What is a Postnuptial Agreement?
Postnuptial agreements in Pennsylvania are very similar to prenuptial agreements but they differ in that they are entered into after the parties already have entered the marriage. Like a prenuptial agreement, they are signed in front of a notary or other person permitted to administer an oath. A postnup is strictly voluntary and can be signed at any time during the marriage. If the contract is signed by both parties and is filed with the court, the postnuptial agreement becomes a court order upon divorce.
People may choose to enter into a postnuptial agreement prior to filing for divorce . A common reason for entering into a postnup is that one party will not sign the divorce action. The parties may enter into a postnuptial agreement without first having a divorce complaint filed because the agreement may be necessary to resolve issues such as custody, support and equitable distribution. It may also be necessary to resolve issues relating to business valuation. It is important that we consult with you regarding the exact timing of the postnuptial agreement and to discuss the benefits of entering into the agreement prior to the filing of a divorce complaint or if the divorce complaint has already been filed.
Requirements under the Law of Pennsylvania
In accordance with Pennsylvania law, a postnuptial agreement must be in writing and signed by both parties. The law gives the parties the option to have the agreement notarized, although this is not a requirement for validity. Certain requirements outlined in the Pennsylvania Uniform Premarital Agreement Act (63 P.S. § 801 – 816) also apply to a postnuptial agreement.
The contents of a postnuptial agreement can include almost any matter regarding the couple’s property, such as the distribution of property in the event of divorce, death, or separation. Postnuptial agreements also may address other matters provided that these contracts do not violate Pennsylvania public policy and are capable of being valid and enforceable.
A postnuptial agreement cannot violate any of the following:
- Express statutory prohibitions. Pennslyvania statutes expressly prohibit a marital agreement that: (1) adversely affects the right of a child to support; (2) adversely affects the right of a child to inheritance; (3) limits or eliminates spousal support to the extent it would cause a spouse to be eligible for public assistance; (4) indemnifies a spouse from a criminal offense; or (5) precludes an enforcement agency from collecting child support, medical support, and spousal support.
- Freedom of marriage. By entering a marital agreement, the parties may not give up their right to marry, thus violating this natural freedom.
- Unconscionable provisions. A marital agreement that includes provisions that would be deemed unusually unfair or one-sided may be held to be unconscionable and, thus, invalid.
- Public policy. The parties may not agree to matters that are against public policy, including provisions that are in violation of Pennsylvania statutes or provide a waiver of the right to seek fault-based grounds for divorce.
Additionally, each spouse must enter into the agreement freely and voluntarily without undue influence or duress. For a postnuptial agreement to be effective and enforceable, the spouses must enter into the agreement without being coerced, i.e., not out of fear of physical harm or imprisonment. A party must also have time and opportunity to seek independent legal counsel.
Advantages to Entering into a Postnuptial Agreement
The advantages of having a postnuptial agreement are numerous. As with almost any area of the law, postnuptial agreements are designed to help couples navigate the complicated waters of divorce more easily.
The key benefit of a postnuptial agreement is the asset protection it affords. Without a postnuptial agreement, Pennsylvania law dictates property division during divorce, and any debts that were not incurred prior to the marriage, but rather during the marriage. A postnuptial agreement protects assets for each partner. This means that assets gained by one person after marriage cannot be touched by the other spouse.
Debt management is another important benefit of a postnuptial agreement. A postnuptial agreement can keep each spouse from being financially responsible for the other’s debts. If one spouse takes on debt during the marriage (a home mortgage, for example), he or she cannot pass that debt to an ex-spouse in the event of divorce.
In addition to protection of assets and debts, a postnuptial agreement offers specificity. That is, the agreement can nail down details of how finances should be handled over the course of the marriage. For example, if you and your spouse would like to maintain separate bank accounts (and other sorts of accounts) during the wedding, that stipulation can be enshrined in the postnuptial agreement.
Also, if you have children from a previous marriage, a postnuptial agreement can help you protect inheritance that is intended only for those children. In divorce, a spouse could otherwise make a claim on the inheritance. However, if that inheritance is specifically named in a postnuptial agreement, a potential claim on it could be avoided.
Specifically in Pennsylvania, postnuptial agreements offer many benefits. For instance, Pennsylvania law is slightly friendlier to postnuptial agreements than some other states. If you and your spouse sign a postnuptial agreement and later get divorced — it cannot be overturned simply because one spouse claims that he or she signed the agreement under duress, or that the terms of the agreement are inequitable.
For example, say a husband and wife sign a postnuptial agreement. In couple of years, the husband begins a relationship with another woman, which he hides from the wife. The wife discovers the affair and sues for divorce. The husband wants the agreement to stand, claiming that he always intended to devote his life to his wife. The wife argues that the agreement should be voided because her husband cheated on her.
In this case, the agreement stipulates that each spouse will maintain separate financial accounts, and keep separate property and assets. There is no alimony payable. The court will not void the agreement simply because the agreement may seem unfair on its face (the negotiation of the agreement was fair). It will also not void the agreement because the husband had an affair. The postnuptial agreement will be upheld.
Commonly Included Provisions
The goal of a complete postnuptial agreement, also known as a marital agreement, is to protect both parties and to leave them with as few issues to address as possible in the event of a divorce. To that end, the following provisions are fairly common: First and foremost, property division is typically addressed in a postnuptial agreement. This section often goes beyond defining exactly what property is owned by each party, as marital assets are usually defined by state law. Thus, the agreement will make it clear how the parties will divide any marital property, including debts, business interests and other assets.
Another common provision in a postnuptial agreement is spousal support. This section will define whether one party will pay spousal support to the other in the event of a divorce. Pennsylvania law has certain guidelines used to determine spousal support, and especially for those who have children, it may be useful to define the amount of spousal support in advance.
If the couple has been married long enough to have earned a pension or retirement benefits that will become eligible during the marriage, it may be prudent to address this in the postnuptial agreement as well. Parties may delineate whether these future benefits will be considered martial property as well as how they will be split up in the event of a divorce.
Potential Issues and Drawbacks
While they are not uncommon, postnuptial agreements in Pennsylvania can sometimes give rise to further issues or disputes. For example, if you and your spouse negotiate a postnuptial agreement during a difficult time in your marriage, you may both later agree that the agreement does not reflect your true desires. If this is the case, the solution could be to amicably terminate the agreement. If you are unhappy with the terms of a postnuptial agreement and its installation into a divorce settlement, the law allows either party to ask for litigation at that point . That request can take the form of a request for declaratory judgment or dismissal of the agreement. Unfortunately, if a divorce is pending when litigating a postnuptial agreement, an annulment or divorce may not be awarded. Pennsylvania is also one of the states that has a prohibition on discretionary favoritism due to marital misconduct being listed as a fault in a marital conduct. Finally, some agreements can be voided or invalidated if it is determined that there was coercion, undervaluation or overvaluation of a property, misrepresentation of assets, the absence of independent legal counsel, or duress in obtaining signatures from one or both parties.
Steps for Drafting a Postnuptial Agreement
Steps to Creating a Postnuptial Agreement in Pennsylvania: Your Comprehensive Guide
For those who have decided to move forward with a postnuptial agreement, the following steps may be taken during the drafting process:
Gather all assets. The first step should involve making a complete list of all your assets, including land, vehicles, business interests, bank accounts, and other financial information. This can involve simply creating an itemized list, or engaging experts to provide formal valuations on securities and business interests.
Make a list of debts. Like a list of assets, it is important to create a comprehensive list of all your debts. Include loans, credit cards, and mortgages, along with any other notes, along with their values. In practice, your debt items should be more simple than assets, as they typically are only valued at the amount owed on a line of credit or automatic in the case of a mortgage.
Negotiate and agree on terms. After both parties have disclosed all financial information to each other, it is time to begin discussing the terms of the postnuptial agreement. Whether you are attempting to protect your own assets or the assets of your spouse, keep in mind that the other party will have concerns as well.
Remember that the main purpose of the postnuptial agreement is not to punish, but as a way to protect your financial security. During negotiations, try to reach a fair agreement that gives each party peace of mind, but provides a safety net in the event of divorce.
Engage an attorney. While it is not required to have an attorney for the creation of a postnuptial agreement in Pennsylvania, it is definitely in your best interest to consult with an attorney. A professional will help ensure that you have fully disclosed all assets to the "other party" prior to signing the agreement.
At this point, your postnuptial agreement will be drafted for your attorneys to review. They will likely make some changes and then return them to you for review, prior to finalizing the agreement and signing.
Agree to terms. Once final terms are agreed upon by both parties, the postnuptial agreement will be signed. However, do not fail to properly store the document. Postnuptial agreements are only enforceable if they contain all necessary elements. When properly stored, they can help enforce the terms of a divorce settlement and prevent the long and costly process of litigation.
Review and Update Periodically. Once the postnuptial agreement is created, it is not a permanent document. Although the agreement will be binding once executed, people change over time and so should the terms of the agreement. It is important to periodically reevaluate various factors and conditions such as changes in laws, financial situations, or goals. Additionally, updates may be needed as children are added to the family, or should another child arrive.
Enforcing a Postnuptial Agreement
Enforcement of a postnuptial agreement in Pennsylvania is handled by the same courts that oversee divorce proceedings. If your spouse decides that they do not want to uphold the terms of the agreement, you will need to take the matter before the court and request that the agreement be enforced. In most situations, this is fairly straightforward, as judges do not look kindly on spouses who try to wiggle out of their postnuptial agreements when there is no valid reason for doing so.
However, there are two primary situations in which courts may determine that a postnuptial agreement should not be enforced .
The burden of proof lies with the individual who wants the agreement enforced. If that person cannot prove that the agreement was valid upon execution, the court will likely rule against them. If the individual contesting the postnuptial agreement has evidence that the agreement was unfair, one-sided or contrary to law, it may be ruled unenforceable.
A postnuptial agreement does not need to be notarized in order to be enforceable. Aside from requiring that the terms be fair at the time of creation, all that needs to be required for a postnuptial agreement to be enforceable is that it be in writing and signed by both parties.