Postnuptial Agreements

A divorce can be an emotional and financial grind that could consume much of your time and energy. Though a divorce may allow you to start over, you could also have a difficult time getting through the process. A way to reduce the chances of a difficult split is through an Indiana postnuptial agreement.

Premarital agreements are more common, better known and they have the same purpose, but the timing is different.

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Premarital agreements are made before the marriage, while postnuptial agreements are created during the marriage and occur for limited situations in Indiana.

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Both agreements are tools that couples can use to potentially greatly narrow what can be disputed during a divorce. A postnuptial agreement can spell out the parties’ intentions on the handling of financial assets, debts, alimony and property in case the couple divorces. What can’t be part of a valid postnuptial agreement is the handling of child custody, visitation and support; these issues, which can be very emotional and contentious, would still remain to be resolved.

Indiana Postnuptial Agreements Must be Valid Contracts

A postnuptial is enforceable if the requirements of contract law are met. If the adults involved aren’t incapacitated, it’s assumed they’re able to contract. Courts are generally reluctant to re-write a contract, but they could get involved if one of the following can be shown:

• It was the result of fraud or duress.
• The terms are unconscionable (unfairly skewed and one-sided), creating an outcome that would be clearly unfair.
• There wasn’t a full disclosure of the assets and debts of one or both of the parties when the agreement was entered into.

A court could also step in to interpret the contract if its terms are vague and confusing and state what it means in case one or both parties dispute that meaning and disagree over their rights and responsibilities.

Indiana Postnuptial Agreements are Based on Case Law Not State Statute

Unlike premarital agreements, there is no state statute creating the validity, rights and responsibilities that come with postnuptial agreements. The foundation of postnuptial agreements is judge-made or common law. In these cases, judges have had to juggle family and contract law to come up with fair and equitable decisions.

If a couple finds itself in relationship trouble and tries to reconcile, part of that process could be to create a postnuptial agreement to resolve financial and property disputes to try to get themselves back on track.

If the postnuptial agreement is created by a happily married couple who just didn’t take the time to put together a prenuptial agreement, whether it’s enforceable or not may be open to question. After a divorce is filed a spouse who’s unhappy with the terms of the agreement may claim it’s not valid because no consideration (something of value) was exchanged between the parties, a requirement under contract law.

Indiana Postnuptial Agreements Provide Some Certainty and May Prevent Future Disputes

Postnuptial agreements have benefits just like any other contract. They bring certainty to what could be an uncertain situation. They clarify the parties’ rights and responsibilities and spell out what they should and shouldn’t do under given circumstances. This can give both parties peace of mind, knowing there’s a plan in place for the worst-case scenario, which could be extremely helpful to couples as they navigate the ups and downs of married life. 

Assets that each spouse wants to designate for a particular purpose, like putting aside and preserving an asset to pass on to children from another relationship, could be part of the agreement. It there’s an income disparity between the spouses, it can be agreed that the one with a lower income will receive certain assets or alimony for a given time after a divorce. If a spouse is the owner or part-owner of a business, how that stake in the business will be handled can be agreed ahead of time.

Creating a valid postnuptial agreement should at least narrow the scope of divorce disputes and reduce its costs if one occurs. Postnuptial agreements can be especially helpful for marriages of older couples and those who’ve been married before. They can also state what should happen in case one spouse dies, spell out what estate planning documents should say and require that life insurance policies be purchased and who their beneficiaries should be.

While there are benefits to creating a postnuptial agreement, like any binding, legal document, you need to think through whether it’s right for you and, if so, what terms you want, what issues you’re willing to negotiate and what issues you’re not willing to compromise on.

If you are married and have questions about postnuptial agreements or want legal help in having one created, contact Church, Langdon, Lopp, Banet Law today. We look forward to working with you. Although we’re based in New Albany, Indiana, we also offer postnuptial agreement services in Kentucky with our Louisville family lawyers.