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Zoeller and Makris: Prenups, postnups and ‘no-nups’ increasingly common

January 9, 2019

 

Makris Makris
zoeller-brian-mug.jpg Zoeller

By Brian Zoeller and Nicole Makris

In recent years, prenuptial, postnuptial and cohabitation agreements have become increasingly common in the United States. The increase in interest can be traced in part to the shifting of societal norms surrounding marriage, cohabitation, and divorce among the country’s different age demographics. A recent study by Philip Cohen of the University of Maryland found that the U.S. divorce rate declined from 2008 to 2018. However, the fact that millennials are not marrying until later in life, if at all, is likely a contributing factor to the decline. According to a Pew Research Center analysis, college-educated adults are considered likelier to marry than those with less education. This in turn increases the likelihood that marriage-inclined couples will seek prenuptials, while those who choose not to marry represent a significant portion of the growing population of cohabiting couples.

Despite the overall decline in divorces, divorce rates among baby boomers have increased, suggesting that this group may be inclined to opt for prenuptial or postnuptial agreements. Through prenuptial, postnuptial, and cohabitation agreements, parties are able to settle their property interests during the course of a relationship and in the event of its termination.

Growing acceptance of prenuptial agreements

According to a recent survey by the American Academy of Matrimonial Lawyers (“AAML”), slightly more than half of attorneys noticed an increase in the number of requests for prenuptial agreements among millennial clients. For these couples, a prenuptial agreement is likely viewed as more of a practical business contract, especially to those that are entering marriage with considerable individual assets or are anticipating significant earnings in their careers.

Because millennials are likelier to marry later in life than previous generations, chances are higher that they have existing assets to protect before marriage. In addition to securing rights to real estate and retirement accounts, millennials are presumably taking student loan debt into consideration and ensuring that respective responsibilities are clearly outlined in their agreements. Millennials are also thought to appreciate the pragmatism of prenuptials because approximately one-third of this generation grew up with single, divorced, or separated parents.

Members of the baby boomer generation are likely to seek prenuptial agreements as well, particularly those who have been married. According to the Pew Research Center, the divorce rate of individuals age 50 and above about doubled since the 1990s. Out of the individuals age 50 and older whose marriages were dissolved, 48 percent of them were in at least their second marriage. At this stage in life, people are likely to be especially cognizant of the value of protecting assets such as retirement accounts before entering into a subsequent marriage.

Rising interest in postnuptial agreements

Postnuptial agreements, or reconciliation agreements, are an increasingly popular option for married couples who are willing to reconcile despite encountering obstacles in their marriage. A 2016 study by the AAML found that 50 percent of divorce attorneys had observed an increase in postnuptial agreements over the course of the preceding three years. When there has been infidelity or otherwise a near breakdown of the marriage, these agreements provide couples with the opportunity to outline their respective rights as to property and designate responsibility for liabilities in the event that the marriage is dissolved in the future.

The key distinction from a prenuptial agreement is that these agreements are entered into during the parties’ marriage, and the consideration for the contract is the forbearance of filing for dissolution of the marriage. For this reason, the postnuptial agreement is an important topic to discuss with clients seeking information regarding their rights and options when contemplating whether to pursue dissolution of their marriage.

The value of cohabitation agreements

Today, it is not uncommon for couples to choose to live together, share expenses, acquire property together, have children together, and otherwise function as a family unit without the formality of marriage. For those who opt for the “no-nuptial” route, case law stands in favor of preventing unjust enrichment to parties who have benefited from cohabitation with another party with “no rings attached.”

According to the Pew Research Center, an estimated 18 million adults were in cohabitating relationships in 2016, which is a 29 percent increase since 2007. Approximately half of these individuals were under the age of 35. The baby boomers also contributed to the rise in cohabitation statistics, with an estimated 75 percent increase in the number of cohabitating adults age 50 and older. Out of this group, 55 percent were divorced and 27 percent were never married.

Cohabitation agreements are a valuable option for those who wish to protect their individual property interests in the event that a non-matrimonial relationship terminates. Cohabitation agreements may be detailed to the point of allocating responsibility for monthly expenses between the parties during the relationship, as well as determining custody of a shared pet in the event of a breakup. While one may be successful in recovery based on the theory of an implied contract and the equity principle of unjust enrichment, a written agreement delineates each party’s rights and provides clarity as to the distribution of assets and liabilities in the event of the termination of the relationship.

Clarity for the future

Through the use of prenuptial, postnuptial, and cohabitation agreements, couples are afforded the opportunity to provide clarity as to their respective rights to property at every stage of a relationship. The millennial and baby boomer generations have played distinct roles in the shifting of societal norms and the growing acceptance of contracts in the context of relationships. For the population of cohabitating couples, the adaptation of contract theory and equitable principles to reflect the realistic circumstances of modern relationships has benefited many people who may have thought that a prenuptial agreement would be their only option to protect their property rights in the event of the termination of their relationship. Prenuptial, postnuptial, and cohabitation agreements are likely to continue to be beneficial options for couples in the future as generations age and societal norms evolve.•

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Brian K. Zoeller — bzoeller@cohenandmalad.com — is a partner and family law practice chair at Cohen & Malad, LLP. Nicole Makris — nmakris@cohenandmalad.com — is a family law associate at Cohen & Malad. Opinions expressed are those of the authors.

 

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