What Is a Post-Nuptial Agreement?
Post-nuptial agreements are governed by statutory law in Colorado. The statute on post-nuptial agreements provides:
"(1)(a) Seven days or more after the marriage of the parties, the parties may enter into an agreement in writing which:
(I) Waives, except to the extent specifically waived, any alimony, maintenance, or support obligations now or hereafter imposed by law on the party from whom waiver is sought or both of the parties;
(II) Confirms, as separate property, any or all of the property of either party or transmutes any or all of the separate property of either party to marital property or marital property to separate property; or
(III) Performs an act permissible to be performed by a husband and wife .
(b) Such an agreement shall not be enforceable or admissible in evidence unless it has been signed by both parties.
(2) At any time after seven days following the solemnization of a marriage, an agreement between the parties to the marriage concerning their property, any provision for the award of maintenance to one or more of the parties or for the maintenance of the minor children, or both shall be permitted.
(3) This part 1 does not affect the validity of agreements between the parties made prior to the date of the marriage to be solemnized on or after July 1, 1987. Such agreements were not valid or enforceable prior to July 1, 1987.
Requirements under Colorado Law
To be legally valid and enforceable in Colorado, a post-nuptial agreement must be in writing, be signed by both spouses, and be voluntary (as opposed to coerced, threatened or unduly influencing). A post-nup agreement that moves a spouse’s benefits from a retirement account is subject to the Employee Income Security Act of 1974 (ERISA), and therefore requires the signature of both spouses’ attorneys. A post-nuptial agreement in Colorado provides creditors with a way to go after someone’s share of marital property located here. Creditors can enforce the provisions of a marital agreement against their marital debtor as a means of satisfying the debt.
Advantages of Post-Nuptial Agreements
While prenuptial agreements are often associated with assets being protected prior to marriage, a post-nuptial agreement serves much the same purpose during marriage. Often referred to as a "post-marital" agreement, a post-nuptial agreement is made after two people are legally married. They serve several purposes including protection of assets, the management of debt should a divorce occur, and the format in which spousal support is paid in the event of a divorce. It is not uncommon for our firm to be contacted by new clients seeking representation for a divorce and they inform the attorney that they have just recently discovered a post-nuptial agreement was entered into during the marriage.
Whether the provisions of the post-nuptial agreement can be enforced or modified will depend on whether or not it properly meets the requirements for enforceability under Colorado law. A post-nuptial agreement may also be used to separate property accumulated after marriage (as a form of separate property) from marital property and therefore subject it to a different analysis and distribution in the event of a divorce. If a client has a large amount of student debt or a business he or she wants protected, the post-nuptial agreement may be just the solution for protection from a future division in the event of divorce.
Post-nuptial agreements are also critical in dealing with debt. If significantly more debt is attributed to one spouse during the course of the marriage, a post-nuptial agreement can identify that debt and characterize it as that spouse’s responsibility. Likewise, debt can also be divided in an equitable manner in the event of a divorce.
A post-nuptial agreement can also determine whether spousal support will be paid in the event of divorce as well as the amount, if any. While a post-nuptial agreement cannot eliminate the amount of maintenance that will ultimately be ordered in a divorce, it can mitigate the amount awarded and is therefore incredibly important.
Common Terms Found in Post-Nuptial Agreements
The terms and provisions of a post-nuptial agreement may vary according to the specific needs of each couple, but they generally cover the following common issues:
Division of Assets and Inheritance
A post-nuptial agreement aims to determine what happens to your assets in the event of divorce. Colorado law is a ‘marital property’ state, which means that all marital property is subject to division during a divorce. Marital property is defined as "any property, whether real or personal, acquired by either spouse or both spouses during the marriage and before entry of a decree of dissolution of marriage" excluding property acquired through gift or inheritance from a third party.
However, if you own any assets prior to your marriage and you would like to retain full ownership over those assets, Colorado allows you to do so in a post-nuptial agreement. The terms of your post-nuptial agreement automatically take effect upon divorce and a court will not question your desires for the division of assets contained in the agreement.
Inheritance issues can get tricky due to the potential for the intermingling of funds. For example, if you receive a sizeable inheritance and you do not clearly separate that money from any other marital assets, you may be at risk of losing a portion of that inheritance in a divorce. Similarly, if you expect an inheritance from a deceased family member at some point in the future, you can retain your right to that inheritance in a post-nup.
Financial Responsibilities
A post-nuptial agreement can require each spouse to contribute equally or receive compensation for their contributions towards marital debts, including credit card debt, loans, car payments, mortgages, etc. Although Colorado courts cannot interfere in matters of alimony, the terms of your post-nuptial agreement can allow for temporary financial support from one spouse to another. You can set terms that stipulate a specific period of financial support that one spouse must provide to another, or you can waive your right to alimony, which then prevents any involvement from the courts on the issue of alimony or spousal support.
Potential Problems and Limitations
While post-nuptial agreements can be beneficial for many couples, they are not without challenges and limitations. A common argument against the validity of a post-nuptial agreement is that it was signed by only one party. Colorado law does not require that both parties sign the agreement in order for it to be valid; however, the agreement could be contested on the ground that the party who did not sign the post-nuptial agreement did not consent to its terms.
The more time that elapses between the time that a couple enters into a post-nuptial agreement and the time that they divorce, the greater likelihood there is that one of the parties will challenge the agreement in court. This does not mean that all post-nuptial agreements will be contested but the likelihood of a challenge will increase substantially if an agreement is moved up for a court’s review many months or even years later during the course of the divorce proceeding. A challenge may be based on an evolutionary change to the agreement’s terms or a change in financial circumstances about which the parties were unaware when the agreement was entered into. Even in the absence of any significant changes, a court may nevertheless conclude that the agreement is outdated because circumstances in the parties’ lives have materially changed in the years since its execution.
As mentioned above , it is possible for parties to enter into a post-nuptial agreement to address their financial affairs while seeking to save and preserve their marriage. In so doing, they may be trying to avoid the necessity of going to court for a divorce if their relationship falters. But circumstances can change. One spouse, for example, may be meeting someone else and considering divorce even as the other spouse thinks the marriage is still viable. Or one spouse may lose a job and fall behind in paying the bills. Or it may become apparent that one spouse has undisclosed assets that materially alter the parties’ financial position. In such circumstances, the court may determine that the parties have not entered into the marriage agreement in good faith and that it should be set aside.
Parties can amend or replace a post-nuptial agreement before or after they file for divorce. That said, the parties’ relationship is irretrievably broken after they file for divorce and so they are forewarned that the court will carefully scrutinize any proposed amendment or replacement of the prior agreement to ensure that it is fair and equitable. Therefore, parties should make every effort to ensure that the terms of their post-nuptial agreement address the reality of their financial circumstances at that time.
How to Establish a Post-Nuptial Agreement
Creating a post-nuptial agreement in Colorado is very similar to the process of creating a prenuptial agreement. The parties must first consult separately with an experienced Family Law attorney, who will guide them through the process and make sure they understand the legal ramifications of the process. It is imperative that both parties have separate counsel, because having the same attorney to create the agreement presents a very serious conflict of interest. Moreover, for a post-nuptial agreement to be enforceable in Colorado, there are some criteria that must be met:
-Both parties must voluntarily agree to the terms of the agreement. Coercion or duress can render a post-nuptial agreement unenforceable.
-The provision contained in the post-nuptial agreement must be fair and reasonable.
-A complete and accurate disclosure of each party’s finances must be made prior to signing the agreement.
-Each party must have sufficient time to review the terms and provisions of the agreement.
-The agreement cannot leave either party at a disadvantage or in an unfair manner.
The above list is not an exhaustive one. Instead, it is a list of general conditions that must be met for a post-nuptial agreement to be enforceable in Colorado. In addition, the agreement must be in writing and signed by both spouses.
It is important that both parties understand what is being given up or waived by a post-nuptial agreement. For some parties, it may be difficult to comprehend what the future may hold in the absence of the confidence that the marriage will continue and under the belief that the parties share equal rights in assets acquired during marriage. Nevertheless, post-nuptial agreements serve an important purpose. During the course of a marriage, parties may decide to "revisit" their overall financial plan for the family and how assets should be divided. A post-nuptial agreement may also provide individuals with peace of mind or eliminate concerns regarding hypothetical situations such as divorce, separation, and death.
As with a prenuptial agreement, consultation with an experienced Family Law attorney is crucial.
Frequently Asked Questions
What’s the cost?
These arrangements can be expensive to draft. They involve negotiation between you and your spouse, and often a fair amount of revision. Costs will vary by attorney, but plan on several thousand dollars.
Can a post-nuptial agreement be changed?
Yes. If circumstances change, you will have the option to revise your agreement later. This process will require the same time and effort the original agreement did.
What if I’m already separated?
In Colorado, a post-nuptial agreement is valid whether or not you’re living with your spouse . A couple may file for legal separation and still enter into a post-nuptial agreement.
Does my post-nuptial agreement have any effect on the changes Colorado made recently?
The new spousal support statute went into effect in August 2014, and went back to January 1 of that same year. Many people are asking if the amendments affect their existing agreements. Perhaps—if those agreements deal with alimony issues. The attorney who drafts your agreement may recommend that you add a provision to specify which version of the statute applies.