While prenuptial agreements address property issues before a couple is married, a postnuptial contract can address the same problems after the wedding date. A postnup can also be considered if the details in the prenup are no longer satisfactory, primarily due to changes in circumstances. Some of the property issues that can be addressed by postnuptial agreements are discussed below.
Protection of assets from creditors
Protecting property from creditors is arguably the most critical reason married couples enter into a postnuptial agreement. In the absence of a postnup, any asset owned by the couple becomes community property after the annulment of marriage, divorce or death of a spouse. Property earned by an individual before marriage may also be included as community property especially if it was put into joint accounts.
Each spouse owns ‘half right’ to all community properties; this equal entitlement often invites havoc from creditors. This is because a creditor may recover half of the community property to pay the debts of one spouse. Signing an agreement will keep your property out of reach to creditors. If, for example, you start a business, you need to utilize the services of a family law firm like kufferlaw.com to have your home signed as personal property, which will insulate it from commercial creditors in the event of bankruptcy.
Asset separation
Apart from protecting assets from creditors, you can use a postnup to put aside some property acquired after being married as specifically yours. This action will protect your position during a divorce or separation. If, for instance, you hold a particular asset dear such as a customized car, you may consider using a postnuptial agreement to ensure that you don’t lose it when your marriage ends. This agreement is also ideal for someone who is expecting a substantial inheritance or one who recently became very successful.
Marriage is exciting, but aside from the happiness it may bring, it comes with serious financial ramifications. A postnuptial agreement can serve to protect you from losing property to creditors or even your partner. This agreement also protects family legacy by keeping the right to inherited property with the original beneficiary even after the end of a marriage.