A postnuptial agreement is simply a contract between two people who are married. The parties may be heterosexual or same-sex spouses and the agreement may include just about any terms, with a few exceptions, that a couple may desire.
While prenuptial or pre-marriage agreements* are usually entered into when a couple’s relationship is relatively happy and full of promise, postnuptial agreements are often used to remedy some sort of difficulty in a marriage. Yet, even when a marriage is happy, a postnuptial agreement can help to ensure continued harmony by clarifying the desires and needs of each member of a couple.
Although postnuptial agreements are most often used to address financial issues, they can also be used to deal with all sorts of marital issues, such as:
Couples who felt no reason to enter into an agreement prior to marriage may find that their circumstances have changed after the wedding. One spouse may decide to give up a career to raise a child. Careers may change for other reasons, as well. Any significant change in a couple’s financial situation can warrant an agreement regarding a change in relative duties, the valuation of time commitments, or a designation of who owns what.
Couples may agree on how to divide assets in the event of divorce or what they will leave each other in their wills. Details regarding future support may also be addressed. In other words, as postnuptial agreements are contracts, just about anything may be included.
The law of postnuptial agreements is the same, in most respects, as the law of contracts. The primary difference between the law’s treatment of postnuptial agreements and other contracts is that a postnuptial agreement requires full and fair disclosure between the parties in order to be enforceable.
Pennsylvania courts will generally enforce a postnuptial agreement as long as it was entered into voluntarily and each party provided the other with a full and fair disclosure of his or her assets and liabilities. Because the parties to this particular sort of contract are in a relationship of trust beyond that existing between parties to a purely business-like contract, the law requires the parties to give each other a complete and honest appraisal of their financial situations before a postnuptial agreement is executed.
If you and your spouse enter the postnuptial agreement voluntarily and each of you provides the other with full and fair disclosure, your postnuptial agreement will be enforceable even if it is one-sided and strikes an “unfair bargain” for one of you. In fact, you will be bound by the agreement even if the terms were not read or fully understood. The law assumes that parties know what they are doing when they execute contracts and that they are entitled to make whatever bargain they wish.
Couples sometimes enter agreements only to have one or the other spouse regret the decision at a later time. You should prepare for that possibility when you and your spouse draft your postnuptial agreement, by making sure you fulfill all of the law’s requirements so that the agreement will be enforceable in court.
The Pennsylvania Divorce Code provides that parties will be bound by their postnuptial agreements unless the spouse seeking to avoid it can prove by clear and convincing evidence that he or she entered the agreement under duress ( i.e., did not enter it voluntarily), or that he or she was induced to enter it through fraud or misrepresentation (i.e., was not given full and fair disclosure of the financial position of the other party or did not voluntarily waive, in writing, the right to such disclosure).
A postnuptial agreement is a contract and must be evaluated by a court according to contract law. The first thing the court will look to in its evaluation of your agreement’s enforceability is the contract’s wording.
If your postnuptial agreement contains clearly worded statements 1) that you and your spouse are both entering the agreement voluntarily and 2) that each of you has provided the other with a full and fair disclosure of your financial positions, your agreement is very likely to be enforced.
If each party relies on the advice of separate counsel in drafting the agreement and the agreement includes a statement to this effect, the chances of enforceability will be strengthened even further. A court is also likely to enforce your postnuptial agreement exactly as written if the agreement provides that each of you has read and understood the agreement and intends to be bound by its terms.
Despite the importance of the requirement of full and fair disclosure, courts will nevertheless enforce a postnuptial agreement that was entered into without full and fair disclosure if the requirement was knowingly waived by the party who did not receive it. In the 2013 Pennsylvania Superior Court decision of Lugg v. Lugg, one of the parties had waived the requirement of full and fair disclosure. That party later challenged the postnuptial agreement in court, arguing that the required disclosure was not provided and that it could not be waived.
The court disagreed. It held that when a party to a postnuptial agreement voluntarily waives the requirement of full and fair disclosure in writing, the requirement will be considered to have been satisfied.
Parties have also challenged the enforceability of their agreements by arguing that the full and fair disclosure given by the other party was not specified in the agreement itself. In the Pennsylvania Superior Court decision of Sabad v. Fessenden, the husband argued that the full and fair disclosure requirement had not been met because the parties’ prenuptial agreement*** did not contain the financial disclosures of the parties and because the disclosures made were not detailed enough.
The court found that the statement in the agreement that disclosure was made was adequate to create the presumption that such disclosure was made, and that the presumption could be rebutted (or proved to be false) only upon a showing of fraud or misrepresentation. The court also found that the specifics of the financial disclosure need not be exact, and that they need not be included or otherwise reduced to writing in order to satisfy the disclosure requirement.
A postnuptial agreement may be one of the wisest relationship decisions you will ever make. The discussions necessary to entering a postnuptial agreement can go a long way toward creating a sense of security and trust between you and your spouse. Honesty and openness about what matters most to each of you can strengthen your relationship, eliminate uncertainty, and set your minds at ease regarding mutual expectations.
* Prenuptial agreements (alternately termed premarital or ante-nuptial agreements) are contracts entered into between people who intend to be married but have not yet done so. For additional information on premarital agreements, see Premarital Agreements for PA Business Owners and Prenuptial Agreements: Why Women Need Them.
** Courts will not allow a party to waive the requirement of voluntariness, however. In other words, if one party to a postnuptial agreement can establish by clear and convincing evidence that he or she entered the agreement against his or her will, the courts will not enforce the agreement even if the party who entered the agreement under duress wishes to waive the voluntariness requirement.
*** Although Sabad v. Fessenden dealt with a prenuptial agreement (one made before marriage rather than after), the law relating to prenuptial and postnuptial agreements is the same, so that the analysis of Sabad is applicable to both.