What is a Postnuptial Agreement?
A postnuptial agreement, or postmarital agreement, is a formal agreement executed by both spouses at anytime during the marriage, which makes enforceable certain promises one spouse makes to the other. The main purpose of the postnuptial agreement is to alter the character of a spouse’s separate property or community property, or to alter the rights and obligations of each party in the event of a divorce or death , or even to prevent a party from seeking a divorce at all. These agreements are similar to prenuptial agreements in that provisions may be made to protect one spouse from the other’s inheritance or creditors, to ensure the repayment of loans from one spouse’s family, or to preserve property interests for the benefit of children or grandchildren. However, the difference may lie in the fact that a postnuptial agreement is entered into during the course of a marriage, whereas a prenuptial agreement is entered into before marriage.
Reasons to Consider a Postnuptial Agreement in Texas
The primary reason that people consider postnuptial agreements is to obtain certainty in their financial affairs as to their spouse’s rights in the future. Marriages today are often more of a business arrangement – people marry for love, but increasingly it is to combine assets, finances, tax consequences to provide a better life for the both of them. If you are bringing assets into the marriage with the intention of keeping those assets separate, then a postnuptial agreement may be what you need.
Finally, it may be worthwhile for you and your spouse to enter into a postnuptial agreement so if your marriage ends, you have already decided how you will divide your assets and debts. In Texas, the classification of property as separate or community affects division at divorce. If you have a postnuptial agreement, you can specify if property is community or separate and how it is to be divided; at a divorce, the courts will usually honor your agreement.
Legal Requirements for a Postnuptial Agreement in Texas
A postnuptial agreement is a contract between married persons and retains its enforceability during and after a separation or divorce. In order to be enforceable, a postmarital or postnuptial agreement must be in writing. It becomes effective at the time it is signed unless otherwise specified within the agreement. Under the Texas Family Code, a postmarital agreement is not enforceable if it was not signed voluntarily or if the agreement was unconscionable when the agreement was signed and before the execution of a waiver of disclosure of the financial statements required by the Code. When determining whether an agreement is unconscionable, the court looks to the circumstances under which the agreement was signed. Additionally, in order for the agreement not to be found unconscionable, the party against whom enforcement is sought must be represented by an independent attorney, or must be given the opportunity to retain an independent attorney but knowingly waive their right to do so and have access to statutory disclosure of assets subject to disclosure. Upon request by a party, a postmarital agreement is enforceable only if the party who is ordered to perform under its terms proves compliance with the requirements of the Texas Family Code.
Factors that Influence the Cost of Postnuptial Agreements
Determining how much a postnuptial agreement costs in Texas is often more complicated than a prospective client expects:
-Complexity. The complexity of each individual’s circumstances can greatly affect the cost of a postnuptial agreement. A client with few assets may pay less for a postnuptial agreement than a client who has numerous community and separate properties. More extensive efforts may be required in order to ensure the postnuptial agreement takes into account all properties to be divided in the event of a divorce. The length of each party’s assets lists, as well as the addition of real property, retirement funds and family trusts, add to the complexity of each case and substantially increase the length of time a Dallas divorce lawyer must spend on the negotiations.
-Involvement of Third Parties. Another factor that may increase the cost of a postnuptial agreement is the extent to which a couple’s attorneys must enlist third parties who have previously assisted a spouse with the purchase of a separate property or the establishment of a trust. Wills, titles and deeds may also require third-party assessment in order to develop a comprehensive picture of how all existing properties are to be divided in the event of a divorce. As explained by Austin divorce attorney Jennifer February, "Extensive information-gathering that requires the detailed review of documentation in attorney- and client-negotiated agreements can drive up the cost of an agreement."
Ángelina Walsh, a Dallas divorce lawyer, says couples should be aware of the different aspects that affect the cost of postnuptial agreements: "Located in a major metropolitan area, I encounter a lot of complex cases where postnuptial agreements must translate into a divorce decree from the state of Texas. If a clause omits certain types of assets or overrides a standard prenuptial agreement in an unusual way, a divorce may be harder to initiate. It is important to go through the process, creating the clearest document possible that can be enforced in a final judgment."
Average Cost and Typical Fees for Postnuptial Contracts in Texas
The expenses of a postnuptial agreement can differ greatly, based on various factors. Even so, in general, anticipated costs can sometimes be broken down into three elements: lawyer retainer fees, flat fees charged by some lawyers, and expenses associated with an inventory and appraisal. Projects that are more complex may also involve fees and expenses for other experts who may be needed to finish a project.
As a rough guideline, the costs of a postnuptial agreement can generally range from $1,500 to $7,000. In some instances, if there are issues, costs could be even higher. Still, this is a minimal price when you consider the benefits a person could obtain by reducing the risk of a negative outcome in the event of a marital breakdown or divorce.
Many lawyers have firm policies about how much of a retainer is required. A general rule of thumb is that the retainer will often be the equivalent of the amount of the lawyer’s basic hourly fee times the number of hours the attorney believes the work will consume. Some firms will charge a smaller number of hours less than the estimated "hourly" rate to reflect the fact that it only takes several minutes or an hour or two to draft the formal agreement.
A lawyer who handles a large volume of postnuptial agreements may charge a flat fee , rather than use a retainer agreement system. Typically, this will be a discounted rate over what the lawyer might charge on an hourly basis. In such cases, the lawyer may bill by the hour for any work done beyond the scope of the agreement.
Other fees may involve having a neutral third party prepare an inventory and appraisal, which some people may consider to be an optional expense. For others, however, in order to be sure that assets are valued accurately, an independent party may be needed for this work. The cost of this type of help will vary, depending on the size of the project, the location of assets and the particulars of the work needed. For example, if a spouse handles a lot of investment properties, it may be necessary to investigate what the prices or rentals values are per property to apply this information to the net worth of the spouse. An accountant may be helpful in determining business valuations, although care must be taken that this does not transform into a divorce business valuation. If a spouse is working on a more bespoke agreement, significant payments may be needed to produce the final result, as there may be more than one draft that is needed because of negotiation.
How Much Does a Postnuptial Agreement Cost – Finding the Right Lawyer
The wisest choice for meeting with the appropriate attorney is to consider one’s personal recommendations and then judge first for one’s self. In the instance of an acquaintance’s prior experience with a law firm, you must consider the "personal match" quality of the relationship. For instance, Ideally, you want a law firm that is compatible with you as a person. You should feel comfortable visiting in person and through e-mail and telephone. Finding such a personal match is just as important as the "professional match." Price, the "professional match," is also important, but as you read above, only when compared to other factors.
In contrast, in the instance of getting a new attorney’s name, from an acquaintance or other professional that one trusts, then several questions come to mind:
What are the attorney’s credentials, awards, recognitions? Before you hire an attorney, you want to know that they are qualified and experienced to prepare your postnuptial agreement. Specific experience in drafting postnuptial agreements is essential, but it is also important to know what other "peer reviewed" credentials the attorney possesses. Credentials in this sense are awarded by groups and societies of experienced persons who review and rate the qualifications and accomplishments of the members. Examples include the American Academy of Matrimonial Lawyers (AAML), the American Academy of Adoption Attorneys (AAAA), and the American Institute of Family Law Attorneys (AIFLA). Those are examples of very exclusive groups, similar to making the All Star Game, elite, exclusive, and distinguished.
Does the attorney publish? The lawyer who stays active in writing about the field is usually at the top of their game. You may want to ask for a resume of publications and awards.
What do my friends and acquaintances think? The professional match is not enough-If others had good experiences with the attorney or firm, there should be no reason for alarm. If the firm has an extensive client list with reviews, then you can feel safer. It is very difficult to find a postnuptial attorney and you will probably end up meeting several to make a decision.
Ways to Save on a Postnuptial Agreement
Many factors go into determining the costs of a postnuptial agreement. The length and complexity of your agreement will be one of them. In addition, you will have the expense of your lawyer, your spouse’s lawyer, and any other lawyers who may need to review your appraisal for specific assets. That said, there are ways to bring significant savings to the equation. Consider these strategies:
Identify all the assets that you have and how you acquired them.
Be as clear as possible about the sources of your assets. This will minimize the research that your attorney will have to do, saving you time and money. Also, by agreeing on what you have as separate property, including before you got married, it reduces the likelihood that you will end up fighting over the sources of those assets in the future.
Be calmly and clearly communicative with your spouse.
Once your spouse’s attorney has prepared the initial draft of your postnuptial agreement, share your comments with your lawyer. Having this type of open line of communication will help your attorney understand the reasons for your suggested alterations; if he or she can then quickly wrap things up with the opposing counsel, it helps save on costs.
Have a strong sense of what you want.
While your attorney is there to offer you advice, legal counsel is most effective when you know what you want. Further, the more strategic and reasonable suggestions you make, and the more respect you pay to your attorney’s expertise, the more likely that you will avoid unnecessary back-and-forth and conflict, which, of course, costs you money.
Ask your attorney for strategies to expedite the process.
Generally, a lawyer will charge by the hour. If your attorney can send you a ready-to-go list in advance, if you do research that can help answer some of your questions or if you can arrange meetings to review more than one issue at once, it can save you money in legal fees by reducing the amount of time that you will have to pay for.
Common Misunderstandings
In Texas, the topic of postnuptial agreements is often shrouded in misconception. This is significant because many agree that one of the main reasons that people opt not to commit to drafting a postnuptial agreement is cost. From listening to their clients, lawyers have discovered that most people presume that postnuptial agreements are prohibitively expensive and, therefore, may be best avoided. For this reason, it is critically important for couples to understand the common misconceptions associated with postnuptial agreements.
One common misconception associated with postnuptial agreements is that a postnuptial agreement is unnecessary if you already have a valid prenuptial agreement. Others presume that a prenuptial agreement will be honored by a judge during a divorce. Under Texas law, neither of these assumptions are correct. With regard to the first misconception, while it is true that a prenuptial agreement may address some of the same issues a postnuptial agreement would, it is unlikely that the two will address the same issues in the same way. It is very common for a couple to have both. While these agreements are not drastically different in terms of their purpose , there is a critical difference when it comes to the decisions involved. A prenuptial agreement usually includes more superficial decisions. It does not take into consideration the changes which life dictates would occur over years of marriage. A postnuptial agreement involves a deeper level of decision-making on how you may want to handle certain issues in the event of a divorce down the road.
Again, while a postnuptial agreement may not be needed immediately, it can always be revisited at a later date. Unlike a prenup, a postnuptial agreement assumes the couple already managed to tie the knot. Given the unpredictability of life, there are a number of reasons a couple may want to address certain issues as they relate to a marriage or a divorce. The reasons are unique to each couple. At the end of the day though, it all boils down to a good, strong conversation. That is how a postnuptial contract is valued. After all, these contracts are unique, just like the couples who enter into them. They are not cookie-cutter agreements.
Another common misconception is that a postnuptial agreement will only benefit the wealthier spouse. On the contrary, it can benefit both spouses. A fair postnuptial agreement outlines how assets will be divided and creates an easy way to determine who pays what in terms of child support and alimony. This means less litigation and a tangible way to avoid court when a couple chooses to go their separate ways.