In other instances, a prenup is postponed or not drafted at all because couples are in the throes of wedding planning and cannot set aside the time, or are afraid of quashing romance. As John now bemoans, “I got married because I was in love, not because I thought I would get a divorce.” He brought up the subject of a prenup prior to his wedding, but his wife refused to sign it. In hindsight, he wishes he had insisted. “We should have had a prenup because she had no money and I had it all. It would have made this activity over the past two-and-a-half years a lot easier.”

Even if there is a prenup in place, couples realize years later that the contract has become outdated, or unforeseen circumstances arise, requiring a postnup. One common scenario occurs when one spouse moves off the career track to raise the couple’s children. Their joint objective is the same, but one party holds the financial clout. A postnup can provide financial security to the spouse who has given up income.

DUE CONSIDERATION
Michael LoVallo, a partner at Sachnoff & Weaver in Chicago, prefers that couples who are anticipating drafting a contract do it in the form of a prenup, if at all possible, rather than waiting until after marriage. Not only is the time before marriage an opportune period to establish a financial understanding, but the marriage itself automatically grants privileges to a spouse, complicating the negotiations. Once the marriage takes place, “the spouse already has rights, and then you’re asking someone to give something up in many cases,” like the rights to automatic state-granted spousal benefits, LoVallo points out. “It’s harder from a bargaining point of view.”

The mechanics of drafting a postnuptial are much the same as with prenups. Both are binding contracts. Each party should have separate legal counsel to avoid accusations of coercion in the future, and full financial disclosure is required. All contracts, LoVallo says, must feature some give and take to be legal. In order to hold up in court, the postnuptial needs to demonstrate what the spouse is obtaining in exchange for relinquishing benefits. Typically, the consideration given to the spouse is an amount in a trust, or a will. In most states, spouses have rights to a certain share of an estate, unless the spouse waives those rights through a prenup or postnup. For example, New York and Florida have a provision called “elective share,” which entitles the spouse to one-third of an estate. If one spouse is already wealthy and gives up the right to elective share, that other spouse can transfer that portion of the estate to the children. This tactic makes postnuptials popular with couples of means who have children from previous marriages and want to pass more assets to them.

Couples should also coordinate estate plans and wills with postnuptial agreements; the postnuptial usually requires the execution of consistent estate planning documents. “You’ve obligated yourself [in the postnuptial] to provide financially at death, or even before death, say for children’s college educations or to contribute to current trusts,” Casteel says. “I’ve never seen a postnuptial that doesn’t address what happens at death.” In the event the other documents are not coordinated with a postnup, then the postnup—as a contractual agreement—takes precedence. “The spouse has a claim against the estate,” Casteel adds.

COMPROMISE AND CONCILATION
Attorneys advise patience when drafting postnups. Sifting through assets accumulated in a marriage and reaching a legal agreement takes time. Months can pass before the process comes to fruition, and there is a substantial amount of back and forth between attorneys and couples. “The agreement was not as clean and neat as I’ve described it,” John says. “I had to try to meet her emotional needs to get her to sign it. We had to compromise.”

The Uniform Premarital Agreement Act drafted by the National Conference of Commissioners on Uniform State Laws, a group of attorneys that designs model laws for state legislatures, supports prenups. Most states have adopted the act, but it does not apply to postnuptial agreements. Instead, postnuptial rules vary on a state-by-state basis. In some states, Dubin says, postnuptials are scrutinized more closely by the courts, under the notion that one spouse might have financial leverage over the other following a marriage, while a prenuptial agreement assumes that both parties enter the marriage with separate lives and assets. Dubin admits, however, that she does not see postnups challenged in the courts very often. “When done properly, they will hold up,” she maintains. She expects states will follow Colorado’s example and model legislation to govern postnuptials after the Uniform Premarital Agreement Act.