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Postnups?

  • Article by: GAIL ROSENBLUM
  • Star Tribune
  • September 12, 2008 - 2:25 PM

Let's say that someone you're married to (we won't name names) is having trouble holding up his or her end of the wedding vows. She's having an affair (again). He's fallen off the wagon (again). He can't stop yelling. She can't stop shoplifting.

So, you say: "That's it. Outta here!" But your spouse begs you to reconsider. "Isn't there something I can do to persuade you to give me one more chance?"

Actually, there is. If you haven't heard of a postnuptial agreement, you will soon enough. Still rare, these contracts, also called marital agreements and reconciliation agreements, are growing. In a 2007 study by the American Academy of Matrimonial Lawyers (AAML), 49 percent of members said they'd seen an increase in postnups in the past five years.

Minnesota enacted legislation allowing postnuptial agreements in 1994, but they've become more common in the past few years, said Minneapolis attorney Jonathan Fogel, "as people are getting married older, or are in second marriages, or are becoming entrepreneurial later in life." In fact, estate planners are recommending them as much, if not more, than lawyers, he said.

Like their more common precursor, the prenup, which is written before marriage, postnuptial agreements tackle similar sticky issues of property division, spousal maintenance or the protection of inheritances for children from previous unions. The big difference is that they're entered into during a marriage, sometimes a marriage on the rocks, which makes them pretty tricky to pull off.

"Maybe you suddenly become CEO and get an extraordinarily large raise," said Brian Bix, a law and philosophy professor at the University of Minnesota and an expert on the subject. "What kind of conversation are you having? 'I love you dearly, but just in case we get divorced ...' I don't know how you begin to have that conversation."

Fogel had a similar situation. His client wanted a postnup after receiving a large inheritance. While inheritances generally don't count as marital property, the client wanted to use that money to invest in other assets, which could become marital property. "He wanted to protect it," Fogel said.

Lawyer and AAML President Jim Hennenhoefer recalls a husband who had invented "a bunch of things related to artificial hearts." While the man had a substantial estate, he was worried about a potentially huge lawsuit and wanted a postnup to transfer as many assets as possible into his wife's name. Altruistic? Hardly. "The idea was to protect the money from creditors," Hennenhoefer said.

Postnups are used in other ways, too. Women stepping off the career track might find in postnups a comforting way to know they'll have financial security in the unfortunate event of a split, particularly in a noncommunity-property state such as Minnesota. Parents with special-needs children, or with grown children suddenly down on their luck, might use a postnup to carve out additional funds to care specifically for them.

And, sometimes, couples craft postnups for the sweetest reasons. A spouse, for example, might decide after decades of wedded bliss that he wants his wife to share ownership of a cherished family cabin that otherwise would not be hers.

"Postnups can actually strengthen a relationship," Fogel said. "They force people to talk about money, finances," subjects that, he says, most couples are reluctant to tackle.

Harder to get

Hennenhoefer estimates that 5 to 8 percent of marrying couples, "mostly at the higher end of the socioeconomic scale," request prenups. Only 1 to 2 percent craft postnups. And while prenups are relatively easy to enforce, lawyers say the bar is far higher for postnups. Some states, too, are more receptive to enforcing them than are others.

In general, couples must fully and fairly disclose their income and property, and each must have his or her own legal counsel. The agreement must be written and signed in the presence of two witnesses, and each party's signature must be notarized. The agreement will be presumed unenforceable if either party initiates a split within two years of the agreement, unless the spouse seeking enforcement can prove that the agreement is both fair and equitable.

In other words, no tricky business. A spouse who threatens to file for divorce, "unless you promise me lots of property now or at divorce," isn't going to succeed, Bix said. "That postnup is unenforceable because it's coercive," he said.

The same goes for empty promises. If the postnup is part of a reconciliation agreement, he said, "and the parties don't sincerely intend to try to work things out, such as they don't go to marital counseling or AA, the court will likely not enforce the agreement. They must be acting in good faith."

There are limits, too. Postnups cannot be used to shift child custody or child support arrangements.

Hennenhoefer doubts that pre- or postnups are going to become trendy, but he does view them as one more example that times are changing.

"The time is long past when marriage was considered a sacrament that binds people together no matter how unbearable it becomes," he said. "The bottom line is, it's a contract with a predictable result."

Fogel sees another surprise benefit. Postnups, he said, "are a cold, hard reality check. Someone might say, 'If I know this is all I'm getting if we get divorced, maybe I'll work a little harder to make this work.'"

Gail Rosenblum • 612-673-7350

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