Everyone is familiar with prenuptial agreements. A prenup is an excellent way for each person to help ensure that their property is protected before they walk down the aisle.
Fewer people know about postnuptial agreements. Just because you didn’t sign a prenup before you married, that doesn’t mean it’s too late to protect your assets.
What is a postnuptial agreement?
A postnup is a contract between spouses after they marry. It outlines how to handle assets, debts and financial responsibilities if the marriage ends.
So why would a couple want to draw up an agreement after they are already married? A postnup doesn’t necessarily mean that the marriage is in trouble. Instead, it often is a reflection of changed circumstances. Some couples marry young, before they start to accumulate wealth and then acquire significant assets they want to protect.
Others may experience major life events, such as receiving an inheritance or starting a business, that necessitate some proactive financial planning in case of divorce. Postnuptial agreements can be beneficial for couples who want to clearly distinguish between what is marital and separate property, particularly when children from prior relationships are involved.
A well-drafted postnup can cover a wide range of issues. It can include how real estate, investments, retirement accounts and personal property will be classified and divided. It can also state how to handle debts and liabilities. For business owners, a postnup can clarify ownership, ensure the company’s continuity and prevent disruptions.
A postnup can also address spousal support expectations, provided the terms are fair. However, it can’t determine child custody or child support. Those issues are subject to court rulings.
Maryland typically recognizes postnuptial agreements when properly drafted and executed. Both spouses must be transparent regarding their financial circumstances, including assets, income and debts when developing a postnup. The agreement must also be voluntary, without pressure, and its terms must be fair and reasonable.
Before drafting or signing a postnuptial agreement, it’s in your best interest to discuss it with a legal representative. They can help ensure compliance with state laws and protect your rights and assets.
