On the whole, most litigants, attorneys and judges would agree that divorce is not a good thing or a pleasant process. Yet, it is a reality for one in every two marriages. However, there are a number of legal concepts, such as no-fault divorce to binding arbitration, which globally seek to minimize the emotional and financial impact, as well as speed up what is usually a lengthy process.
Sometimes this is not enough to address the facts (typically financial) of a given case.
In the last blog post, addressing legal separations for older adults, Ciyou & Dixon, P.C. began looking at new or unique ways of using the common tools in the divorce lawyers’ tool box to minimize the impact of a divorce on a specific case-by-case basis, given the ever-changing composition of the divorcing family and their needs.
However, such tools may be used in any given case if it makes sense. Thinking in creative ways is what is key. This blog post explores another perhaps underutilized tool (which was referenced in the last post): the post-nuptial.
Everyone has heard of the prenuptial agreement, which is nothing more than a contract entered into in advance of a marriage to specify how the parties’ affairs will be wound up if the marriage fails in the future. The post-nuptial is the same thing, but entered into when the marriage is rocky in lieu of a divorce at that time.
This too may be an underutilized tool that pre-divorcing parties should consider. Why? A very good example is found with health insurance. If each party does not have coverage through his or employer, or if one spouse does not work, health insurance in the present day economy is a proverbial “big deal.”
COBRA coverage is expensive and may be just the cost that keeps the parties from being able to balance and juggle two household budgets post-divorce. Thus, a divorce timed later, allows the parties a chance to work through such issues, and if this fails, time the divorce after the other spouse obtains insurance and reduces that cost factor as some of the friction in a divorce.
For this or a number of other reasons, if the timing of a divorce is bad relative to other factors going on with the parties specifically or in their lives more broadly, a post-nuptial might be a viable option. Again, done properly, a post-nuptial entered into in lieu of a divorce filing in a matter may save the marriage or time its end to when there is a better financial situation.
As divorce advocates, we have considered this tool for older adults where one has a major health problem. A hesitancy or push-back is sometimes encountered because attorneys and/or clients believe they will have difficulty enforcing a post-nuptial later in court.
In reality, while a divorce court does have discretion to modify a post-nuptial agreement, the grounds on which it may do so are quite narrow and exercised with great restraint. Recently (and consistently), the Indiana appellate courts have reversed trial courts for modifying or refusing to enforce post-nuptials in absence of the following: (1) Fraud, (2) Duress, or (3) Manifest Inequities.
To aid with the educational purposes of this blog post, and to help readers understand the power of the post-nuptial agreement in the right case, each of exceptions–where the post-nuptial may not be enforced–is addressed. These probably would not apply to your case or the typical case if a post-nuptial was being used appropriately and may not be cause for alarm.
Fraud is perhaps the most obvious. This could occur in a number of ways. For instance, a spouse obtains the signature of the other on a post-nuptial under the guise he or she is signing something else, when in reality, it is a post-nuptial agreement which, had he or she known, would not have otherwise entered into.
Duress is not a dis-similar concept. Here the classic law school example is obtaining the other spouse’s signature with the proverbial gun held to his or her head. The stress and duress under which the signature is obtained would, upon establishing this in the evidence, direct the trial court not enforce it in the subsequent divorce proceeding.
Finally, there is manifest inequity. This concept sounds in social policy, as no spouse or court could, should or would want this to occur to an innocent spouse. For example, the division would leave one spouse destitute or in a very dissimilar financial position than the parties envisioned when they entered into the agreement.
In present times, even staple and notoriously safe investments, such as municipal bonds, have gone to dramatically lower values with bankruptcy. If this were the case, and the other spouse’s accounts were intact and not dramatically different in value, assuming this is the martial asset (and often it is the only set of assets if the parties have filed personal bankruptcy), this may reach a manifest inequity such the trial court would not enforce the post-nuptial.
Ultimately, a good divorce is one that minimizes the downside to the litigants (which they may never be able to overcome in the course of their lifetime) and should be considered in this light, not just unfortunate default course some litigants take: fight-file-divorce. If this can be avoided, there are sometimes tools to help many divorcing parties better meet their post-divorce objectives. However, the acrimony of many divorces precludes their consideration and use.
Thus, if timing is an issue in a rocky marriage, some relief may be found in the post-nuptial agreement. This is not to say this is the proper tool or choice of course in every divorce, but it may just be.
If this blog post has you heightened your thinking about divorce, its implications, and minimizing the negative ones for both parties in creative ways, it has met its goal.
Ciyou & Dixon, P.C. attorneys practice throughout Indiana. This blog post was written by attorney Bryan L. Ciyou.