Many people don’t realize that there’s a significant difference between a prenuptial agreement and a postnuptial agreement. Aside from the obvious “pre” and “post” portion of the words that denote when the agreement was made, there are other differences that you should take into account when deciding on how – and when – to divide up your assets.
A prenuptial agreement, also sometimes called a prenup, a premarital agreement or an antenuptial agreement, is a legally binding contract between two people who intend to get married. The contents vary from couple to couple, but it usually pertains to issues like equitable distribution of assets in the event of divorce, spousal support, and and any other important financial obligations a couple wants to prepare for.
A postnuptial agreement, often called a postnup, is pretty much exactly the same agreement, with the exception of the fact that it was made after the couple got married. So, if it’s the same agreement, how could it be different, right? Well, this is where things get complicated….
According to the Michigan Family court, a married couple has a fiduciary duty to one another. What this means is, a marriage is a relationship in which the individuals have an obligation to act for another under circumstances which require total trust, good faith and honesty. In essence, because they are married, they have an obligation to always act in each other’s best interests. Makes sense, right? Of course it does! But the facts are a little more complex.
Prenups and postnups are not equal in the eyes of the law…
The American Bar Association says that the courts often prefer a prenup to a postnup, on the grounds that a prenup will always be considered valid, but a postnup doesn’t carry quite the same validity. Why, you may ask? Aren’t they supposed to be exactly the same agreement? Yes, it is, but when it was created makes a world of difference in the eyes of the court.
Simply put, a postnuptial agreement is hard to enforce because once married, a couple has a fiduciary duty to care for one another in all ways. Translated into reality, this can mean a couple of things. First, a prenuptial agreement has no absolute requirement of full disclosure. Either or both parties can choose to waive this, and the validity of the agreement will still stand.
However, because a postnup happens after marriage, when full disclosure of all assets is an absolute requirement due to the fiduciary duty mentioned earlier, a postnup sometimes won’t stand up to the same scrutiny in court.
In summary, if you have significant wealth that you are hoping to protect when you get married, don’t assume that a postnup will provide you the same protection and coverage that you would have with a prenup. Obviously, a postnuptial agreement is better than no agreement at all from the asset protection standpoint, but a prenup is traditionally better accepted by the courts, although this perspective is slowly changing.
So if you are considering hitching your waggon to the love of your life, we advise you to spend a little time with a trusted family attorney. An experienced family law attorney can advise you as to the best possible course of action in your individual case, and help you structure an agreement that will stand up to even the most rigorous scrutiny.