Post-nuptial Agreements: What is your consideration?

On Behalf of | Nov 16, 2016 | Family Law

Almost everyone who is or has contemplated the possibility of marriage has heard of a prenuptial agreement, which is a contract between two soon-to-be married persons that can specify their rights and obligations with respect to their separate property in the event of divorce, annulment, and/or death. However, many already married couples may not be aware that there is such a thing as postnuptial agreements. Postnuptial agreements can cover the same issues that arise in prenuptial agreements such as equitable division of the assets, waiver of rights to certain property of the other person, and alimony.

Postnuptial agreements are governed by the same general principles as any other contract. Intrinsic in every valid and legally enforceable contract, is basic proof of an offer, acceptance, and consideration. In Tennessee, even though postnuptial agreements are not considered contrary to public policy, they are nonetheless, subject to close scrutiny by the courts to ensure that they are fair and equitable. Most questions regarding the enforceability of postnuptial agreements rest on whether there was sufficient consideration on the part of both spouses to enter into the agreement.

Consideration exists when a party does something that he or she is under no legal obligation to do or refrains from doing something which he or she has a legal right to do. It may be either a benefit to the spouse making the promise to enter into the agreement or obligation upon the spouse seeking to have both parties enter into the agreement.

In evaluating the validity of a prenuptial agreement, the general consideration for the contract is the marriage itself. Legally, marriage imparts the gift of being able to share in the other spouse’s estate upon death or dissolution. However, the question of what constitutes adequate consideration becomes muddied when couples intend to enter into a postnuptial agreement because the marriage has already occurred and past consideration cannot support a current promise

Generally speaking, the act of a reconciliation after separation or even in contemplation of a divorce will be found to serve as adequate consideration so that the postnuptial agreement can be enforced like any other contract. Nevertheless, couples may also validly contract to divide property or set spousal support in the event of a divorce by postnuptial agreement, even without it being incident to a contemplated separation or divorce, if there is adequate consideration.

So what makes for adequate consideration in postnuptial agreements where reconciliation is not involved? Courts have found that mutual promises are sufficient consideration to support a contract. For example, a postnuptial agreement that includes the release by one spouse in the interest of the estate of the other spouse, in exchange for a similar release could support adequate consideration in a postnuptial agreement. However, the parties must ensure that they are not making illusory or false promises to the other, as such will not support consideration to uphold the postnuptial agreement.

Consider the case Bratton v. Bratton, 136 S.W.3d 595 (Tenn. 2004), in which the Tennessee Supreme Court declined to enforce the postnuptial agreement eighteen years later for lack of consideration. In this case, the Court found that the husband gave adequate consideration by agreeing to provide half of his net worth to his former wife if the divorce was his fault based on infidelity. However, the Court found that wife’s consideration to the postnuptial was vague and illusory because she signed the postnuptial agreement and merely promised not to pursue a career as a dentist.

Like any other contract, postnuptial agreements, must be freely and knowledgeably executed by both spouses in good faith and without duress and undue influence affecting either spouse. As you can see, the sufficiency of consideration is often questioned as the basis to uphold or invalidate a postnuptial agreement. If your spouse approaches you about a postnuptial agreement, you should obtain independent legal advice to ensure that the agreement is properly drafted and to discuss options if this is the first step toward dissolution of the marriage.