What is a postnuptial agreement?
A postnuptial agreement is a contract executed by a couple after the marriage ceremony. Usually a postnuptial agreement contains the same kind of provisions that would be found in a prenuptial agreement that a couple would enter into prior to the marriage ceremony.
However, a postnuptial agreement addresses issues that are occurring after the contingent of the marriage has been satisfied; the marriage has occurred. And frequently, when a postnuptial agreement is entered into, there may be no impending marital issue to be addressed at that time.
Just as a prenuptial agreement may protect the parties’ separate property and address issues such as alimony and attorney fees for the parties should the parties later divorce , a postnuptial agreement serves the same purpose as a prenup while also addressing issues occurring in the present.
Some examples of utilizing a postnuptial agreement would be if there has been a marital discord, conflict or separation. The parties may believe that the conflict or estrangement could be addressed and remedied by clearly delineating the issues. Or perhaps one party has an inheritance or other financial resource that should be specifically addressed in a contract.
The agreement may be utilized to clarify the parties’ rights as to the ownership of certain property as well as how income from property is to be classified.
The most important thing to remember about a legitimate postnuptial agreement is that it is voluntary and the terms are fair.
What does the law in Tennessee require?
In Tennessee, the legal requirements for a postnuptial agreement to be valid are primarily governed by the Uniform Premarital Agreement Act. Generally, these agreements are both enforceable and valid in Tennessee. A valid postnuptial agreement requires that the parties do both of the following: A postnuptial agreement is also subject to the requirements of contract law. Under Tennessee law, postnuptial agreements are enforceable if they contain: Specific statutory requirements. When determining whether a postnuptial agreement is binding, Tennessee courts often require that the essential terms and information contained in the contract should parallel those found in prenuptial agreements, however, as noted above, postnuptial agreements are subject to the requirements of contract law.
Key Provisions
The provisions of a postnuptial agreement can be tailored to fit the needs of both parties. Even though the future is unpredictable, a detailed agreement can reduce the uncertainty and provide direction to your family in the event of a divorce. A postnuptial agreement is a contract, so it can include any provisions that are not illegal and that both parties want to include.
The following is a list of typical provisions found in a Tennessee postnuptial agreement: Some of the provisions are required, and some of them are negotiable and can be adjusted as warranted. A postnuptial agreement most often contains the requirements to be enforceable in Tennessee: (1) voluntary execution, (2) adequate consideration (such as resolving marital disputes, settlement prior to a divorce action, or specifying and relinquishing property interest), and (3) full and fair disclosure of material facts.
When you should get a postnuptial agreement?
When couples contemplate the terms of their marriage, a more frequently missed consideration is whether or not a postnuptial agreement is needed or even desired. Sure, when times are good and fortunes are shared, our attorneys at Brewer, Krause, Brooks, & Chlebus have clients who are interested in protecting those assets from statutory division in the event of divorce. But this may be the easy part because parties frequently understand that those "marital" assets will need to be divided fairly regardless of whether there is an agreement. Questions become more difficult when the financial picture is not so rosy.
For example, a woman may have little to no assets prior to marriage. This same woman will marry someone who already has a very successful business or otherwise considerable assets. These two people decide that they want to create a premarital agreement to protect the assets that were accrued prior to marriage. The parties marry one year later and new business opportunities present themselves to the husband – a start-up business that requires substantial cash investment. The husband, in an effort to fund his new business, decides to sell 50% of the marital residence to a third party. This residence was purchased during the marriage and is the home to all three children. The wife’s new husband has the following questions: In this scenario, the wife should consider entering into another written agreement – a postnuptial agreement. Here, the parties have differing opinions and interests. The wife’s rights to the children are not questioned. The start-up business presents uncertain future for the wife. What if it fails? If the business succeeds, will her husband give her alimony of some sort? What sort will it be and how often? Should the wife be concerned that her husband’s new partner could potentially remain in her home? Should the wife be concerned about whether or not her husband will remain committed to her if his business flourishes? What happens to the residence if the husband dies as the result of his new venture? Will the wife have to continue to live with a third person? The questions are numerous but can be answered by the parties if they are able.
This is just one scenario where a postnuptial agreement might be considered. There are other circumstances that might also warrant a postnuptial agreement. Consider: The information above is not intended to be a complete list of all reasons for postnuptial agreements. There are myriad reasons why postnuptial agreements should be considered.
Pros and cons
As with any legal instrument, postnuptial agreements come with both advantages and disadvantages. The potential benefits include financial advantages, such as clarity over the disposition of assets and debts in the event of divorce or death. In financially complicated situations, a postnuptial agreement can help to ensure that both parties have clarity as to their rights in the event of divorce. They also provide for certainty in the event of a spouse’s untimely death by removing the need for a lengthy process to determine what marital property will be attributable to which spouse. A postnuptial agreement can also set forth rights in relation to other issues , like alimony or custody.
On the other hand, a postnuptial agreement can create strain in the relationship during the time it is being negotiated. One party may feel insecure about his or her rights in the marriage, when in fact the level of comfort the other party would find with the agreement is unclear. Negotiating the terms of a postnuptial agreement can create a strain on the relationship, even if the underlying issue can be settled amicably. Additionally, the enforcement of a postnuptial agreement has been called into question in some instances, raising the possibility that even a validly-formed agreement will not be recognized as binding by a court.
Tennessee postnuptial agreement enforcement process
Enforcing postnuptial agreements in Tennessee is generally the responsibility of the courts. If a contested postnuptial agreement is taken to trial, the judge or jury will determine its enforceability after considering the validity factors set forth in Tennessee Code Annotated Section 36-3-501(a). However, prior litigation history may substantially influence the outcome of a later enforcement action.
The clearest indication of invalidity is if the postnuptial agreement is not in writing and signed by both parties. This is indispensable for an enforceable contract in Tennessee, as a handshake, cross their hearts, or even tere-liam habet mus cum papau, will not create a binding agreement. "Clearly, such an agreement is in no sense enforceable in a Tennessee court." This was the outcome in Harris v. Harris, 639 S.W.2d 663, 664 (Tenn. 1982), where the court declined to enforce a postnuptial agreement because it was not in writing, although in this case, both sides had valid past consideration under Tennessee law. That is, things of value had been exchanged. Fortunately, Tennessee does not require consideration for an enforceable postnuptial agreement. The existence of a valid pre-existing mutual duty under a prior agreement or marital relations is good enough.
Courts will also void postnuptial agreements that are unconscionable as a matter of law. If a judge believes that the agreement is so unfair and one-sided that no reasonable person would have voluntarily agreed, the judge may declare the postnuptial agreement unconsicionable. In In re Estate of Meade, 112 S.W.3d 655, 657 (Tenn. 2003), the existence of unconscionability was considered to be a material fact, and the issue was not appropriate for summary judgment. See Tenn. Rule Civ. P. 56.04.
The current law in Tennessee does not address any potential distinction between pre and postnuptial agreements. Prior to 2002 the statute used the term former "antenuptial" agreement which encompassed all antenuptial and postnuptial agreements. But, a series of 1984 amendments omitted any reference to precedents from whether an agreement is called a postnuptial or antenuptial agreement, and changed "former" to "antecedent" as the adjective modifying the word "marriage," thus removing any limitation for a marriage to have occurred prior to the agreement. A pre-existing marriage relationship is not a requirement for a postnuptial agreement, but is helpful where parties have grown apart.
The timing of a request to have a postnuptial agreement enforced is critical to the decision of the court. Delays of several days to several months were considered to be reasonable, but requests made several months and years after the alleged prevailing party performs his or her obligations under the postnuptial agreement will likely be rejected in favor of the party who failed to abide by the agreement.
If the postnuptial agreement contains any factors showing possible coercion or duress, a court is likely to find that the postnuptial agreement is invalid and unenforceable. This is the law generally in Tennessee, but the presence of prior litigation between the parties to the postnuptial agreement over related issues could be a compelling inducement to a judge to find an absence of coercion.
How to draft a postnuptial agreement
In order for the Agreement to be enforceable and valid, it must be made voluntarily. This is a separate element from being fair or equitable. The existence of section 36-3-501 may be considered by the court in analyzing the Memorandum of Agreement, but it is not the only consideration. In short, Tennessee precedent directs that the existence of section 36-3-501 does not create a requirement that a postnuptial agreement be entered into in compliance with the statute. McFarland v. McFarland, 336 S.W.3d 378, 389-391 (Tenn.Ct.App.2010).
In order to make certain that the parties to a postnuptial agreement entered into by contract would not later be setting grounds for a successful challenge, common suggestions in entering into a postnuptial agreement include:
- Enter into a written agreement as early on in the marriage as possible;
- Place it into the hands of experienced counsel to craft the language in the agreement, prepare the Memorandum to hold the agreement in trust, and finally to witness the execution of the Memorandum;
- Provide full and fair disclosure of the parties’ financial status both before the execution of the Postnuptial Agreement and after its execution;
- If the other spouse is not also represented by counsel, then the party conveying an interest under the Postnuptial Agreement should suggest to the unrepresented spouse that he or she obtain independent review of the agreement;
- Likewise, a spouse also receiving an interest under the Postnuptial Agreement should consider obtaining independent counsel and have that thought documented in writing in some appropriate form; and
- It may be important to revisit the Postnuptial Agreement with counsel to consider amendments periodically to make certain that it meets current requirements of the law in terms of both enforceability and/or to make certain it reflects your current desires.
How to get help
For the drafting of a postnuptial agreement, it is crucial to seek the advice and counsel of a lawyer who has experience in handling these types of agreements . The Tennessee Bar Association offers a lawyer referral service that can match you with a family law attorney in your area, and many family law firms across the state provide online resources such as blog posts like this one to offer more general information about postnuptial agreements.