Babies, businesses, career changes, you name it. Life comes at you quick and things can change at the drop of a hat. If you already have a postnup and life changes drastically for you, you may want to consider updating that postnup. But how often should you be reviewing this postnup to actually know when it’s time to update it? Well, regular review of a postnup is crucial to ensure it stays relevant and continues to reflect both spouses’ intentions. Let’s get into everything you need to know about reviewing your postnuptial agreement and when it may be time to update it.
Why review a postnup in the first place?
You may be thinking: “Why would I review my postnup? It’s a static document that doesn’t need changing, everything is already accounted for!” And while that may be true (because well-drafted agreements tend to account for big life changes), sometimes things come unexpectedly.
When life changes in a drastic way, the postnup may become outdated and need updating. Here are some examples of drastic life changes that may not be accounted for in your original postnup, and may be a reason for you to review your postnup:
- Significant increase or decrease in income and/or assets
- New business ventures (individual or joint)
- Unexpected or new inheritances/large gifts
- Birth or adoption of children that wasn’t expected
- Care for elderly or disabled family members
- Significant health changes in one of the spouses or children
- Changes to state laws that impact marital property and/or divorce
- Marital issues, such as infidelity or addiction
- A general shift of goals
In addition, reviewing your postnup can simply be a way to give you both some peace of mind and reassurance that you are both still aligned financially. Heck, you can even make a date night out of it—pour a glass of wine, sit down at the table, whip out the postnup, review the terms, then follow it up with a rom-com and snacks!
How often should you review your postnup?
Now that you understand the importance of reviewing your postnup, you may be wondering how often you should do this. The general recommendation is to do an annual review and review again during any life event triggers, such as new children, new businesses, new income, etc.
For example, John and Melissa got a postnup in 2018 right after getting married because they missed the deadline for a prenup and wanted to clarify financial matters. Every year on their wedding anniversary, they review their postnup. They also review it any time anything relatively “big” happens in their life, like the birth of a new child, a job change, etc.
What should you consider during a postnup review?
Picture this: You’re sitting down on your wedding anniversary to do your annual postnup review. You make a date night out of it and go to dinner afterward. But what should you specifically be looking for in this review? Well, every postnup is different. Some people may only have certain clauses in there that other folks do not, so this is a question for your lawyer.
However, just generally, here are some things for you to consider when reviewing your postnup:
- Accuracy of financial disclosures: Ensure all assets, liabilities, and income are accurately represented. If there has been a large windfall of income or assets, you should speak with a lawyer to determine if this necessitates updating your financial disclosure (and it may or may not be necessary, depending on the state law and the situation).
- Alignment with current intentions: Confirm that the agreement still reflects both spouses’ wishes regarding asset division, debt allocation, spousal support, and whatever other matters are within the document. For example, if there is a clause in there that says interests in Business XYZ are one spouse’s separate property, but the other spouse has taken on a big role in the business, the couple may want to consider changing it.
- Fairness: If there have been any significant life or financial changes, such as one person forgoing their career to stay home with the kids (when this was not previously anticipated), some clauses may not be fair anymore, such as waivers of spousal support.
Consequences of not reviewing your postnup
Reviewing your postnup is by no means a legal requirement. However, it can significantly help your case should the postnup ever be challenged down the road. For example, it would be much harder for one spouse to claim that the agreement is unconscionable because it is outdated, unfair, and/or irrelevant due to certain lifestyle changes. In addition, it would also be difficult for one spouse to claim that they didn’t willingly enter into the agreement or understand what they were bound to if they are reviewing it every year (or more frequently).
The bottom line
At the end of the day, the general recommendation is to review your postnup on an annual basis, plus during any major life events. Sometimes, postnups may need to be updated based on outdated or irrelevant terms due to life’s curveballs. For example, if you both entered into the marriage financially independent and then unexpectedly got pregnant and now one person is a stay-at-home parent—They may want to change some of the terms of the postnup. Remember, postnups are about promoting financial harmony and creating terms that are fair and reasonable to both spouses. So go on and review that postnup—if anything needs changing, reach out to a lawyer. Happy planning!
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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