What Is a Postnuptial Agreement? How It Works and What's Included

What Is a Postnuptial Agreement? How It Works and What’s Included

What Exactly Is a Postnuptial Contract?

An agreement made by spouses after being married that specifies who will own what property in the case of a divorce is known as a postnuptial agreement. The agreement may also specify the duties related to any children or other commitments for the term of the marriage.

A “post-marital agreement” or “postnup” is another name for a postnuptial contract. It may be compared to a prenuptial agreement, which is signed before getting married.

Learning about Postnuptial Agreements

Postnuptial agreements, similar to a prenuptial agreement, help couples defuse conflict brought on by money worries. By entering into a contract of this type, spouses can decide how their assets will be divided fairly in the event of a divorce.


Marriage contracts, even postnuptial ones, are frequently viewed as immoral or not in the best interests of a relationship. Such contracts, according to critics, show the couple doesn’t want their marriage to succeed. However, if a contract may ease their financial strain, the couple might decide to sign one in an effort to save their union.


Although laws can differ by state a postnuptial agreement must have these five components:


  1. Writing is required. Oral agreements are not legally binding.
  2. Both parties must voluntarily enter into it.
  3. At the time of execution, it mandates the full and impartial disclosure of all pertinent information.
  4. Terms must not be objectionable, unfair, or biased in any way.
  5. The contract must be signed by both parties.

Items Postnuptial Agreements Usually Cover

There are several additional topics that most postnuptial agreements cover in addition to the fundamentals. The agreement will first specify what happens to marital assets in the event that one partner passes away. This is significant because a surviving spouse may forego inheriting some property rights.


Second, a postnuptial contract outlines specific provisions that were decided upon by both couples in advance of a divorce. Both parties can save time and money by coming to an agreement on these parameters in advance. Upon separation, the married partners agree on the distribution of property, other marital assets, custody, alimony, maintenance, and other matters of a similar nature. The final divorce decree will often include this clause from the agreement.


In the event of a future divorce, a postnuptial agreement will also try to define the rights of the spouses. These agreements deal with more than just marital property; frequently, they also limit or do away with alimony (spousal support).

Things Postnuptial Agreements Do Not Cover

The terms of a postnuptial contract cannot be used to pursue matters like child custody or child support. A postnuptial contract cannot also attempt to incorporate clauses that aim to control commonplace elements of a married relationship.


State laws will differ in how a postnup will be enforced. As long as the agreements are in writing, were freely signed without compulsion, and included full disclosure of each party’s financial information, most courts tend to maintain them. Some jurisdictions, though, erect extra obstacles. For instance, the postnuptial agreement must be deemed “fair and just” in New Jersey in order to be enforced, which is a threshold that leaves room for some subjectivity. Additionally, the contract in California, where spouses have a fiduciary duty to one another, must demonstrate the “highest good faith and fair dealings.”

Motives behind postnuptial agreements

Postnuptial agreements may be sought by any number of reasons. It’s possible that they simply never got around to drafting a prenuptial agreement before getting married. Even if it’s after they’ve said “I do,” they can resolve the same financial issues they planned to deal with all along with a postnuptial agreement.


The following are some situations where couples might request a postnuptial agreement.


Keeping an Inheritance Safe

The two may want to determine who is entitled to the money should they split it if one of the spouses anticipates receiving a sizeable bequest. This is particularly true in states with community property laws, where marital assets are typically divided equally between spouses.


The majority of the time, an inheritance acquired by one spouse during the marriage is not regarded as common property. But an inheritance might be regarded as common property if it was handled in a way that made it “co-mingled” with other people’s property. When a postnuptial agreement is in existence, it would take precedence over that equal claim to the property and make sure the successor retained ownership of their inheritance. Any rise in the value of the inheritance is regarded as marital property, even in certain jurisdictions where there is no community property, like Pennsylvania.


Supporting Parents Who Stay at Home

A legal agreement outlining the division of assets may also be valuable to a stay-at-home parent who has seen their earning potential decline or a spouse who wants to support children from a prior relationship.


Dividends on Business Interest

Bank accounts and retirement money are examples of assets that are generally simple to evaluate during a divorce. However, it is much more difficult to put a price tag on a company if one or both spouses are principals. Because determining a company’s value can be very costly and time-consuming, some couples utilize postnuptial agreements to designate a firm as separate property that will remain with the spouse having the title. To make up for it, the couple can decide to offer the other spouse a larger portion of non-business assets.

Paying Back Gifts

A divorce settlement can be a particularly uncomfortable process when one spouse’s parents give the couple a sizable sum of money, possibly for a house down payment. A postnuptial agreement gives the in-laws (and their children) the assurance that they will be compensated if the marriage is unsuccessful. The agreement may specify, for instance, that the spouse whose family provided the funds receives the first $100,000 in assets as compensation.


Relationship Restoration

Negotiating these issues is sometimes considered a means to save a failing marriage. Let’s say one of the people has been disloyal, for instance. Choosing post-divorce conditions that benefit the other spouse can be a sign that you want to save your marriage.