A recent decision by the Indiana Court of Appeals makes postnuptial agreements a more attractive option for married couples who, while considering filing for divorce, decide instead to reconcile.
Premarital agreements, entered into prior to marriage, have long been recognized in Indiana, by statute, as a means by which couples can determine a division of their property, and other issues, in the event of a subsequent divorce. However, with no corresponding statute addressing postnuptial agreements – similar to premarital agreements, but entered into during the marriage – the potential validity and enforceability of them has existed under a cloud of uncertainty. Consequently, most matrimonial lawyers have been reluctant to advise clients to enter into a postnuptial agreement.
That cloud of uncertainty has substantially lifted with the recent decision in Hall v. Hall. In the Hall case, the Indiana Court of Appeals held that postnuptial agreements are valid and enforceable contracts if they are entered into for the purpose of extending a marriage that was otherwise facing divorce. In Hall, the Husband and Wife married in 2004 without a premarital agreement. Not long thereafter, Wife learned various information about Husband’s finances and criminal history that led her to seek counsel and consider filing for divorce. Husband did not want a divorce, and suggested to Wife that they enter into a postnuptial agreement to give Wife reassurances. The parties did so, and they reconciled. Years later, in 2013, Wife filed for divorce and in the dissolution proceedings, Husband argued the postnuptial agreement was invalid and unenforceable. The divorce court disagreed, and applied the terms of the postnuptial agreement in fashioning its divorce decree. Husband appealed, but the Indiana Court of Appeals also sided with Wife. Even though postnuptial agreements are not recognized by having their own statute on the books, when one is entered into as part of a reconciliation of the marriage, without which the parties would have divorced, the postnuptial agreement is valid and enforceable in the event of a later divorce.
While not specifically addressed in the Hall case, best practices would warrant that any postnuptial agreement include the same safeguards found with a sound premarital agreement in furtherance of enforceability (e.g., full financial disclosure between the parties while the agreement is negotiated, both parties represented by counsel, no duress surrounding execution of the agreement, etc.).
In light of this important legal development, a married couple facing divorce now has an important new tool available to save their marriage, and they are no longer forced to decide between the two options of divorce, or remaining married on their original terms.