A postnuptial agreement and a separation agreement are different types of contracts, but there is some overlap in their functions. While it may be painful to begin the negotiation process, working through outstanding issues to reach agreement will likely ease tensions in the long run. Some couples credit postnuptial agreements with saving their marriage, and a separation agreement can help smooth the way when you transition into separate households.
Definitions
A postnuptial agreement is similar to a prenuptial agreement except that you negotiate it after the marriage---sometimes decades later. It can be a step towards divorce or separation, but often it is a way to save a marriage because it addresses issues that have caused tension, such as finances. By contrast, a separation agreement lays out arrangements for a couple to live in separate households. It typically addresses a broader range of issues, including custody and visitation.
Reasons for a Postnuptial Agreement
Sometimes a couple's circumstances change during their marriage. For example, you or your spouse might start a business, or one of you may give up working to stay at home and raise your children. Changes such as these sometimes make a spouse feel financially vulnerable or resentful about the use of joint money for the other spouse's business venture. A postnuptial agreement may ease tensions by compensating you or your spouse for the use of joint money by the other or for earnings lost by the stay-at-home spouse. Conversely, when a spouse inherits a family business or a piece of property, she may wish for it to stay in the family. A postnuptial agreement may ease family tensions by assuring relatives that the business or property will stay in the family.
Reasons for a Separation Agreement
A separation agreement normally is a step towards either a legal separation or a divorce. In order to live separately from your spouse, you need to reach agreement regarding who will remain in your marital residence, who gets which pieces of property and how you will divide responsibility for bills and joint debt. If you have children, you also need to reach consensus on where they will live and arrangements for the noncustodial spouse to visit them. Frequently, the separation agreement is folded into the final divorce decree, so it's important to seek a lawyer's advice before signing any such agreement.
Court
Postnuptial agreements are contracts and do not require a court hearing, but it is best to consult a lawyer to make sure that the agreement will stand up in court in case your spouse or extended family members challenge it in the future. Also, postnuptial agreements are not recognized in every state, so you should consult an attorney to make certain such a contract will be valid in your locality. Separation agreements also are contracts, but because they usually involve support payments and custody issues, it is wise to have your agreement ratified by a judge to make it a court order, which carries greater force of law.
Tax Issues
Alimony payments are taxable for the recipient and tax deductible for the payer. If your agreement involves alimony, you cannot file a joint tax return. If you are separating and you anticipate a refund from taxes filed jointly, your agreement should address how this money will be divided. If you plan to file taxes separately, your agreement should specify who will take the deductions for mortgage interest, real estate taxes and for dependent children.
