The British View of U.S. Post-Nuptial Agreements

The following excerpts are from Patti Waldmeir, Why post-nups are good for marriage, Financial Times, June 5, 2007:

For most of us [married British], marriage will be the most important business deal we ever do. Now US courts are accepting that wedlock is just another contract, and letting husband and wife rewrite the terms – even after the nuptials. * * *

In theory, post-nups can be used for everything from regulating the frequency of in-law visits to determining who picks up the kids from daycare or which spouse vacuums the rug. But in practice, they almost always involve money – and usually large sums of it. Unless the parties have a lot to lose, they have little incentive to write a contract longer than “I do”. * * *

On the face of it, post-nups may look a lot like legalised theft: if one spouse suddenly strikes it rich on the hedge mines – or founds another Google, or inherits a fortune – he (or, less likely, she) writes a post-nup to hog all the wealth. But neither the courts, nor the spouses, are likely to let that happen, Mr Williams says. Courts strike down post-nups that are unfair. And spouses – who know their mate’s bottom line – are likely to resist exploitative post-nuptials.

Things differ a lot from state to state: Ohio and Oklahoma ban all post-nuptial agreements, and other states impose varying restrictions, Mr Williams says.  * * *

Lawyers who write such contracts say adultery is the single most common factor that triggers a post-nup: spouses that have been burnt once by extra-marital infidelity often want an “adultery penalty” to discourage future indiscretions. * * *

Post-nups have got bad PR recently: the idea of hedge funds requiring partners to sign post-nups to disinherit their wives – rather than risk a divorce that could destabilise the fund – is obviously distasteful.

But if America believes it should allow divorce, why not permit spouses to negotiate contracts that could keep them married? Why not allow the nervous spouse to write a post-nup that insulates her from a profligate partner’s debts – and yes, why not let that hedge fund manager ring-fence some wealth, if it helps him stay married?

Special thanks to Prof. Joel C. Dobris of the University of California-Davis for bringing this article to my attention.