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While couples might sign a prenuptial agreement before they’re married and a “post-nup” after, it’s greater than just the timing that differentiates these arrangements, experts say.
“It’s a complete different ballgame when you’re married,” said Martin Shenkman, estate attorney with Shenkman Law in Latest York City.
“With a pre-nup, you may have no obligation to a spouse,” he explained. “With a post-nup, when you’re married, you may have a legal and fiduciary obligation to your spouse.”
Shenkman emphasized that it is important to envision what your state law allows.
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When a post-nup is perhaps called for
What situations might prompt a pair to organize a postnuptial agreement?
For instance, married couples might have to regulate a pre-nup they’d signed, in keeping with attorney and licensed financial planner Keith Singer, president of Singer Wealth in Boca Raton, Florida. “They wish to be sure that the brand new terms are based on the things which have happened in your life,” he said.
Changes in marital dynamics can trigger a change within the terms of a pre-nup. For instance, couples may not have anticipated one spouse beginning to earn significantly greater than the opposite or that, as the wedding endured over time, greater trust grew between the partners, Singer said.
A post-nup may additionally come into play when a pair is contemplating divorce but still attempting to work things out. In response to the Centers for Disease Control and Prevention, over 10 years as many as 43% of first marriages can fail.
“Because divorcing sooner [rather] than later might be more advantageous to one among the spouses, their agreement may stipulate that the wedding ended as of the date of the post-nup for purposes of calculating alimony and property division, should efforts to repair a wedding be unsuccessful,” Singer said.
There are occasions when a postnuptial is needed to supersede certain state laws to permit one spouse to depart the opposite one lower than what’s required by their state.
“A variety of individuals are unaware that when they’re married, state law gives their spouse a minimum percentage of the estate, even when the deceased spouse tried to depart it to another person,” Singer said. An example of that case could be an individual in a second marriage who intends to depart all their assets to children from a previous marriage.
How various professionals help with post-nups
- Matrimonial attorney: knows the state laws and drafts the agreement
- Estate attorney: ensures the plan is consistent with the couple’s estate documents, especially with regard to trusts
- Financial advisor: helps the couple with a budget and financial forecasts, addresses inherent capital gains, determines which assets ought to be put aside and how one can divide accounts, etc.
- Insurance skilled: helps the couple select insurance to satisfy the necessities of the plan
— Martin Shenkman, estate attorney with Shenkman Law in Latest York City
There also could also be external forces, corresponding to a future change in wealth, that trigger a post-nup, said CFP Crystal Cox, senior vice chairman of Wealthspire in Madison, Wisconsin.
Within the event of a possible inheritance, for instance, an heir — or the relatives leaving the assets — may insist on a post-nup in order that the wealth will stay on their side of the family and never be included in any possible divorce negotiations. A financial advisor may also help by establishing accounts for the heir only, Cox said.
“It’s rather a lot easier to do it when you still think about the wedding,” she said.
‘An avenue of communication’
Not all post-nups have to be legal documents. Lili Vasileff, CFP, certified divorce financial analyst and president of Wealth Protection Management in Greenwich, Connecticut, is a marital mediator who prepares post-nup agreements which might be private memoranda of understanding.
“Preparing these agreements opens an avenue of communication,” she said. “They do not at all times result in divorce, but give couples more time to work through financial issues.”
There are generally two sorts of parties who work with Vasileff. The primary are spouses with a mature mindset who have to have higher communication around funds, especially later in life.
The second type includes spouses who need a solution to atone for something that went mistaken in the wedding. The postnuptial may aim to remediate the mistaken financially, to rebuild the connection and show good faith.
Or the agreement may outline how the couple can stay married, but separate themselves financially and change into independent of the opposite’s financial activities.
“It is a process that requires time, energy and participation … and a tool to learn more about one another,” Vasileff said. “[Post-nups] have been far more in demand recently than in prior years.
“They’re less emotionally charged than pre-nups, that are a condition to marry.”