Most couples would rather not think of their marriage as a contractual arrangement. However, it is a legally recognized partnership. It’s smart to protect your legal and financial rights – particularly if you have significant assets. That’s why increasingly more couples get a prenuptial agreement before they wed.
A lot can change over the years. While you can’t specifically update your prenup after you’re married, you can replace it with a postnuptial agreement.
Whether you have a prenup or not, a postnup can help you protect your financial interests should the marriage end. Certainly, if you’re accumulating significant wealth (especially if one spouse is greatly outearning the other) a postnup can be drafted that protects both parties financially. Any significant life change should warrant consideration of creating or modifying your postnup.
Protecting a business
Sometimes outside forces require a postnup. For example, if one of you becomes part-owner of a business, they may be required to have a postnup that stipulates their spouse cannot get their share of the business in a divorce.
Even if you go into business for yourself or take over a family business, if your spouse has no role in it, you may want a postnup to codify that they can’t get ownership rights in a divorce.
When divorce may be on the horizon
Many couples don’t get a postnup until their marriage is nearing the end – or at least being tested. Maybe they separated because one spouse was unfaithful, for example. That can get them thinking about how much is at stake if they divorce and what they want to protect. A postnup is often part of a reconciliation.
A postnup can also help a divorce go more smoothly because you can work out your property division and any spousal support agreements. You can’t, however, address child-related issues in a postnup.
The closer to the end of the marriage the postnup is drawn up or modified, the more likely it is to reflect a couple’s current circumstances when they divorce. When Bill and Melinda Gates divorced, they reportedly had no prenup but had negotiated a “separation contract” that helped them finalize their divorce quickly and privately. That separation contact could be viewed as a type of postnup.
As with a prenup, both parties to a postnup should have their own legal representation. This can help both spouses ensure that their rights and interests are protected.