You didn’t sign a prenuptial agreement when you married on that beautiful Massachusetts day. You were young, in love, and as the old saying goes, didn’t have two nickels to rub together.
You aren’t rich now, a few years into the marriage, but your financial situation certainly is brighter. You and your spouse now have assets you didn’t bring into the marriage, and you think your side project is on the verge of becoming a full-fledged success.
It might be time to start thinking about a postnuptial agreement.
If you’re not familiar with the term, it’s like a prenuptial agreement. It helps a couple divide, and protect, their holdings in the case of a divorce down the road. But unlike a prenup, a postnuptial agreement is executed after your marriage.
By completing a prenuptial agreement, both parties can agree in advance how to divide their assets. Referring back to the startup business we mentioned, you could draw your agreement to give your spouse a set percentage of what the company is worth today. The advantage? Your business could have sales of $1 million this year. Ten years from now? Maybe $50 million.
Another reason for a postnuptial agreement is to make sure the children you might have had in another relationship prior to your marriage are protected financially in case you divorce or die. In the event of your death, your spouse could inherit all of your assets and not share with the children unless you have written out your wishes in your estate plan or dealt with the issue in a postnuptial agreement.
Just as you want your children to receive an inheritance from you, a postnuptial agreement also can protect an inheritance that you or your spouse might receive and take if off the table as a marital asset should you divorce.
A postnuptial agreement also can protect your retirement savings from being split in a divorce, which is crucial if you split up closer to your planned retirement age and don’t have enough years left in the workforce to rebuild the funds.
And, finally, a postnuptial agreement could be valuable to people who are separating but not yet sold on a divorce. The spouses can determine what they’d like to walk out of the marriage with when things are less emotional than they are in a divorce.
If you’re considering a postnup, a family law attorney can provide greater detail.
