated. The court evaluated the nature and complexity of the agreement’s terms, the disparity in assets, and the parties’ respective age, sophistication, education, employment, experience, and access to independent counsel.
Improper execution and formalities
Each state has its own execution and formality requirements. For example, some states require witnesses to sign off on a postnup. Other states do not. It’s imperative that you follow the legal requirements of your state otherwise the agreement could be thrown out. Some other types of formalities for postnups include signatures, notarization, and putting the agreement in writing.
Lack of proper consideration
Consideration is a legal term used in contract law that is an act or omission of one person in exchange for the act or omission by the other person. In plain English, it means both people “get” something out of the agreement. Many states require that postnuptial agreements have proper consideration for them to be considered valid and enforceable.
For example, in one New York case, the court found that the postnup was unenforceable due to improper consideration. The wife waived her right to any of the business property owned by her husband, regardless of whether it was acquired before or during marriage. The husband did not give up any rights to any of the wife’s property or give the wife anything in return for the release of her claims to his business property.
Best practices for creating a valid postnup
Now that we’ve gone over the common legal challenges in postnuptial agreements let’s talk about the best practices for creating a valid and enforceable postnup. Here are some practical tips for creating a legally sound postnup:
- Hire independent legal counsel to help guide you through the postnup process
- Provide full financial disclosure and do not omit anything
- Negotiate the terms so that both parties are “getting” something out of the agreement
- Document the entire postnup process and save any communications you have regarding the agreement via email or other written form
- Follow the laws of your state regarding postnups, which may include getting it notarized or witnessed
- Even if your state doesn’t require notarization, it can be a great additional step to take anyway
The bottom line on the common legal challenges in postnups
Understanding the legal challenges associated with postnups can help you understand how to create a valid agreement. Common challenges include duress, unconscionability, lack of consideration, lack of proper financial disclosure, and lack of formalities. However, if you hire an attorney, ensure a fair agreement for both spouses and follow your state laws, you should be in pretty good shape. Don’t let these common challenges scare you away from getting a postnup! They are still very much enforceable as long as they comply with your state’s laws. So, get out there and find a qualified attorney to create your postnuptial agreement that accurately reflects your intentions, protects both spouses, and withstands any potential legal challenges.
Nicole Sheehey is the Head of Legal Content at HelloPrenup, and an Illinois licensed attorney. She has a wealth of knowledge and experience when it comes to prenuptial agreements. Nicole has Juris Doctor from John Marshall Law School. She has a deep understanding of the legal and financial implications of prenuptial agreements, and enjoys writing and collaborating with other attorneys on the nuances of the law. Nicole is passionate about helping couples locate the information they need when it comes to prenuptial agreements. You can reach Nicole here: Nicole@Helloprenup.com
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