Postnup

Married couples sometimes find it appropriate or desirable to enter into a postnuptial agreement (often called a “postnup”) to specify how certain matters will handled in the event they later divorce.  A mediator can help you work out and document the terms of a postnup.  But an attorney should be involved in the final drafting of the agreement.

California Postnup Law

Postnups must comply with the following:

• It must be in writing;
• The terms must be lawful and fair to both spouses;
• It must be signed by both spouses;
• It must be notarized.

Couples may agree to terms governing asset and debt division, and sometimes spousal support matters.  Other provisions, such as agreements regarding child custody and child support are not valid.  Courts will not enforce them.  The aim of a postnup is usually to establish each spouse’s rights and obligations regarding the couple’s debts and assets.  But it can also address inheritance rights, death benefits, retirement benefits, health insurance, and even payment of household expenses.

Before entering into a postnuptial agreement, each spouse must disclose all assets and debts.  Normally this disclosure is made part of the agreement, perhaps as an attachment.  If spousal support or payment of expenses is addressed in the postnup, incomes should also be disclosed.  If either spouse fails to make proper disclosures, a court may find that the entire agreement is invalid and unenforceable.

Courts will not enforce postnup terms that are vague or ambiguous.   Each asset and debt must be clearly and specifically defined.

Prenuptial agreements are presumed valid without court approval so long as they comply with California prenuptial agreement law.  Postnuptial agreements, however, are not presumed valid by a court in a legal proceeding.  Therefore, if contested, a court will carefully review a postnup and decide whether it is valid and enforceable.

Fiduciary Duty

A significant difference between a prenup and a postnup is that, once married, spouses owe each other a fiduciary duty.  This means they each must enter into a postnuptial agreement in good faith and with fair dealing.  In general, postnups will not be enforced if the terms are unreasonable or unfair to one spouse.

California courts are wary of waivers of spousal support in postnuptial agreements.  Since spouses owe each other a fiduciary duty, spousal support terms are closely scrutinized by the court.

A postnup is invalid if it is determined by a court that one spouse exercised fraud, duress, or undue influence over the other.  Fraud generally exists when one spouse deceived or concealed an important fact that would impact whether or not the other spouse would have signed the agreement.  A spouse may not threaten or exert such pressure on the other that essentially makes his or her postnup signature involuntary.

Because a postnuptial agreement is not provided for in the California Family Code like a prenuptial agreement is, it is very important that the postnup be written carefully and that all fiduciary obligations are met by both parties during its drafting and upon its execution.  Therefore, an attorney should always be involved in the drafting of the agreement.