It is not uncommon for a potential divorce client to express that financial concerns have led to a visit to your office. Their concerns have resulted in feelings of desperation concerning their marriage and their future. Complaints include the dissipation of assets by a spouse to finance gambling addictions, internet site addictions, accumulation of debt, unwarranted spending on dependent adult children from a prior marriage, and the like. When questioned about the relationship otherwise, these clients have often said that they did not really want to divorce or separate, but they felt no other options were available to protect their financial survival. In a number of these instances, we have suggested a seldom-used, but very effective way to deal with these issues is a postnuptial agreement.
These agreements can be utilized by married couples to save their marriage and define each party’s rights with regard to issues in dispute between them. In a postnuptial agreement, the couple can define their areas of concern, reach an amicable accord and subsequently reduce their agreement to a writing to save an otherwise inevitable trip to the local matrimonial center.
Postnuptial agreements can provide an answer to resolving the marital disputes, while allowing the parties to continue the relationship after removing the conflict and alleviating uncertainty brought on by those financial issues.
Domestic Relations Law § 236(B)(3) codifies the use of postnuptial agreements, stating: “An agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded.” In Whitmore v. Whitmore, 8 A.D.3d 371, 778 N.Y.S.2d 73 (2nd Dept. 2004), the court stated that postnuptial agreements are “subject to ordinary principles of contract interpretation and require consideration.” The court in Whitmore defined consideration as “a benefit to the promisor or a detriment to the promise.”
While most are familiar with prenuptial agreements, it is clear from the terms of the DRL that postnuptial agreements hold the same weight as prenuptial agreements in a matrimonial action. Accordingly, the same protocol must be followed when drafting a postnuptial agreement as would be required by the preparation and signing of a prenuptial agreement, including the following:
- Both parties hiring independent counsel to represent them in the drafting and signing of the agreement
- Financial disclosure by both parties, including but not limited to the exchange of Statements of Net Worth and tax returns (1-3 years preferably)
- Notice of each party’s present property and assets with as much specificity as possible, which should be noted on an annexed schedule
- Having both parties subscribe and acknowledge the agreement simultaneously to assure its validity
- Sufficient consideration to assure that the agreement will be binding on both parties
In light of the amount of time and money a matrimonial action may potentially entail, postnuptial agreements should be considered as an option prior to initiating a divorce action. This is not to say that a couple should enter into a postnuptial agreement prior to filing for divorce as the postnuptial agreement should be entered into by a married couple who plans to remain together.
There is no bright-line rule with regard to what should be included in a postnuptial agreement. Issues that may be resolved include ownership rights to certain premarital or marital assets, estate rights and the waiver of either spouse’s elective share or intestate share, the division of property, one spouse’s decision to sacrifice his/her career to stay home and raise the couple’s children and the effect that will ultimately have in the event of a divorce, the allocation of marital debt and other issues that would normally be addressed in a premarital agreement or a divorce agreement.
One important concept to recognize is that when sitting down to draft a prenuptial agreement, the practitioner is looking at a crystal ball in that all events addressed are looking to the future and what may or may not happen. In a divorce agreement, we are looking back at events historically. With a postnuptial agreement, there is often a combination of perspective and historical vantage points.
Noteworthy is the fact that the recently amended Domestic Relations Law § 250, which applies only to postnuptial agreements signed on or after July 3rd, 2007, is also applicable with regard to the invalidation of a postnuptial agreement. Said statute provides a three-year statute of limitations for an action arising from a postnuptial agreement. This holds true in both estate and nonmarital lawsuits as the statute of limitations is tolled until the death of the decedent in regard to a claim made to the waiver of estate rights in a postnuptial agreement if a matrimonial action was never commenced. It should also be noted that the statute of limitations is tolled until a divorce action is commenced or until one of the parties dies.
Postnuptial agreements signed before July 3rd, 2007 are governed by the six-year statute of limitations contained in CPLR 213(1), absent continuing duress or undue influence. Hosseiniyar v. Alimerhri, 48 A.D.3d 635, 852 N.Y.S.2d 338 (2nd Dept. 2008). In Hosseiniyar, the court ruled that the plaintiff’s claim for rescission of the parties’ postnuptial agreement was not untimely since there was continuing duress exerted upon the plaintiff by the defendant throughout the duration of the marriage.
In sum, the postnuptial agreement provides a prospective client with an alternative that can save a marriage and, ultimately, save a client from litigating over the entire pie when only one slice is at issue.