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What Can and Can’t Be Included in a Postnuptial Agreement?

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California law provides that each spouse is entitled to half of the community property should their marriage end in divorce. The couple can override the law by entering into a marital property contract, such as a postnuptial agreement. The postnup allows the couple to determine themselves how assets and debts are divided if their marriage dissolves.

The postnuptial agreement can only cover certain matters, such as business interests or debts. Provided the contract is valid, it can save the couple time in the event of a divorce by helping avoid costly litigation.

If you and your spouse are considering establishing a postnup, please speak with one of our Los Angeles attorneys at Claery & Hammond, LLP by calling us at (310) 817-6904 or submitting an online contact form today.

What Is a Postnuptial Agreement?

A postnuptial agreement is a contract between spouses entered into after the couple is married. In contrast, the most often thought of marital property contract – the prenuptial agreement – is established before the marriage.

Under California’s community property law, if a couple gets divorced and cannot decide how to divide their property and debt, the court will split community property 50/50. In the eyes of the law, an equal division of marital assets and debts is fair, but the couple might see it otherwise.

To alter the community property law, the couple can establish a marital property agreement (California Family Code § 1500). As mentioned earlier, when the agreement is entered into after the couple is married, it’s called a postnuptial agreement. The contract allows the couple to indicate how they would like their assets and debts split if they get a divorce. It enables them to protect their interests as they see fit rather than as the law dictates.

Without a postnup, upon a divorce, the couple might disagree on property division matters, which means they might have to go to court to settle the issues. Litigation can be lengthy, costly, and emotionally draining. A postnup can help the couple avoid this.

What a Postnuptial Agreement Can and Can’t Cover

With a postnuptial agreement, the couple can legally protect their assets and debts and set up expectations concerning property division should they get divorced. A couple might establish a postnup (as opposed to a prenup) because, before the marriage, they might not have had substantial property or business interests to consider. However, their financial circumstances might have changed after the marriage, prompting the spouses to think about what would be in their best interests should they divorce.

Some of the items that can be included in a postnup include:

  • Debt responsibility: The couple can decide who takes on which debt upon divorce.
  • Pet ownership: The couple can determine who gets to keep a family pet.
  • Retirement accounts: The couple can agree that each individual keeps the plan that they paid into.
  • Business assets: The couple can decide that the spouse with the greater share of interest in the business gets to keep it.
  • Community property: The couple can determine who gets to hold onto assets acquired during the marriage.

Generally, a postnuptial agreement is for financial and property matters. It cannot be used to determine such things as child custody, visitation, or support. These issues must be decided based on what’s in the child's best interests, and a contract entered into long before a divorce might not consider the present circumstances and how they might affect the child.

What Makes a Postnuptial Agreement Valid?

For the provisions of a postnuptial agreement to be legally enforceable, the contract must be valid.

The requirements for a valid postnup include:

  • A written document: The couple’s property and debt division decisions must be written down. Oral agreements will not hold up in court.
  • A signed contract: Both spouses must indicate their agreement to the terms of the postnup by signing it. Additionally, the document must be notarized.
  • An unambiguous agreement: The terms of property division must be clearly spelled out and defined. Courts cannot enforce contracts containing ambiguous language.
  • A voluntary agreement: Each spouse must have entered into and signed the contract without being forced or coerced into doing so.
  • A fair division of property and debts: The agreement must be just for both parties. That doesn’t necessarily mean everything must be split evenly, but it does mean one spouse can’t be left with nothing or all debts and no assets.

In addition to the requirements above, the spouses must disclose all of their financial information before entering into the contract.

That means they must share with each other details concerning their:

  • Saving and checking accounts,
  • Retirement accounts,
  • Real property owned,
  • Debts,
  • Business interests, and
  • Student loans.

Speak with an Attorney

Before signing a postnuptial agreement, discuss your case with a family law lawyer. They can help draft the documents to ensure it meets the requirements of a valid contract. They can also review the provisions to protect your rights and best interests.

If you need legal assistance with your postnuptial agreement, contact Claery & Hammond, LLP at (310) 817-6904. We serve the people of Los Angeles and the surrounding areas.

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