Does the fact that a married person wants to have a postnuptial agreement (also called postmarital agreement) mean that they want to get divorced? Although that might be the first thing that comes to mind, it’s generally not the case. After all, if they wanted a divorce, well, they just could get a divorce.
Usually what’s occurring is just the opposite: the person seeking a postnuptial agreement wants to stay married. But they have a concern, and the goal with the postnuptial agreement is to address that concern while staying married.
Here are several common reasons (although by no means exhaustive or the most common) married people – who don’t want a divorce – might nonetheless want a postnuptial agreement.
To Alleviate Concern Over Spending, Savings, Etc.
It’s no secret that one of the most common disagreements between married couples is over money. Sometimes these disagreements are over earning money, but they are also often over the spending habits of one partner and/or the lack of savings.
In California, the money you earn and save during a marriage is community property, assuming there is no prenuptial or postnuptial agreement to the contrary, which is split 50/50 between the parties regardless of who earns it, and both parties have the right to use that property. Which means if you bring home $100,000 a year and your partner spends $100,000 a year, that means you could be left with nothing and no recourse to ask for reimbursement.
A postnuptial agreement, however, could be used to agree that each person’s earnings are their own separate property and/or that one spouse receives a monthly or yearly allowance for spending. There are any number of ways a married couple can structure this to meet their needs. And while it may not sound romantic, it may just save the marriage.
To Protect a Business Venture
Community property is split 50/50 in a divorce, and a spouse also inherits 50% of the community property upon the other spouse’s death, regardless of what the will might say, unless again there is a prenuptial or postnuptial agreement to the contrary.
While that fact alone leads people to obtain postmarital agreements, there can be extra motivation when one spouse owns a business venture. The divorcing or surviving spouse does not necessarily become a 50% owner of the other spouse’s ownership interest in the business, but they do have the right to that 50% of value, which can cause problems when most of the wealth is tied up in that business.
For example, if you are the sole owner of a dry cleaners worth approximately a $1,000,000 which is all community property, you would be obligated to provide $500,000 of assets to your spouse in a divorce or upon your death, absent an agreement. If you don’t have $500,000 lying around, a judge might require that the dry cleaners be sold so that you can pay that amount. Or your ex-spouse may become your new co-owner. You might find ways to borrow money or pay over time but that is not always feasible.
Needless to say, having a postnuptial agreement can avoid messy, unpredictable results like these.
To Provide For Others Outside the Marriage
Postnuptial agreements are common among people in second and third marriages, not just because they’ve been around the block once before with marriage and understand just how painful it can be to contest a divorce, but also because they frequently have children from first marriages who they want to provide for. Thus, a postnuptial agreement can be a good method to ensure that assets are protected for children both in the event of a divorce or death in light of the community property principles described above.
To Avoid a Potential Divorce And Show a Commitment to the Marriage
The reasons above all go to why a person might seek a postnuptial agreement to protect their own assets, but sometimes a spouse wants a postnuptial agreement specifically to protect the other spouse’s assets and thereby prevent a divorce and/or demonstrate a commitment to the marriage.
For example, Spouse #1 might be worried about Spouse #2’s spending habits and may even be concerned that their won’t be enough money to send Spouse #1’s teenage children to college if the spending habits continue, or, more drastically, if Spouse #2 seeks a divorce in which Spouse #1 ends up paying vast amounts of money in property distribution and spousal support. Spouse #1 may even think that seeking a divorce immediately before the financial situation becomes worse and she is on the hook for more spousal support is the best option. Spouse #2 in this situation might offer a postnuptial agreement which protects Spouse #1 as a way of alleviating concern and providing Spouse #1 with more security and stability so that Spouse #1 stays in the marriage.
Guidance on Your California Postnuptial Agreement Questions From a Westlake Village Family Law Attorney
If you would like to learn more about how our office can provide guidance on your Postnuptial Agreement issues or any other California family law issues you are facing in Ventura County or Los Angeles County, contact the Zonder Family Law Group office today at (805) 777-7740 or (818) 877-0001, or schedule your strategy session using easy-to-use online form here.