What Is a Postnuptial Agreement?
What is a postnuptial agreement? It’s essentially the same animal as a prenuptial agreement, except completed after marriage. Like prenuptial agreements, they can be written on the basis of mutual consent between a husband and wife and are aimed at determining the rights and obligations of married couples in either death or divorce scenarios. The difference is that a prenuptial agreement is entered into before the wedding, while a postnuptial agreement is completed afterward. Although prenuptional agreements are technically valid in Illinois, postnuptial agreements are prevalent.
Sometimes, when a couple enters into the postnuptial agreement, they believe they have filed a prenuptial agreement in essence. In those cases, the parties might be surprised later that the postnuptial agreement is subject to more scrutiny under Illinois law.
Another common misconception is that a postnuptial agreement is like a separation agreement , except executed sooner.
The legal requirements to enforce a postnuptial agreement frequently overlap with the legal requirements to enforce an ante-nuptial agreement.
As the Second District Appellate Court said in In re Marriage of Davenport, 2018 IL App (2d) 180247, paragraph [33]:
"Although often referred to as "postnuptial" agreements — a term that is not a legal term per se — the only area of statutory law concerning the enforcement of agreements entered into after marriage is the Illinois Uniform Premarital Agreement Act. See 750 ILCS 10/1 et seq. (West 2016). As such, we interpret the terms "marriage" and "premarital" consistently with their traditional common law meanings."
As a result, the requirements for grant of status are about the same as for a prenuptial agreement.
Are postnuptial agreements recommended? In many cases yes, particularly if a person did not enter into a prenuptial agreement prior to the marriage. More common are people who consider them if they are having difficulties in the marriage and desire to "hold things together" but wish to clarify obligations.
Postnuptial Agreement Requirements in Illinois
The legal framework for these agreements is provided by the Illinois Uniform Premarital Agreement Act, which states that a "marital settlement" or "postnuptial agreement" is an "agreement" made after marriage. While the term "postnuptial agreement" is not specifically defined in the Act, courts have traditionally understood it as an agreement made after marriage that relates to property and financial issues (as opposed to custody or visitation issues).
In Illinois, postnuptial agreements are contracts that require mutual consent. In order to be valid, both spouses must fully comprehend the elements of the agreement, including provisions as to exemptions, waiver or disposition of various rights in the event of divorce, separation or death of a spouse and any other provision with regard to property rights. Any provision of a postnuptial agreement that is related to one party’s obligation for child support or maintenance (spousal support) is unenforceable.
As with other types of contracts, a postnuptial agreement does not meet the requirements of Illinois law when it is "against public policy"; for example, if it provides guidance on maintenance (spousal support) payments that would contravene a statutory limit. As a general rule, postnuptial agreements must specifically reflect each spouse’s intent. In addition, during negotiations, both parties must provide full disclosure of assets and liabilities.
Advantages of a Postnuptial Agreement
A clear benefit of entering into a postnuptial agreement after marriage is the opportunity for financial planning. It serves as an important tool for couples to anticipate and navigate their future in terms of assets, liabilities and finances – as well as to protect themselves from potential creditors of their spouses. For wealthy spouses it provides an opportunity to further protect themselves, even if they already have a prenuptial agreement in place. Working through the terms of a postnuptial agreement also often requires a period of candid and constructive discussion about the responsibilities that each spouse has to the financial aspects of the marriage. Did you discuss student loan debt prior to marriage? How about whether you would both maintain a separate bank account containing your own income or if you planned to intermix your finances? If you have children, did you talk about the appropriate division of household costs and expenses? A postnuptial agreement provides a framework to make important decisions about these matters in advance with some degree of legal protection. In so doing, it can help to foreclose future litigation over these issues in the event of a divorce.
Disadvantages and Risks of a Postnuptial Agreement
However, postnuptial agreements are not without their risks and drawbacks. They can create a false sense of security for one or both spouses. In other words, even though the agreement is signed, there is no guarantee that it will be adhered to, especially if a flaw exists in the way it was executed. For instance, if the agreement appears to be unfairly weighted in favor of one party, then the courts may decide that such an agreement is unconscionable. If a postnuptial agreement it drawn up as part of a divorce agreement that has not been finalized yet, it can be rescinded if the divorce decree is never finalized. If one party decides to file for divorce, the postnuptial agreement can then be called into question. If the marital situation changes and the spouse who contributed less to the marriage becomes disabled or ill, the agreement will certainly present some conflicts. The spouse whose income or assets ensure a comfortable level of living will certainly not be pleased.
Moreover, there are other examples of how a postnuptial agreement can be problematic or present challenges. If you are contemplating a postnuptial agreement and are in a second or third marriage and have children, you may be pitting your children against your spouse. That is, a postnuptial agreement may leave little or nothing for your children upon your death. Without a postnuptial agreement, this part of the process is flexible and you can change what you choose to do with your assets when the children age – thus allowing your children the ability to object if they don’t agree with how you handle your estate.
In terms of finances, a postnuptial agreement will require that you give full disclosure of all your finances and assets if you furnish a full financial statement. You run the risk of giving away too much information with possibly damaging long-term effects on you and your family. A postnuptial agreement will not prevent the court from considering a change in income or assets when it comes to child support or spousal support and may therefore provide no guarantee of protection in the event of a divorce. Finally, depending on what the ground for divorce may be, the postnuptial agreement may also give rise to a divorce on the grounds of fraud if you lied about the status of your assets.
Provisions That Should be Included in a Postnuptial Agreement
Postnuptial agreements are subject to the same standards for enforcement under Illinois law as marital agreements. Accordingly, the following are key provisions to consider including in a postnuptial agreement.
An express statement that spouses are voluntarily entering into the agreement; A stipulation that the agreement is being entered into without fraud, duress or coercion; The terms of the agreement set forth the proposed division of property and assets upon a future separation and the terms of allocation between spouses for payment of any debts incurred during the marriage; A full financial disclosure of each spouse’s income and existing and anticipated assets; The agreement addresses the payment of spousal support, if any , for a post-separation period; An indication in the agreement that the attorneys for the parties explained to the spouses that the agreement is a legally binding contract; The agreement contains specific provisions if the spouses have children born or adopted after the date of the agreement; An agreement which provides for alternative dispute resolution if there is a change in the parties’ financial circumstances; The agreement does not dispose of maintenance or spousal support concerns; The agreement makes clear that the spouses have had adequate time to consult with independent counsel; If the agreement addresses child support, the amount of the draft complies with statutory child support guidelines; A general waiver or disclaiming of spousal rights and responsibilities in the event of death upon the terms and conditions therein.
Creating a Postnuptial Agreement in Illinois
In Illinois, the postnuptial agreement process generally requires two main steps. The first is for the parties to sit down and negotiate the terms that will form the content of the written agreement. The negotiation is very important to the overall process because of the duties of each party to fully disclose all assets, income, and expenses during the pendency of a divorce or legal separation. The postnuptial agreement is a contract that legally binds both parties. While mediation may be an option, it is also a good idea to enlist the help of a highly skilled family law attorney. The attorney will work with you to help ensure that your postnuptial agreement is valid and legally enforceable.
The second step is for each spouse to retain their own attorney and have the postnuptial agreement drafted. A postnuptial agreement signed without the independent advice of counsel may be challenged in court as invalid. Therefore, you and your spouse should each receive separate and independent counsel in this process. Each attorney will review the agreement with their client, advising each of them of all of their rights with regard to its terms. If an Illinois court determines that a postnuptial agreement is disproportionate, it may deem the entire agreement invalid – meaning that a judge could award a different amount of alimony than that which is spelled out in the written agreement.
Modifications and Termination of a Postnuptial Agreement
In Illinois, the procedure for amending or terminating a post-nuptial agreement is very similar to that of a prenuptial agreement. As such, the agreement must be in writing and signed and acknowledged by both parties.
However, not all post-nuptial agreements are created equal. The Illinois Marriage and Dissolution of Marriage Act (IMDMA) provides that any agreement relating to marital rights must be in writing, signed, and notarized to be valid. By contrast, it does not specifically set forth the procedures to amend or revoke a post-nuptial agreement, however, it states that a court may only set aside its provisions if the court concludes that a spouse did not voluntarily enter into the agreement or the agreement was unconscionable. 750 ILCS 5/502(f). Applying general contract law, Illinois courts have recognized that a post-nuptial agreement may be amended and/or revoked by the agreement of both spouses. Such an amendment or revocation, like the original agreement, should be in writing, signed, and notarized.
Misconceptions Surrounding Postnuptial Agreements
There are many misconceptions regarding whether or not postnuptial agreements even have a purpose, who these agreements are for and what they can and cannot do. Here are a few common misconceptions we have heard over the years and clarifications of those misconceptions:
- Postnuptial agreements are only for "bad" people or people in bad relationships. While that may sometimes be the case and there certainly are people who use these agreements as a means to an end, just as common are large families with substantial assets, some of whom are contemplating that they are at a major life juncture. Perhaps they have had a new child and mom wants to stay home with the child rather than working full time. Or perhaps one spouse is leaving a full-time role at their family business under which they will no longer have a salary so they want to ensure they still contribute to their retirement fund at a certain level as part of an agreement.
- Postnuptial agreements can never determine custody or visitation for children. While that is technically true, a judge will take those agreements into account when evaluating "the best interests" of the children and many times a judge will respect what the parties agreed to.
- A postnuptial agreement can take away or limit what a judge could do if you get divorced . A postnuptial agreement can limit your rights, obligate you to do things you wouldn’t otherwise have to do, or preclude you from asking a judge to do something. For example, it can state that a judge cannot award maintenance in excess of a certain amount, or maintenance for as long as 15 years, or that a judge cannot award custody to one party and such like.
- You need a postnuptial agreement if your spouse has a lot of student loans. Not necessarily. If the student loans are marital debt, your spouse may be able to seek a distribution of the debts during the process of getting a divorce. Sooner is always better to eliminate this debt.
- A postnuptial agreement’s provisions take effect immediately and cannot be reversed without going back to court. Not true. While a postnuptial agreement is immediately effective, it often requires court approval in order for it to be enforceable. When a judge sees an agreement, the court can decide not to approve it without having to go through a full-blown hearing. The court can also say "I’m not going to approve this until the parties have been divorced for a year, or a year and a half. Until then, the agreement will not be enforceable."
Once a full agreement is negotiated, in order to ensure that the agreement deals with any legal issues that may arise, both parties should be represented by an attorney.
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