Postnuptial Agreements – Changing the Rules After Marriage

By David DePuy (originally published 3/13/2014)

The New Hampshire Supreme Court, in a landmark decision (In Re: Estate of Richard B. Wilber), has confirmed that agreements made between spouses after marriage are valid and enforceable in New Hampshire.  The questionable validity of agreements determining rights of each spouse in property of the other upon death or divorce has now been laid to rest.  The Court in the Wilber case followed the trend of other states which recognize such agreements, finding that they are, in essence, subject to the same requirements as agreements entered into by parties prior to marriage, so-called prenuptial agreements.  The cornerstone to the enforceability of such agreements is fairness.  Because there is a fiduciary relationship between husband and wife, the parties to a post-marital agreement must be honest and open and act in good faith in all matters relating to the agreement “with fairness being the ultimate measure.”  [See more, including when to use a prenupt and the link to the Wilber decision].

Most married couples in New Hampshire have entered into agreements affecting each other’s rights to property generally presuming that such agreements are enforceable.  Thus, it is common for married couples, as part of their estate plans, to change the manner in which they hold title to property, so as to avoid probate, or to take advantage of tax laws.  Such post-marital agreements have historically been recognized and enforced in Probate Courts following the death of a spouse.  The contract in the Wilber case was more expansive, determining what the rights of the parties were to certain real estate permanently and waiving the interest of each in property of the other.  The Wilber case involved a matter pending in probate court where, by the time of the decision, both parties had died and the battle was between their estates.  While the decision leaves many questions unanswered, the clear message delivered by the New Hampshire Supreme Court is that post-nuptial agreements are valid and enforceable in New Hampshire.  While questions about the enforceability of such agreements in divorce court on matters such as alimony and property settlements may remain, the clear understanding to be drawn from this decision is that such agreements will be given effect in divorce court as well.

WHEN TO USE A POST-NUPT.  There are many times when a post-marital agreement may be appropriate.  Parties entering into a second marriage may find such agreements helpful in rearranging their estate plans to provide for children from a prior marriage.  Postnuptial agreements can be helpful in revising prenuptial agreements entered into prior to marriage, where circumstances have changed.  Most notably, post-nupts may be attractive to couples with financial disputes who are contemplating divorce.  The implementation of such agreements may provide a remedy that allows the parties to forego the expense and bitterness of a divorce while allowing them to settle financial matters and live independently.  Finally, such agreements are now commonly employed with regard to estate planning.

CONCLUSION.  The Wilber decision expands the creativity estate planners may use in providing for the disposition of assets at death, provides couples contemplating divorce with a less disruptive, less expensive alternative, and couples after marriage to separate assets and finances.

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