Thinking about getting a postnup? You’ve come to the right place. A postnuptial agreement (postnup) is a contract between two spouses who intend to remain married and want to lay out the financial obligations between one another. But what are the advantages of a postnup? The disadvantages? From cost to relationship dynamics—we cover it all. So keep reading to learn about the pros and cons of getting a postnup with your spouse.
The advantages of a postnup
First, let’s talk about the upsides to getting a postnup, from clarity in the relationship to asset protection, here’s what to know:
Clarity within a relationship
Getting a postnup ensures you and your spouse are on the same page about everything finances. For example, who is responsible for what debt, who owns what property, tax filing, estate planning, and more. Hashing out the terms of a postnuptial agreement helps married couples get on the same page.
Asset protection
Think: real estate, bank accounts, retirement funds, stock options, jewelry, and any other asset with economic value. You can ensure these assets stay with you in the event of a divorce, regardless of when they were acquired.
Business protection
Along the same lines of asset protection is business protection. You can use a postnup to protect your business interests and assets. Whether you acquired the business prior to the marriage or during the marriage. Just make sure to address how spousal contributions to the business will be treated!
Inheritance protection
Postnups can protect any inheritances you might receive from family or friends. For example, if Great Aunt Jo leaves you an unexpected million bucks, you may want to consider getting a postnup to keep that separate. Without a postnup, inheritances may be subject to division in a divorce.
Avoid your spouse’s debt
Has your spouse taken on an exorbitant amount of debt during the marriage? Without a postnup, you could be on the hook for this debt. Having a postnup in place allows you to allocate debt between spouses that is fair and reasonable.
Protect the money you want to pass down to your kids
If you have children from a previous relationship, you may want to ensure that they get all of your money and not your current spouse. Without an elective share waiver in a prenup or postnup or other agreement, your spouse may be able to take a portion of your estate regardless of what your will says.
Protect your pets
Have you and your spouse gotten a new fur baby recently? Maybe you want to outline who should keep the pet in the event of a divorce. Maybe you want to have sole ownership or joint ownership, but either way, you want to outline what would happen.
Streamline a potential divorce
Though postnups are not meant to be created incident to a divorce (that’s for a property settlement agreement), they can still make getting a theoretical divorce easier. Having a postnup in place streamlines the divorce process by having property and spousal support issues pre-determined.
Include other clauses like infidelity
While not enforceable in every state, some states will allow couples to include infidelity clauses or other lifestyle clauses in their postnup. This may look something like “neither party can cheat, and if they do, they owe the other spouse $X.”
Create financial transparency
Part of the process of getting a postnup includes providing full financial disclosure to each spouse. This includes the values of income, assets, debt, and potential inheritances.
Facilitate enhanced communication
The process of getting a postnup requires hard conversations. These conversations (when done in a healthy way) can help couples learn how to better communicate with one another about topics that are often hard to swallow, like divorce, money, death, and children.
The disadvantages of a postnup
Now, let’s talk about the downsides of a postnup, from enforceability to additional legal requirements, here’s what to know:
Postnups may be less enforceable than a prenup
Depending on your state, a postnup may be a newer legal concept, and shakier in terms of enforceability. This is not true in all states—as in some, postnups are routinely enforced. Check with your state laws to see how enforceable postnups are.
Hiring an attorney is highly recommended
Given the potential issues with enforceability, most lawyers would recommend having legal representation for your postnuptial agreement. This is to ensure understanding of the rights each party may be giving up and the importance of such rights. For example, a lawyer can explain the heavy impact of waiving spousal support rights.
No child matters
While you can cover a broad range of financial topics in a postnup, child custody and support issues are off limits. No modifying terms to child support or dictating custody in a postnup. This is for a court to decide at the time of divorce, utilizing the “best interests of the child” standard.
Cost
Postnups aren’t free. They cost money. Depending on how you obtain a postnup and the attorney you hire, it can range from a few hundred dollars to thousands of dollars. Depending on your budget, this may not be feasible.
Conflict with spouse
Sometimes, bringing up the idea of a postnup may create conflict in your relationship. Some people may feel like asking for a postnup is equivalent to asking for a divorce (though that is not the case). It may be prudent to speak with a couples counselor to work out any issues.
Stigma
Sometimes, getting a postnup comes with societal stigma if anyone finds out you have a postnuptial agreement. They may automatically think you’re headed for divorce or having marital issues, but that’s not always true. Postnups are intended for couples to remain married and to create a stronger foundation, not the other way around.
A quick note on how postnups differ from prenups
Let’s have a quick legal lesson on the difference between prenups and postnups. Postnups are contracts between married couples that are entered into during the marriage. Prenups are entered into before the marriage. This matters because of the relationship of the parties entering into the agreement—with a postnup the two parties are spouses with marital history and with a prenup the two parties are fiances who have the option of calling off the wedding. So postnups are typically treated with higher scrutiny by a court because of the complex relationship spouses may have.
Prenups and postnups are generally the same in terms of what may be included. However, sometimes, in some states, there are restrictions on what can be included in a postnup. For example, in some states, you may not waive your right to spousal support in a postnup, but may include property rights.
The bottom line on the pros and cons of a postnup
As you can see, there are significantly more advantages to postnups than disadvantages. However, there are plenty of downsides to consider, too, such as cost, legal requirements, and potential conflict. On the other hand, with a postnup, you are able to get clarity in your relationship, asset protection, financial transparency, and so much more. Take the time to consider both sides of the coin and make a decision that is right for you and your spouse. 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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