How a good 'postnup' can cover your assets

Fans of “Desperate Housewives” will probably remember an episode from the first season when Eva Longoria’s character, Gabrielle, kicks her husband out of bed because he dared suggest she sign a postnuptial agreement. But postnups are not mere fiction and they’re not just for multiple-marriage moguls like Donald Trump. As the less glamorous cousin to the prenup, this post-wedding paperwork is being used more often by not-so-rich-and-famous Americans to salvage sometimes-shaky marriages.

Like prenups, postnuptial agreements deal with the tricky issues of how to divide money and property if a marriage goes sour. Some couples use them to update their prenups if they have “sunset” clauses that automatically make the agreement expire after a predetermined period of time. If it is not updated, a high-net-worth individual could become exposed to a big liability in the event of a divorce. The Donald, for example, updated his prenup with ex-wife Ivana twice during their marriage.

Because they're not public documents, there are no national statistics about the use of postnups. But lawyers say inquiries about them have increased considerably in recent years. Courtney Knowles, spokesperson for the Equality in Marriage Institute, said he has seen a rise in the number of spouses who have contacted the organization for more information.

“Either they had a major financial change such as acquiring an inheritance or a family business, which is a good time to get a postnup, or their marriage is in trouble, which is not as good time-wise,” he said. “Because the right way to make one is to create one together that will respect your mutual decisions about what marriage means legally and financially.”

There’s no more fervent believer in the value of postnup agreement than the Institute’s founder, Lorna Jorgenson Wendt. She and former husband Gary Wendt were the couple engaged in a highly public disagreement covered by the media over dividing their assets after divorcing in 1997 when Wendt was a highly-paid executive at General Electric. A judge ultimately gave her $20 million, a sum she still views as far below her contribution as a "non-economic partner” in the marriage. She founded the Institute in 1998 to give spouses advice and information about postnuptial agreements. (MSNBC is a joint venture of Microsoft and NBC, which is a GE company.)

Like the prenup, the primary purpose of a postnuptial agreement is to stipulate ownership and division of financial assets in the event a couple divorces. Besides amending a prenup, there are several reasons people seek postnups. One spouse’s financial circumstances may have changed, either through inheritance, job promotion, stock options, or the sale of a business.

New York is one state that decrees that advanced degrees earned during marriage can become (potentially lucrative) marital assets, said Sheila Riesel, head of the matrimonial group at New York City law firm Blank Rome. “So young spouses entering graduate school may want to consider a postnup to make sure marital assets that degree brings in do not get divided.” 

Spouses may want to provide for their dependents from a prior marriage, or they want to specify the division of their assets rather than leave it up to the state.

In some cases, creating a postnup is due to the couple not seeing eye to eye on saving and investing strategies. One example: A Florida man learned his wife had run up huge credit card debt on accounts he knew nothing about and hadn't been paying her bills. He sought a postnuptial agreement to force her to get counseling and promise not to get new credit cards.

A postnup agreement can specify that if things don't work out, a spouse is entitled to a fixed amount of money or a share of assets as of a fixed date, thereby excluding any future increase in assets/income.

Besides income and assets, behavioral issues, from infidelity and drinking to failing to help with the chores or the children, can also be addressed. But Knowles said that those provisions are not usually legally enforceable. “A judge can’t come your house and make you take out the garbage,” he says.

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