Effective March 23, 2023, post-nuptial agreements will be legally valid and enforceable in the State of Ohio. Up until now, Ohio was one of only a couple of states which did not permit a postnuptial agreement. The change in Ohio law reflects a need to allow spouses to create certainty between them based on changing circumstances.
A Postnuptial Agreement is an agreement entered into by married couples which defines and establishes their respective financial rights and obligations in the event of death and/or divorce.
Ohio has long recognized pre-nuptial agreements – agreements which are entered into before marriage and determine issues such as spousal support and division of property in in the event of divorce and/or death.
Postnuptial agreements will now allow spouses in Ohio to modify inheritance rights between them, terminate prenuptial agreements, allow outdated premarital agreements to be updated and modified to correct errors and ambiguities in existing documents.
A postnuptial agreement can also alter the terms of a pre-nuptial agreement to determine what happens with the couple’s assets, including personal property, real estate, business interests, retirement accounts, investments and debts – at the conclusion of a marriage, whether through death or divorce.
Spouses who have children from previous relationships may find postnuptial agreements helpful as an estate planning tool in second marriages to confirm their wishes upon death, similar to a will or a trust. These agreements can pre-determine the character of assets as marital or separate property and how such assets are passed down to the spouse, children and grandchildren.
For practitioners, a postnuptial agreement is one more thing to consider when preparing a comprehensive estate plan – either whether a postnuptial agreement already exists or whether one is needed. The estate plan should be consistent with the terms of any postnuptial agreement.
Postnuptial agreements, like pre-nuptial agreements, will be held to a higher standard in the negotiation, drafting, and execution, and must meet the following minimum standards: 1) the agreement has to be in writing and signed by both spouses; 2) the agreement must be entered into freely without fraud, duress, coercion, or overreaching; 3) the agreement must be negotiated with full disclosure or full knowledge and understanding of the nature, value, and extent of the property of both spouses; and 4) the terms may not promote or encourage divorce or profiteering by divorce.
In order to avoid adverse claims in the future, the practitioner should keep adequate notes and records concerning the disclosure of assets and liabilities, the negotiations, the exchange of draft agreements and the voluntary execution of the postnuptial agreement. Each party to the postnuptial agreement should also have the opportunity to consult with his or her own counsel throughout the negotiation, drafting, and execution process.