Post-nuptial Agreements - Good Point from Prenuptial Agreements Blog

The article Postnuptial Agreements nails the point quite well:

"The reason for more careful treatment of postnuptial agreements over prenuptial agreements is the legal rights of the people involved. Prior to marriage, neither person has any legal family law rights on the other. So, a person is not giving up any rights when they enter into a prenuptial agreement. However, the situation between a married couple is very different - both parties have very well defined legal rights regarding support and property division. So, when they negotiate a postnuptial agreement, they will be giving up some of these rights. Because of this, it is very important for both parties to each have an attorney and to really bend over backwards to be fair in the postnuptial agreement."

I say check the rest of the article for a general overview of post-nuptial agreements. Post-nuptial agreements share with prenuptial agreements one thing from my practice's viewpoint: under utilization by people.

Postnuptial Agreements - New York Times

The New York Times published a short article on post-nuptial agreements, Postnuptial Agreements.

"One reason couples use postnups, according to Stuart S. Greenfeig, a Maryland attorney who specializes in them, is to try to shore up rocky marriages. “They generally arise when there’s concern about the stability of the marriage — for example, when one spouse has committed adultery,” he says. Some clients wanting a divorce may end up reconciled through a postnup that guarantees more assets to the aggrieved spouse. Postnups also arise from simple economics: when a couple goes through a major financial change — the wife gets a major promotion and a significant income increase, for example — they may want to renegotiate their original terms. (Many postnup couples already have prenups.)"

Why the increase? For a reason I previously mentioned here.

But why so many of these agreements now? One factor is that hedge funds and other high-value equity partnerships increasingly urge new partners to get postnups. It’s a phenomenon of the new gilded age: postnups assure such firms that a divorcing partner won’t be giving away part-ownership.

Prenuptial Agreements - what's new for today?

I thought for today I would put all the new articles on prenuptial and cohabitation agreements into one article.

For those wanting a general overview about prenuptial agreements, you should read Divorce and Premarital Agreements: What are Premarital Agreements?. I have one disagreement with the article. The article says you should see a lawyer where I say not having a lawyer review the prenuptial agreement (or the cohabitation agreement) puts you at risk.

What to put in a cohabitation agreement provides a general overview for cohabitation agreements.

VA Family Law Blog puts forward the argument in Not Hollywood: the truth about Prenuptial Agreements that prenuptial agreements are a communications tool that will help a marriage:

Others tell me prenups just doom a marriage to fail. How can a marriage succeed if you start off assuming you will get divorced, they say. While prenups do set up the financial rules to be used if a marriage fails, they also let couples craft a financial plan which will help their marriage succeed. You doom your marriage when you do not talk in advance about financial details and expectations. I encourage my clients to make full financial disclosures as part of the prenup process. Often each side only has a sketchy idea about the other’s situation until we tackle the disclosure. Communication, not cluelessness, is a good marriage building block.

I can say that my experiences with relationships is that as soon as we stopped talking to and with one another, they came to an end. Which explains why I like this particular argument for prenuptial agreements. I will go further and say that the same idea applies to cohabitation agreements.

For an article mixing prenuptial and cohabitation agreements, I suggest taking a look at this article from Divorce Lawyer Blog Premarital and Living Together Agreements - Do You Need One?:

"First, let's look at the difference between the two agreements. Premarital agreements are created between two individuals who are planning to get married in the near future. Living together agreements, also called property agreements, are created between two individuals who do not plan to marry immediately or perhaps at all, but who may accumulate property together. This can include same-sex couples and long-term roommate situations, as well as couples who choose to live together for an extended period."

The Uniform Pre-Marital Agreement Act is a federal law that provides legal guidelines for premarital agreements. Agreements are usually enforceable in court unless it can be proven that one party was forced to sign the agreement against his or her will or that the agreement is written in such a way as to promote divorce, such as providing an unusually large settlement.

I do need to quibble a bit here - the UPAA - is not a federal law but a state law.

Jeffrey Lalloway of California Divorce and Family Law Blog picks up an article which I did not see in Prenuptial agreements prevent much pain. Practical advice here that ought to be paid attention:

It's a process that should begin long before the wedding invitations are mailed.

First, working out an equitable agreement takes time.

Second, and most important, a rushed prenup might not stand up in court because one spouse was under pressure. (Ask director Stephen Spielberg. He was ordered to pay ex-wife Amy Irving $100 million when a judge ruled that their prenup, scrawled on a cocktail napkin, was invalid because Irving didn't have legal representation.) "A prenup isn't cumbersome or expensive to set up," Charny says. "But it does take time because everything must be carefully evaluated."

Full disclosure of all assets is essential. If one spouse tries to hide money -- or debts -- from the other, it could negate the deal.

Which partially explains, why I wrote above that making optional review by an attorney was not a good idea.

I do not think that I mentioned before that Indiana's prenuptial statute is online. Actually, it is Indiana's version of the uniform premarital agreement act and is found at IC 31-11-3.

For my other articles on prenuptial, post-nuptial, or cohabitation agreements, you need only click on the links below next to "Label".

If you live in Indiana and need an agreement written or reviewed, please contact me.

Post-nuptial Agreement - Why to Get One

I ran across Ignoring debt won't make it vanish from the Ventura County Star. I remember one divorce where the division of debts confounded both myself and opposing counsel to settle matter as bloodlessly as possible. No agreement being reached, we left the matter to the judge and I can only call the result a bloodbath. The original article was in a question and answer format. I have some comments interspersed in the original.

"Dear Bruce: I got married five years ago. My husband has two sons, 44 and 42. Both are married and they have a comfortable financial life. All of my husband's stocks are in his sons' names after he passes. We have a house, which my husband owned prior to our marriage and recently was paid off. My question is what will happen to me after he passes? Also he doesn't have a will and he is against it. We live in Colorado. — H.K., via e-mail

So you would think that these sort of people would be talking to a lawyer, right? So did the person at the newspaper.

Dear H.K.: You most surely should have had a prenuptial agreement prior to your getting married. The fact that your husband is against a will is not very clear thinking on his part. In most states, a wife would be entitled to at least one-third of the husband's estate if he dies intestate (without a will). Whether the other assets would pass directly to you or become part of the state is a legal matter.

Of course, they did not, have not, and probably will not. Second marriages with assets and no prenuptial agreement? Who would have thought it? No need to worry about how those assets get used and what debts do not get paid to rankle the newlyweds. Besides they get to save so much in attorney fees!

I think you and your husband should sit down and decide exactly what is appropriate. It may very well be that a postnuptial agreement is the way to handle this. It would appear that your husband, in some ways, is very immature and feels that he is more responsible to his children than to his current wife. These matters should have been resolved before getting married, but since that didn't happen, I would tell him that it is necessary for the two of you to get your lives straightened out legally, and that his first responsibility should be to you, particularly since his sons are financially on their own.

Without a prenuptial, a post-nuptial agreement makes sense. I would say that they are actually merging very close to what might be more proper to call estate planning. (In reality, there ought to be a symbiotic relationship between the need for a prenuptial agreement/post- nuptial agreement and estate planning. The pre/post- nuptial agreement has a part to play if there are probate proceedings instead of a divorce.) Indiana law gives a surviving spouse under these facts only 25% of the real estate's fair market value (less any liens) and 50% of the personal property.

People may not mind the kind of result I just outlined and that is fine because there is no problem then. Problems arise when the results are not what was expected or desired. Undesired and/or unexpected results regarding money and property means litigation. Litigation means much higher costs than would have been the case if the parties had just talked to a lawyer and drew up an agreement that protected their expectations.

A thought for those who are cohabitating together without marriage. Nothing I have written here applies to people who are living together. If the people in the original article were living together, I would say they need a cohabitation agreement and a lot of estate planning. Without a cohabitation agreement and estate planning, the women would get nothing.

Divorce and finances

San Francisco Family Law Blog has a longish post with the title How Will My Divorce Affect My Credit?. Until October of 2005 I practiced bankruptcy law and I got to say that many of bankruptcies came from divorces. I found only one point I disagree with.

Notify Creditors of Your Divorce — Once you have separated/canceled all of your joint accounts/debts, you are no longer legally bound to your former spouse's current debts. Call all of the creditors who have been bothering you and alert them to this fact. In a perfect world, they would apologize for the inconvenience and never call you again. However, it may take awhile before such calls cease entirely. In addition to notifying the proper collectors, you should right a letter to them as well. That will help them to expedite their file updates.

Let me explain why I have a problem with this paragraph. If the debt is a joint debt, the fact of a divorce does not change the obligation. The parties divorced each other and not their creditors. If the debt is not a joint debt and the one sending the letter is not obligated on the debt, then the letter is just a waste of a stamp for most debts. Indiana has its Doctrine of Necessities but that doctrine is complicated enough that most creditors will not waste their time with it.

With the exception of that one paragraph, I would say it is a good column to read and put into practice. I did notice one solution unmentioned was a prenuptial or post-nuptial agreement.

Reading around - prenuptial agreements

Smart Money has an online article I do. (However ...) that covers the legal and non-legal issues of a prenuptial agreement quite adequately.

Conceived and carried out correctly, prenups don't have to be antagonistic or punitive. Dealing with the financial nitty-gritty, happy prenup owners say, is a healthy way to get communication flowing — in all areas. Why not get the hot-button issues aired now rather than later? To Marcy Syms, it wasn't about communication. For her, a prenup was simply the prudent thing to do. Back in 1985 she was already the president and COO of her family's business, New Jersey-based clothing retailer Syms Corp. Syms believes that anyone in her position "absolutely must have a prenup, to keep the business in the family." When she brought up a prenup with her fiance, a Wall Street analyst, it was "very well received," she says. "I knew he'd think it was the intelligent thing to do."

The article also has a short questionnaire for determining if you should have a prenuptial agreement.

New Jersey Family Law Blog is another posting on post- nuptial agreements. If you didn't make a pre-nuptial agreement, it's not too late to consider a post-nuptial agreement:

Both parties would be required to provide full financial disclosure and each would need to have separate legal representation. A post-nuptial agreement might sound unromantic and is not something for everyone, but it is not unreasonable if you have children from another marriage and want to protect their inheritance or you have partners in a new business venture who are worried about business ownership in the event of a divorce. If you didn’t make a pre-nuptial agreement, it’s not too late to consider a post-nuptial agreement.

Armchair Millionaire has a slightly different slant on prenups. Call it the difference between lawyers and businesspeople. The article is Saying "I Do" with a Prenup in Hand.

When we asked members of the Armchair Millionaire community their thoughts about prenups, the comments we heard showed how much it depends on each couple:

Burned once. "I did not have one but would have been more than willing to sign one if my husband wanted. He had been in a bad divorce before I met him which consumed his assets, including an inheritance from his grandmother." --Jennifer

Just common sense. "We didn't have a prenup when we got married--we were young and had nothing to fight over, except a little debt. I think prenups make sense for people who go into their marriage with sizeable assets, or for second or third marriages. It might take away the romance, but it's common sense!" --Gina

Family Law Professor has a range of articles on prenuptial and post- nuptial agreements that ends last year. These articles are here. Nothing specifically Hoosier in these posts, so I will just note them for now. One post raised a question in my mind but the hour being late I will put off research till another day.

I am uncertain how to describe the publishing history of Marriage Later in Life Tricky for Estate Planning. That history is on the site.

Findlaw has a prenuptial FAQ page here. The lawyer in me pauses suggesting this site because the site tries to fit the law of fifty states into one FAQ. There are wrinkles, and you know you need to talk to an attorney. If the site provides makes you ask questions of that attorney, then it is a good site. So much for lawyerly reservations, exceptions and so forth.

Suze Orman has a 2005 piece titled The Case For The Prenup.

A blog that seems dead but still might provide some good nuggets of information is Love and Marriage, Family Affairs.

Not Indiana law but interesting - alimony and same-sex couples

Indiana lacks alimony - unless the parties agree to alimony. California law provides for alimony. Indiana does not have a domestic partnership statute while California has a domestic partnership law. Thanks to the Indiana Law Blog for a post here about a Los Angeles Times article (registration required for the L.A. Times but it is free) on a case where California's alimony law intersects with its domestic partnership law.

Indiana Law Blog got most of the story but I would like to add these bits:

State marriage laws say that spousal support ends when the person receiving it dies or remarries, unless otherwise specified in an agreement.

"If he had signed that agreement under the same factual scenario — except marriage, not domestic partnership — his agreement to pay spousal support would be null and void," said William M. Hulsy, Garber's lawyer.

Edwin Fahlen, who is representing Garber's former wife, Melinda Kirkwood, said the agreement was binding, regardless of whether his client was registered as a domestic partner or even married. Both sides agreed the pact could not be modified, and Garber waived his right to investigate the nature of the Kirkwoods' relationship, the lawyer said.

This could still happen here if: 1) the parties agree to alimony and 2) the agreement does not provide for the alimony's end with cohabitation regardless of the cohabitant's gender.

Post-nuptial agreements - new appellate court case

The Indiana Court of Appeals handed down a new opinion on post-nuptial agreements. Remember, post-nuptial agreements are agreements entered into after marriage (and prenuptial agreements are made before marriage).

The new case turns on the issue of modification. The parties agreed on the souring of the marriage, they created an agreement that included a provision about insurance and the beneficiary of that insurance, and then the husband filed for divorce in Indiana. During the divorce, husband requested that the court change the insurance beneficiary from his wife (as in the Agreement) to their adult children. The trial court made this change. The trial judge makes the wrong decision.

The trial court gets reversed because the husband failed to show "'fraud, duress, and other imperfections of consent, . . . or with manifest inequities, particularly those deriving from great disparities in bargaining power....'"

The Court of Appeals provides selections from the Agreement in the opinion and it may be worth checking out for that purpose, too.

The case, and a link to it, is Marie B. Augle n/k/a Marie B. DeLuca v. William H. Augle.