The Anatomy of a Postnuptial Agreement
What is a Postnuptial Agreement?
As the name implies, a postnuptial agreement is a written agreement that is entered into after the parties have already gotten married. These agreements are much less common than their prenuptial counterparts, but they are not unheard of and their use is growing.
The chief distinction, then, between a postnuptial and a prenuptial agreement, is timing. Unlike prenups, in order for a postnuptial agreement to be enforceable it is crucial that neither party is in a position where they are under duress, or undue influence from a third party at the time of the signing. A postnuptial agreement that is entered into hastily, say, over the course of a day, may not be enforceable in the event of subsequent litigation. This is the result of the fact that the postnuptial agreement must be entered into after the marriage, and as such, the relative bargaining power of the parties must be considered much closer to that of parties’ entering into a contract as opposed to those of entering into a marriage .
The increased use of postnuptial agreements is attributed to the fact there is a greater freedom and acceptance when it comes to marriage and divorce in modern society. Gone are the days where a prenup was reserved only for second marriage couples. There is a certain freedom that comes with the agreement as well, and it is now relatively common to see postnuptial agreements with spouses that have been married for some time. These agreements frequently have less to do with ensuring one’s asset protection, but more to establishing a clear and firm foundation on which to build trust and cooperation in maintaining and growing mutual assets.
Whether you are thinking of entering into a postnuptial agreement or an existing agreement is no longer serving your needs, Wisconsin law provides a menu of options when it comes to the postnuptial agreement. However, it is always advisable to consult with an attorney before you either sign an agreement or begin negotiations as the nuances of such agreements can significantly impact their enforceability and the ability to make future changes.
Requirements in Wisconsin
In Wisconsin, there are several legal requirements that a postnuptial agreement must satisfy to be considered valid. The agreement must be in writing and signed by both spouses. In addition, under Wisconsin Stat. § 766.595, the postnuptial agreement must be subject to enforcement conditions in Wisconsin Stat. § 766.58(2) thereby requiring it to be notarized and one of the spouses must have independent counsel or be advised of the right to independent counsel prior to signing the postnuptial agreement.
Pursuant to Section 766.52 of the Wisconsin Statutes, a postnuptial agreement may not adversely affect any right of an individual other than the spouses unless that individual consents to the terms in writing or that individual expressly waives the right to receive notice of the postnuptial agreement.
Common Purposes of a Postnuptial Agreement
Couples may decide to enter into postnuptial agreements for a variety of reasons. For example, the couple may have entered into a nefarious premarital agreement, and now that they are married, want to revisit that agreement and clarify what is and is not a marital asset; it may be that one spouse owns a business before the marriage, and that business has become more valuable during marriage; it may be that one or both spouses expect an inheritance to come in the future, and they want to designate any expected inheritance as separate property; or it may simply be that the couple does not want to take the risk that their choice of concurrent estate shall be second-guessed by a Circuit Court Judge in a divorce proceeding. Regardless of the issue, though, a postnuptial agreement can serve to clarify the issues between the couple.
Pros and Cons of a Postnuptial Agreement
Despite their fear of being perceived as unromantic, many modern couples recognize the value that a postnuptial agreement can bring to their marriage. Of course, like any other contract, a postnup also comes with its own set of pros and cons. While it’s not the most romantic start to a marriage, it does provide some important benefits – provided both parties are on the same page. For starters, a postnuptial agreement helps to ensure adequate protection for your nonmarital property during a divorce – provided that you’re able to prove that nonmarital assets truly belong to you and not to both spouses. In the latter case, courts will divide all marital property fairly regardless of how it was acquired. Postnuptial agreements also help to shield premarital assets from being divided in the event of a divorce, thus allowing those assets to be inherited by your children rather than divided between you and your spouse. These agreements also help to clarify the ramifications of an affair – if fidelity is included in the postnuptial agreement, an affair constitutes grounds for immediate divorce without alimony or property division. A postnuptial agreement can also help to relieve stress regarding financial issues during marriage. For couples who struggle to find common ground about how to budget money, a postnuptial agreement could save significant time and effort in the long run. Of course, all this protection comes at a cost. Like any other contract, postnuptial agreements are not necessarily the best option for everyone. In certain cases, they may worsen conflicts and even lead to marital discord. Disputes over a postnuptial agreement can take a major emotional toll on a marriage, leading to bitterness and resentment. This is especially true for couples who argue about the fairness of the agreement or disagree about the definition of marital property. In order for a postnuptial agreement to be enforceable, you’ll generally need the involvement of a qualified attorney. The signing of a postnuptial agreement may spark a public discussion of your finances among friends and family.
Drafting a Postnuptial Agreement in Wisconsin
Creating a postnuptial agreement in Wisconsin is a relatively straight forward process for the parties, but there are still a number of distinct steps that will be necessary to reach a satisfactory and legally enforceable result. In Wisconsin, there is no "official" form for a postnuptial agreement. Instead, parties need to ensure that the final document includes the necessary components to make it valid in Wisconsin.
The first step in this process is consulting with an experienced family law attorney. A family law attorney will help to virtually "build your agreement" with you, helping you understand various options and how they can work in your specific situation. Sometimes there is more than one way to reach a specific goal, and your attorney will be able to suggest the best strategies to help you. In addition, an attorney will often advise parties to do the drafting of the agreement themselves, or work more closely with only one attorney, rather than drafting the agreement jointly. This is to help protect the parties against any future claims by one spouse that they were not fully informed about or did not understand what they were signing at the time of the agreement (which is a requirement for any valid postnuptial agreement under Wisconsin law) .
Once the substantive issues of the postnuptial agreement have been sufficiently discussed and advanced, the agreement will be drafted, generally by the attorney. This draft should be reviewed by both parties so that they can approve its terms, or provide additional input for changes. Generally, most postnuptial agreements focus on three different areas: division of property in the event of divorce; the support to be paid and frequency of support payments in the event of divorce; and the decision as to whether a spouse has a say in how the other spouse’s estate is handled in the event of death (i.e., estate planning issues). These are broad areas, and can be narrowed by the two spouses to fit their individual situation (e.g., custodial and decision-making rights of minor children, having one spouse sign a quit claim deed to a piece of real estate, life insurance provisions, etc.).
Once a postnuptial agreement has been finalized and agreed to by both spouses, the parties can choose to enter it into the public record or keep it private. Once a copy of the agreement has been made part of the domestic public record, any interested individual may request a copy of the agreement. If your choice is to keep the contract confidential, then only those parties to the agreement – the husband and wife – are entitled to review it.
Challenging a Wisconsni Postnuptial Agreement
Despite the general enforceability of postnuptial agreements, courts may set aside or declare them unenforceable if certain circumstances exist. For example, if a postnuptial agreement is obtained through fraud or duress, it will also be unenforceable. Additionally, if there is evidence that such an agreement is the result of misrepresentation or material nondisclosure, its enforceability may be in jeopardy. However, given the fact that prenups generally require a party to disclose all of his or her assets, so as to allow the other to understand the full ramifications of the agreement he or she is signing, courts are often skeptical of assertions that the nondisclosure of certain property is enough to make a postnuptial agreement unenforceable. Also of note under Wisconsin law is the fact that postnuptial agreements are presumed to be conscionable if there is a full and fair disclosure of the assets and affairs of each party when the agreement is executed. In other words, if complete information is provided and yet one party, upon review, determines after the fact that the agreement was unconscionable, his or her ability to challenge the agreement is substantially diminished. To challenge a postnuptial agreement without running afoul of the waiver of rights, the challenging party has to demonstrate some evidence of fraud, duress and/or unconscionability based on misrepresentation or material nondisclosure.
Actual Cases and Precedents
In Wisconsin, there are few published cases specifically addressing postnuptial agreements, and those that exist have generally focused on the agreement’s enforceability in cases of divorce. The issue most frequently challenged is whether each party entered into the contract voluntarily, and whether the agreement was unconscionable at the time it was enacted. A case from the Wisconsin Court of Appeals provides a clear illustration of some of the more common issues pertaining to enforceability of the agreement.
In the Wisconsin case of In re Marriage of Rockwell, the wife sought to readopt into Wisconsin a divorce decree entered in Mexico. The Mexican decree incorporated a written postmarital agreement (essentially a postnuptial agreement) . The trial court refused to recognize the Mexican law that authorized the parties’ written agreement, holding that a lack of supporting income tax returns and evidence of economic hardship at the time the agreement was entered into made enforcement of the agreement unconscionable and that no evidence existed that the parties intended to be legally bound by the agreement. The appellate court reversed, stating that the parties had sufficiently demonstrated their mutual consent to the agreement’s terms and that the trial court had improperly applied Wisconsin law in determining that factors of unconscionability existed.
The appellate court found that the wife had failed to prove that the husband had inadequately represented his assets and income to her at the time of the agreement, and that standing alone, hardship does not make an agreement unenforceable. The appellate court also found that because each party was represented by their own attorney when the agreement was executed, neither party should have been surprised at the outcome.