Creating a fair postnup is critical to the success of of your agreement in court, if it’s ever needed. Many states require a postnup to be reasonably fair in order to be enforced. Unfortunately, there’s not a super straightforward answer to what makes a postnup fair. It’s generally analyzed on a case-by-case basis by a court. And what is considered fair in one state may not be considered fair in another state. *Sigh* What does this mean? How do you know if you’re creating a fair agreement. Never fear–HelloPrenup is here to help you understand what is generally considered “fair” in terms of a postnuptial agreement. Let’s explore this topic in more depth.
The key elements of a fair postnuptial agreement
While every state will have it’s own guidelines on what is considered a fair and enforceable contract, there are some key elements that are true in all states. Here’s what to know:
Full financial disclosure
Generally, all states require full financial disclosure from both spouses. This must mean each party shares the accurate values of their assets, income, debt, and future inheritances. Omitting information or smudging the numbers a bit can lead to an unfair postnuptial agreement. How is that unfair? Because the other party doesn’t have a full understanding of the other party’s finances, and could be signing the agreement under false pretenses. For instance, let’s say John lies about how much he makes on his financial schedule. He says he makes way less. His wife, Mary, relying on this information, agrees to waive spousal support under the understanding that he makes a low income. However, it’s not the truth–he actually makes a pretty large salary. As you can see, this is unfair to Mary, as she agreed to terms in the contract that relied on this information.
Independent legal counsel for both spouses
Another key element to fairness in a postnuptial agreement is retaining attorneys for each spouse. Having independent legal advice for each party helps show that each person was advised on their rights and advised on whether or not they should sign the agreement. This shows a court that each party willingly signed the agreement and had a legal advocate on their side helping them along the way. If you signed something that your lawyer advised against, that’s likely going to be viewed as your own mistake, and not as unfair–because you knew what you were going into.
At least one provision for each spouse
Some states explicitly require that each spouse have at least one provision providing value to them. However, even though this requirement may not be explicitly required in every state, it is still a beneficial thing to do regardless. For example, a postnup that provides at least one provision for each spouse may include something like keeping all assets separate, waiving spousal support so John isn’t required to pay for alimony for Mary, but then providing Mary with a lump sum clause paying her a flat amount of $100,000 upon their divorce. While Mary may not be getting a 50-50 split, she’s getting $100,000 and John is not required to pay alimony and gets to keep his property separate.
Entered into voluntarily by both spouses
The circumstances surrounding the creation of the postnup must also be fair. It’s not just about the terms within the agreement. For example, both parties must be willing and voluntarily agree to get a postnup. There should be no evidence of fraud, duress, coercion, undue influence. Typically, threatening divorce isn’t enough to be considered duress. It has to be something more than that.
Nature and complexity of the agreement’s terms
Some courts may look at the complexity of the agreement’s terms to determine if each party could comprehend the agreement if there were no attorneys representing each party. For example, was the agreement incredibly straightforward–all assets are kept separate and spousal support waived? Or was there more complexity? This is just one factor a court could take into consideration, but it doesn’t mean because your agreement is complex that it’s unenforceable. The court may look at the totality of the circumstances, including this factor as one of the circumstances.
Disparity in assets
Some courts may take into account the disparity in assets between the spouses to determine if the agreement was fair. Now, this alone typically wouldn’t be enough to get a postnup thrown out for being unfair, but it could be one of the factors that a court considers when trying to analyze a postnup.
Examples of a postnup thrown out for being unfair
Let’s take a look at real postnup cases that were thrown out for being unfair.
What happens when one party relinquishes all of their marital rights
In 2017, a New York court threw out a postnup because it was deemed unfair. This married couple entered into a postnup after being married for four years. The wife argued that the agreement was unconscionable (fancy legal word for unfair) because it provided her with no benefit and required her to relinquish all of her marital rights–inheritance rights, property rights, and spousal support. The court agreed with her. The court explained that because husbands and wives have a special relationship, they cannot deal at arms length with one another as two business partners might be able to do. So, that is why contracts with spouses must be reasonably fair. Here, the court noted that the wife did not receive a single benefit from the agreement.
Barclay v. Barclay, 56 N.Y.S.3d 257 (2017)
What happens when the circumstances in creating the agreement are unfair
In a more recent (2023) Alabama case, the court invalidated a postnup due its unfairness based on the circumstances surrounding the execution of the agreement. Based on a combination of factors, the court declared that the wife did not voluntarily consent to signing the agreement nor did she understand what she was signing.
The wife testified that she was not informed about the postnup signing until arriving at the husband’s lawyer’s office (this suggests a lack of transparency and opportunity for her to review the document beforehand). Furthermore, she claimed the husband, who had a history of abusive behavior, pressured her to sign, leaving her feeling coerced and fearful for her safety.
The wife also stated she misunderstood the purpose of financial disclosure, believing it was for reconciling her marriage rather than for the postnuptial agreement itself. This indicates a potential misrepresentation or lack of clear communication regarding the agreement’s implications.
The bottom line is that the court emphasized that a valid postnuptial agreement requires genuine consent and fair terms. The combination of potential coercion, misunderstanding, and the wife’s fear created an environment where her free will was compromised, leading the court to invalidate the agreement.
Hollar v. Hollar, No. CL-2022-1230, 2023 WL 7428497, at *6 (Ala. Civ. App. Nov. 9, 2023)
Building a fair postnup is about honesty, collaboration, and compromise
Postnups can be beneficial to many married couples for many different reasons. And creating a fair one doesn’t have to be rocket science. As long as you ensure full financial disclosure (no omitting info), benefits for both spouses (each person gets something), understanding of the agreement, and independent legal advice for both spouses, you will be well on your way to a valid and enforceable agreement. 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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