Having practiced marital law in South Florida for over forty years, we have been involved in many cases where arguments have eaten away at the parties’ estates in order to settle financial issues in divorce. Palm Beach Gardens, Jupiter and Juno Beach are populous areas where many people have accumulated substantial wealth. It is not uncommon that when marital issues arise couples may desire to enter into a written agreement settling financial issues without a divorce.
In cases where the parties are seeking a divorce, it is not uncommon to draft an agreement settling all issues and then filing that agreement in an uncontested divorce. More than 90% of all divorce actions end in a written settlement and not in hearing before a court. While those agreements are commonly referred toas Marital Settlement Agreement, they are in effect postnuptial agreements.
When entering into such an Agreement, your spouse and you are waiving, or at least modifying, certain rights which otherwise would have been available to you under Florida law. The Agreement will impact your rights in the event of dissolution of marriage or death. Because of this, you should only enter into such an agreement if you have a clear understanding of your rights and of the impact the Agreement will have on those rights. Both parties should discuss the legal implications of a Post-Nuptial Agreement with their own separate attorney.
Below are some significant areas addressed in a postnuptial agreement:
- Equitable Distribution. In the event of dissolution of marriage, the court will determine marital and non-marital assets and liabilities. The court has the authority to divide the marital assets and liabilities equitably (in other words, as the court determines is “fair”). As a general statement, assets and liabilities accumulated during the marriage and enhancements of assets brought into the marriage, are considered marital and subject to division by the court. Upon entering into a Post-Nuptial Agreement, you are agreeing with your spouse how assets and liabilities will be determined as to their being marital or non-marital. The Agreement usually defines marital and non-marital assets/liabilities differently than would be the case under applicable law. Therefore, the Agreement could significantly lessen the assets to which you are entitled and could increase the liabilities for which you are held accountable.
- Alimony/Spousal Support. In the event of dissolution of marriage, spouses might be entitled to receive support in the form of alimony (either rehabilitative, lump sum, bridge-the-gap, durational, or permanent alimony). Upon entering into a Post-Nuptial Agreement, spouses may be waiving or limiting entitlement to receive such alimony or support. Once waived, the spouses are barred from going back and receiving alimony in a divorce action.
- Spousal Elective Share. In the event of a spouse’s death, under Florida law the surviving spouse would normally be entitled to receive either what the deceased spouse leaves in their Will, Trust or by beneficiary designation, orto elect to receive 30% of the deceased spouse’s estate by making a spousal elective share. By entering into the Agreement, a spouse may be waiving the spousal elective share and would only be entitled to receive what his or her spouse leaves by gift or bequest.
- Homestead Property. Under Florida law, spouses have certain rights in and to the primary marital residence, particularly in the event of death. Upon entering into a Post-Nuptial Agreement, spouses may be waiving homestead rights under Florida law and thereby consenting to the homestead being devised to someone other than their spouse.
- Attorney’s Fees and Costs. In the event of dissolution of marriage, payment of attorney’s fees and costs can be a significant issue to be resolved. If the divorce is contested, these fees and costs can amount to tens of thousands of dollars. Under applicable law, the divorce court can order one spouse to pay the other spouse’s attorney’s fees and costs. In particular, the spouse who has the lower income can be impacted since it is usually that spouse who is awarded the fees and costs from the higher income spouse. Often in a Post-Nuptial Agreement, the issue of attorney’s fees and costs are addressed, thereby limiting or altering a party’s rights to recover these expenses.
When two married persons wish to enter into a Post-Nuptial Agreement, it is customary to have one of the parties’ attorney prepare the Agreement and for the other party’s attorney to review it (and in some cases, to revise it). Each party should be advised by their attorney about the terms and implications of the Agreement. Each party should retain their own separate counsel.
Perhaps the single most important aspect of entering into an Agreement is that the parties should disclose to one another their financial condition. This typically includes the parties each completing and exchanging a financial disclosure form which shows assets, liabilities and income. The form is often attached to the Agreement as further indication of satisfactory disclosure. When filling out this form for a Post-Nuptial Agreement, it is important to be thorough and accurate in reporting the financial information.
If you are married and wish to have a Post-Nuptial Agreement prepared, you should contact our firm.