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Consider A Postnuptial Agreement Before Getting Divorced

All hope may not be lost. Consider utilizing a postnuptial agreement to help you two get back on track.


Why A Postnuptial Agreement?

If you’re in a situation where you’re considering getting a divorce, maybe you should consider getting a postnuptial agreement (postnup) first. Not because you’re hoping the postnup will save you from a messy divorce (although it certainly can), but because a postnup might be able to create some structure and boundaries that your marriage is missing and desperately needs. Consider the postnuptial agreement a way to help strengthen your marriage.


Not Applicable If Abuse Is Present In Your Marriage!

This, however, is NOT an article that is encouraging an individual to stay in a toxic or abusive marriage. If there are any types of mental, physical, or emotional abuse taking place, you should consider leaving your marriage sooner rather than later, and connecting with a social worker, calling a domestic abuse hotline, and/or creating a strategic plan to remove yourself from your situation. That is an entirely different situation, where a postnuptial agreement should be the absolute last thing on your mind - your safety comes first. If children are involved, their safety is also a priority.


Perfect For Couples At Odds Regarding Finances.

This article is for couples who seem to be at odds when it comes to handling finances within their marriage. Maybe someone is racking up a wild amount of debt. Maybe someone tends to do quite a bit of retail therapy, draining their bank accounts. Maybe someone is financially supporting a family member that you know has no business receiving money. If someone within the marriage is struggling to be disciplined about the finances or is unwilling to compromise on how you believe the marital finances should be run, a postnuptial agreement can help set up boundaries.


A postnuptial agreement will also come in handy to help protect any other assets that either of you may have, should the financially irresponsible spouse start spiraling out of control. For example, say you and your spouse have a marital home or a second residence in both of your names and those properties are considered community property. A postnuptial agreement can remove those residences as community property, and can instead characterize those properties as separate property, belonging now to the financially responsible spouse, alone. That way, should the financially irresponsible spouse get into issues with creditors, the creditors can no longer try to place liens against the properties, because the financially irresponsible spouse no longer owns the property.


Now, you’re probably thinking that you can simply do a deed transfer to carry out the above example, but you can’t! A deed alone will not change the characterization from community property to separate property and vice versa. A deed does not override family court laws. There must be a writing that explicitly states that change in characterization, both parties must sign it, and it’s best practice to have the document notarized.


The same concept can be done with bank accounts, retirement accounts, vehicles, etc.


Now, retirement accounts? For the purpose of this article, I mention retirement accounts simply to say that spouses should utilize a postnuptial agreement to split their retirement accounts how they see fit. Depending on when the retirement accounts were opened, when money was put into the accounts, where the money originated from, etc. could have the retirement accounts characterized as community property, separate property, or a combination of both. For protection against a financially irresponsible partner, a postnuptial agreement can allow for one spouse to keep 100% of their retirement account, by changing any community portions of it to separate property. Again, it must be done in writing, signed by both parties, and preferably notarized.