Postnuptial Agreement Explained
A postnuptial agreement is a legally binding contract entered into between a husband and wife after their marriage. The postnuptial agreement will provide how their property will be divided upon divorce, whether spousal support will be paid, and generally outline the rights and obligations of the parties in the event of a divorce. The biggest difference between a postnuptial agreement and a prenuptial agreement is the timing. One spouse presses for a prenup before entering into a marriage which puts pressure on the other spouse. A postnuptial agreement is voluntary. However, like a prenup, it can resolve potentially complicated issues .
The decision for entering into a postnuptial agreement can be triggered by a number of different factors including: a desire to identify the marital property and the nonmarital property; a desire to avoid future conflict, especially if one spouse has been involved in an affair; economic changes that threaten the economic future; or just a simple desire by both parties to clearly outline their property rights in the event of a divorce.
While Ohio does not have specific laws regarding postnuptial agreements as it does with prenuptial agreements, it will look to the intent of the parties as to whether the postnuptial agreement is enforceable. Under Ohio law, a court will treat a postnuptial agreement, as it would a prenup and apply contract law.
Requirements Under Ohio Law
To be valid and enforceable, like premarital agreements, postnuptial agreements in Ohio must be entered into voluntarily and not through coercion or duress. The Uniform Premarital Agreement Act (UPAA) provides statutory guidance for postnuptial agreements in Ohio which are defined as a written agreement entered into by the couple after their marriage.
Despite the fact that the UPAA does not explicitly govern the validity of postnuptial agreements in Ohio, the common law definition of a valid contract still applies. In Ohio, a valid contract must include an offer, acceptance, consideration, and a meeting of the minds. Basically, the parties must agree to something of value in exchange for something of value. In the case of a marriage, consideration is usually the marital status itself.
Additionally, the case law around postnuptial agreements in Ohio requires the postnuptial agreement in Ohio to be entered into voluntarily and not through coercion or duress. It is strongly recommended that spouses have their own attorneys represent them in this process.
Advantages of Postnuptial Agreements
For those entering into an Ohio postnup, there are numerous benefits. As with a prenuptial agreement, the main benefit is that spouses can protect their property and rights if they cannot, or do not want to attempt, reconciliation. For example, a party may have significant assets, such as a business or a pension. If parties separate or divorce, there can be issues regarding the division of the business or the pension if a postnuptial agreement does not exist. Such issues can be avoided by designing a postnup specifying the rights each party will have after separation or divorce. A postnup can be used to protect premarital or inherited property from the claims of the other spouse. These agreements give people the ability to avoid costly disputes and to determine their separate and joint rights if their marriages do not work out.
Postnuptial agreements can address support, property division, and even child custody and support matters. However, parties cannot agree on an issue pertaining to children without a judge determining that the agreement is in a child’s best interest.
A Judge will presume that a postnuptial agreement is valid. The parties diligence and fair bargaining will also be presumed. A party who alleges that an agreement is invalid has the burden of proving the invalidity of it.
If the postnuptial agreement addresses rights relating to separation and divorce, it becomes effective on separation. If it contains provisions relating to divorce, for support, property division or another related issue, it will not be effective until the divorce is filed.
Parties who enter into a postnuptial agreement will often state that it was executed voluntarily with full knowledge of all rights. The agreement can also specify the rights of the parties if separated, but not divorced. The postnup can also address the parties’ conduct, such as one spouse’s alimony waiver or how marital debt will be divided.
Commonly Contained Provisions
Common Provisions Included in Ohio Postnuptial Agreements
Although all of the clauses of a marital agreement do not need to be recognized and upheld by the Court, if you are going to take the time to draft the agreement, the agreement should include those topics that would complicate the parties’ divorce if not addressed earlier in the process. By the time of the filing of a divorce complaint, it is usually too late for any significant negotiations to occur, and it is often the case that one party wishes to keep the other out of the house for an extended period of time (clients will often report to me the other wants to leave their residence as early as the day after the filing of the complaint.)
The most common types of clauses in postnuptial agreements address the division of property and spousal support. Common provisions include, but are not limited to:
(i) Division of income and expenses;
(ii) Clarification of which property is separate property and which is marital property;
(iii) Division of property upon divorce;
(iv) Waivers of spousal support rights;
(v) Non-interference clauses;
(vi) Employment of a neutral therapist;
(vii) Estate planning provisions; and
(viii) Retention of counsel.
Division of income and expenses provisions:
Many people do not alter their direct deposit, automatic bill payment and account arrangements even after the parties separate. The court may place financial restrictions on a spouse pending a divorce filing. For example, a spouse might be prohibited from making cash withdrawals, changing direct deposit or automatic bill payment arrangements, etc. A postnuptial agreement can be a cost effective way to confirm the continuing joint nature of accounts and allocation of payment responsibility.
Division of property
It is important to clarify what constitutes separate property and marital property for purposes of a divorce. Provide for the division of any increase in value of a separate property if the other spouse contributed to the increase in value in any manner.
Waiver of spousal support provisions:
The parties can make waivers of spousal support claims if desired. In the event that it has been years since the parties’ marriage any traditional rationale for spousal support (spouse having been out of the workforce for decades, etc.) may no longer exist.
Non-interference:
Each spouse agrees not to disparage the other or make disparaging statements to third parties concerning the other. A non-interference clause provides for additional avenues of relief in the event that spouse’s family and friends may become the subject of comments, "he said/she said" situations, etc. This type of clause can be directed toward children of the marriage as well.
Employment of a neutral therapist:
The agreement may provide for each party to visit a neutral therapist. Each party would pay for their own sessions.
Estate planning provisions:
Consider whether any estate planning provisions are necessary. It is always best to be sure your estate plan is updated.
Potential Pitfalls and Restrictions
Unlike prenuptial agreements which have been written about many times, postnuptial agreements have not received the same treatment by authors. At present, there is no definitive, controlling decision applicable to Ohio courts addressing the enforceability of postnuptial agreements. Recent decisions, primarily from the appellate level, speak to the issue. An agreement may not be enforceable if it was both unconscionable and not a product of good faith negotiations.
Unconscionability is judged by a variety of factors, including: An agreement that is a product of fraud or overreaching may be declared unenforceable. Specific problems exist when attorneys prepare postnuptial agreements for a couple. It is important that each spouse has independent counsel . In 2012, the 8th District Court of Appeals found that a postnuptial agreement, prepared by the wife’s attorney, was unenforceable because the husband was not given the opportunity to secure independent counsel; that neither party was advised of the potential impact of the agreement; nor was either given the opportunity to carefully consider its provisions. McMillan v. McMillan, 2012 Ohio 1867 ( Ohio App. 8th Dist. 2012). The preparation of an agreement may be in the best interests of the parties while they are experiencing marital of family difficulties. An agreement may be a way to resolve division of assets without litigation. However, one way to avoid problems is to have the agreement drafted by the spouse who is not the breadwinner, so to speak. This way, there is no disadvantage that could be used later to say the agreement was unfair. Amendment or modification of the agreement should be as stringent as the original terms of the agreement. The best way to determine the enforceability of a postnuptial agreement is to have well written terms which cover the requirements laid out by the cases.
Drafting a Reasonable Agreement
When aiming to draft a postnuptial agreement that is both fair and comprehensive, it is advised to first draft a list of the aspects of your property and finances for which you want coverage, as well as any other conditions you wish to include. Once these have been drafted, have your partner create a similar list. At this point, you will need in-depth discussions with your partner about the respective positions regarding your lists. After a comprehensive dialogue, you should work with an attorney to create a draft postnuptial agreement that includes, at a minimum, all of the conditions you and your spouse agreed upon during your discussions. The agreement should then be discussed in-depth with your partner, and then revised to reflect any necessary changes until both you and your partner are satisfied with the final version. At this point, both you and your partner should consult an attorney and have the agreement in its current form reviewed. Following this review, revise the agreement again until all parties are satisfied that the terms reflect the wishes of the respective parties. At that point, both you and your partner should complete the final element: signing the agreement. As part of the signing process, have your signatures notarized by a notary public, and file the agreement with all pertinent agencies (this will vary from agreement to agreement). The most important element in this stage of the postnuptial agreement process is to make sure you honor the agreement. You should do everything in your power to carry out the terms as established. Treat your postnuptial agreement as though it were a legally binding contract, because it is. In the event that one spouse violates the terms of the agreement, that spouse may be punished according to an agreement’s terms.
Ohio’s Statutory Changes and Current Trends
Trends in the law regarding postnuptial agreements have trended toward increased acceptance and use. The Uniform Pre-Marital Agreement Act ("UPAA"), which was first published by the drafting Committee of the National Conference of Commissioners on Uniform State Laws in 1977, has been adopted by over 25 states. The UPAA provides a model for state legislatures as they consider adopting pre-marital agreement statutes. A handful of states have adopted the UPAA, while some states have statutes that are closely based upon the UPAA. Not surprisingly, the states that have enacted no law regarding pre-nuptial agreements have also failed to enact any law regarding post-nuptial agreements. As the judicial trend has moved towards acceptance of pre-nuptial agreements, it is perhaps not surprising that post-nuptial agreements would follow a similar path.
In Ohio, judges and lawyers have struggled with the question of whether a post-nuptial agreement is valid and legally enforceable. In fact, in Ohio, two different appellate courts have reversed trial court decisions upholding post-nuptial agreements. See Baker v. Baker, 2018-Ohio-4097 (2d Dist., Nos. 27060, 27086, September 28, 2018); In re Marriage of Charleton, 2018-Ohio-1565 (9th Dist., No. 2016AP009164, Apr. 11, 2018). Recently, two bills were introduced to address this issue and to provide guidance on the enforceability of post-nuptial agreements. The bills were initially introduced in the Ohio Senate, passed by the House and then subsequently in the Senate, before being voted down in committee with no further action.
How To Get Help
When considering the creation of a postnuptial agreement in Ohio, it is crucial to seek legal assistance to draft an effective and enforceable document. Attorneys and financial advisors play a key role in the process, ensuring the agreement is properly structured and fair to both parties.
Attorneys are essential in drafting postnuptial agreements, as they are fully knowledgeable of the legal requirements in Ohio to form a valid agreement. An attorney will provide sound legal advice during the drafting process, and perhaps even suggest alternatives to the agreements prospective clients have in mind. The more unique or unusual the circumstances are, the more necessary consultation with a competent attorney becomes. While financially-based advisors’ general familiarity with family law issues is certainly helpful, divorce and separation issues can sometimes be complex and requiring of professional guidance.
It’s important to remember that the attorneys involved with the postnuptial agreement will only represent the best interest of each party independently . In a postnuptial agreement, Ohio does not recognize the possibility for joint representation, therefore each spouse must obtain their own counsel.
Postnuptial agreements share the same precepts as antenuptial agreements in that they will generally be upheld only if they are fair. The substantive terms to the agreement are not likely to be challenged, however the procedural fairness may be. More specifically, in consideration of the enforceability of the agreement, courts will examine the meaning of the terms and the presence of any kind of duress. A gross imbalance may be evidence that the agreement is unfair. Additionally, if an individual fails to secure a lawyer, it can be an indicator that he or she was coerced in the negotiation of the agreement.
We wouldn’t recommend drafting or signing a postnuptial agreement without first consulting a qualified Ohio family law attorney to explore your options and understand the potential ramifications.
