Tennessee Post Nuptial Agreement: What is it?
A post nuptial agreement is a written agreement between two already married people. Essentially, the agreement is a contract detailing their rights and responsibilities during the marriage and in the event of a divorce.
The purpose of a post nuptial agreement is similar to that of a pre nuptial agreement – with the difference being that the parties are already married when they enter into the agreement, whereas, with a pre nuptial agreement, the parties are not married . A post nuptial agreement can be used for a variety of purposes, including but not limited to addressing the following issues:
A few things to keep in mind about a post nuptial agreement – it must be in writing and signed by both parties, it must be entered into voluntarily and with full disclosure, and it is ultimately enforceable by a Judge. Career enhancement agreements can often be enforced as post nuptial agreements, but there is little case law on this topic.
Tennessee Post Nuptial Agreement Requirements
For a post nuptial agreement to be valid in Tennessee, the agreement must be in writing and signed by both parties. In addition, all of the usual contract formalities must be satisfied, including mutual consent of both parties. Many post nuptial agreements require notarization because they involve real estate settlements and questions of title.
With regard to dividing marital property, for a post nuptial agreement to be valid in Tennessee, the following four factors must be present:
The second factor requires that the agreement dividing the property does not promote the divorce, such as providing more property for a wife who files for divorce. The burden of proof is on the challenging spouse to prove in Court that the post nuptial agreement was not fair or equitable because generally these agreements are the result of negotiations and settlements between the parties and should not be disturbed after the fact unless proven otherwise.
The statute explicitly states that a post nuptial agreement does not constitute a support agreement in Tennessee. It is important to note here for practitioners that the Child Support Guidelines continue to govern the amounts, and frequency of payments, so the post nuptial agreement does not act to modify the Guidelines. It is important to consult an experienced family law attorney in The Nashville Divorce Law Firm to draft or review any post nuptial agreements to ensure they comply with any and all applicable rules and regulations.
An Advantage of Post Nuptial Agreements
Post nuptial agreements have many advantages. First, and most importantly, they help keep assets out of the marital estate in the event of a divorce. Many couples have substantial premarital assets that they want to protect from a former spouse in the event of a divorce. That can be accomplished by including such assets in a post nuptial agreement.
Other assets that are generally protected are those assets that are acquired after the marriage by gift or inheritance. If the donor or testator is a parent, grandparent, aunt, uncle, cousin, or other relative of the spouse, that asset can remain outside of the marital estate in the event of divorce. The same is true for a business owned prior to the marriage or one that is inherited or gifted during the marriage.
However, premarital assets and non marital gifts or inheritances can decrease in value just like any other asset. If the spouse whose own the asset alow its depreciation to occur, that spouse has acted inconsistently with the terms of the post nuptial agreement. That inconsistency may result in the aggrieved spouse being allowed to claim the property as a marital asset for division at the time of divorce.
Another advantage of a post nuptial agreement is that it clears up any ambiguity about the economic and financial arrangement between the spouses. Many spouses upon separation agree to split income, sharing the cost of housing and expenses. Each spouse may expect a 50% of the income to be available for support purposes after separation is imminent. However, what happens if the income of one spouse dramatically increases during the separation? If there is nothing in writing, then a guess must be made whether the spouse has a legal duty to share that newly found wealth with an ex spouse. If the post nuptial agreement is prepared properly, then the question should be clear.
Finally, a post nuptial agreement gives peace of mind to both spouses. Each spouse knows that their individually owned assets are protected. Each knows the written terms that will control their post separation conduct. Each knows when the agreement will become effective and how long it will last.
Typical Terms of Tennessee Post Nuptial Agreements
In Tennessee, post nuptial agreements commonly include provisions for the protection of each party in the event of divorce. They will generally begin with a simple recitation of the information pertaining to both parties, including the date of marriage and the names and ages of any minor children.
A typical provision will require that the parties exchange information about their income and assets so that both parties can make informed decisions about the agreement and its terms. Since post nuptial agreements may be the result of a marital discord, there is also generally a provision for full disclosure. It is understood that the non-disclosure of marital assets is a ground for overturning any resulting divorce that incorporates the agreement. Disclosure includes the value of all personal property.
Liabilities, such as the debts of both parties, are included as well. The agreement commonly provides to whom the liability will be allocated and whether one party will indemnify or hold harmless the other if that party defaults on the payment of any debt or bill provided for in the agreement.
While no one can contract away their obligation of alimony under Tennessee’s equitably distribution law, parties may agree that alimony will not be paid if a divorce is sought. Other issues include the resolution of property division. The language included in the agreement will vary from parties to party and a couple may agree to divide the property according to the usual percentage split of 50%, or they may agree on itemizing specific pieces of property and allocating them to one party or the other.
In a post nuptial agreement, state laws are constant provisions. While there is no requirement that each party have independent counsel, it is a recommendation that each party be represented by different attorneys to avoid any conflicts later. There are certain other issues that must be considered such as premarital contracts, the effect of a post nuptial agreement on any estate planning documents and the necessity of a statutory waiver.
Considerations and Caveats
Enforceability can be a serious issue in the event of a divorce. Post nuptial agreements are by nature difficult to enforce, as a spouse is less likely to follow through with a contract when their spouse is across from them in a court room. The Tennessee Courts have addressed this issue, noting that the ultimate test of whether a post nuptial agreement is enforceable is whether it was unconscionable when made . For an agreement to be unconscionable, there must be conditions so severely unjust or unfair that they are shocking to the conscience. In addition to the enforceability issue, common pitfalls include not doing enough planning prior to establishing and executing the post nuptial agreement and failure to fully disclose assets.
How to Create a Post Nuptial Agreement
To successfully draft a post nuptial agreement in Tennessee, the following steps will be helpful. First, consider any particular issues or concerns the parties have and how those may be addressed in the agreement. For instance, if the parties have children, they should consider whether child custody and child support will need to be addressed in the event of a divorce. Additionally, the parties should examine whether it is necessary to address spousal support in the agreement. If the parties have significant pre-marital property, they should discuss how that property will be treated in the event of a divorce. Similarly, how will a marital estate created during the marriage be distributed in the event of a divorce? Second, the parties should consult with their respective lawyers regarding the issue and concerns raised. In general, during the process of drafting an agreement, it is important to obtain counsel and make the necessary changes to address the stated concerns. It is better to invest money in an attorney to mitigate any concern with a postnuptial agreement than to risk the chance a court may find it invalid after a divorce. Third, once the parties have identified the concerns and addressed them, they should be ready to engage in significant negotiations regarding the remaining terms of the agreement. Negotiating in good faith to draft a mutually beneficial agreement will be key to reducing the risk a court could set aside the agreement at the time of divorce.
Altering or Annulment of Your Post Nuptial Agreement
Post nuptial agreements can be modified after they are signed. Or, once in a while, a post nuptial agreement can be the subject of a court action to declare it invalid. With respect to the ability of the spouses to modify a post nuptial agreement, this can be done at any time in writing and signed by both spouses, and in accordance with the terms of the original post nuptial agreement. Consistent with general contract principles, the parties can agree to any modification they choose and this can even include an intent to divorce or separation and the resulting division of property. There are no special requirements and the substantive law of Tennessee is applicable.
While it is unusual for a court to find a postnuptial agreement completely invalid, this can occur if, for example, the agreement is based on fraud or coercion. If one spouse claimed an agreement was served on them by a stranger or they were forced to sign an agreement, they may have a claim that it was invalid. This could also happen if, for example, one party did not understand the nature of the document he or she was being required to sign. Courts do treat unchanged post nuptial agreements as valid. But they will inquire into various factors that affected the decision of the parties to enter the agreement in the first place and what the circumstances were when it was created. One party seeking to prove the agreement was invalid would typically have the burden of proving the grounds.
Conclusion: Is a Post Nuptial Agreement Right for You?
With the ease in which marital agreements can be accomplished in Tennessee, this avenue may be a cost effective way to secure assets after marriage. It can also be a tool used when spouses may want to have a mutual understanding or desire to clarify certain aspects of their assets. As discussed above , deciding whether or not to initiate a post nuptial agreement comes down to whether the proposed agreement meets the two prong test of the statutory and case law in Tennessee.
We have attempted to provide basic information as it relates to the post nuptial agreement that validates the usefulness of such an agreement. Your individual situation, however, should be analyzed by a legal professional who can hone in on what might be best for you.