Postnuptial agreements sometimes get a bad rap, but like their prenup counterpart they can be a powerful planning tool for married couples.
As in the case of any contract, a postnup must be entered into voluntarily by the parties, and the familiar contract-law protections against coercion and mistake apply. And Illinois law requires a full disclosure of each parties’ assets and liabilities for every postnuptial agreement, allowing each to make an informed decision.
So when would a married couple use one? If one spouse intends to start a business during the marriage, the business-owning spouse may want to protect his or her business in the event of divorce. Similarly, a spouse who makes a substantial non-marital contribution to a marital asset, such as making the down payment on a house, might want to assure reimbursement. Postnups also enable the parties to allocate debt, deal with bequests to children of previous marriages, and even revise a prenuptial agreement based on current/changed circumstances.
One very important thing a postnup can’t do is address issues relating to children – doing so is regarded as contrary to public policy. Also, postnuptial agreements will also not be upheld if they were entered into to legitimize illegal activity.
Like any contract, a postnuptial agreement requires consideration by both parties, and courts will not view consideration as being given when a party agrees to do what they were already obligated to do by the law.
Each member of the couple should be represented by a separate lawyer during the negotiations and at the signing of the postnuptial agreement. A new trend is to have a court reporter for the actual signing of the postnuptial agreement, i.e., Signing Day.
At Signing Day, the parties are sworn in under oath and testify as to the terms of the postnuptial agreement, their understanding, and their desire to enter into such postnuptial agreement. Lawyers review the postnuptial terms as you would with the Marital Settlement Agreement during a prove-up.