While you may have heard of prenuptial agreements, postnuptial agreements are less well known. Couples create these documents during the course of their marriage to establish financial protections.
These agreements often arise from a conflict within the marriage, or they can occur when a couple wishes to divorce but wants to stay married for financial benefits. However, they can also benefit couples in many other situations. Here are a few smart reasons to draft a postnuptial agreement.
Changing financial situations
Receiving a large influx of money, such as an inheritance, can cause conflict in a marriage. So can one spouse’s financial behaviors, particularly if they begin spending frivolously. A postnup will set some ground rules for how to deal with these issues and can prevent lots of conflict as a result.
One spouse is a stay-at-home parent
Stay-at-home parents are typically at a disadvantage after divorce. Because they lack the job training necessary to secure lucrative employment, they may find it difficult to care for themselves financially without their spouse’s assistance. Postnuptial agreements establish a safety net for stay-at-home spouses and ensure they can continue a similar lifestyle after the relationship ends.
You or your spouse plan to open a business
Business ownership is a common reason for people to draft prenups. If you do not open a business until after you are already married, a postnup is the next best thing. Along with protecting the interests of the business owner, it can also protect any partners involved.
Postnuptial agreements also benefit couples from an estate planning perspective. This is especially true if you or your spouse have children from a previous marriage and want to include them in your estate plan.