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Dear Quentin,
My husband and I purchased a house together in New York about a year ago. We’ve been married 14 years. His parents gave us $100,000 toward the house, which was deposited in a joint bank account, one that I don’t have access to.
About a week later, my in-laws had me sign a document stating that the funds were considered “separate property” and that I wouldn’t claim any of those funds in case of a divorce. I signed this document on the day of the closing with their family lawyer, who was also the notary.
Does this document have legal standing in case of a divorce in New York state? Would this be considered signing under duress given that it happened on closing day, or a conflict of interest given that the family lawyer represented all of us?
Confused and Curious
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“You have three questions to ask yourself: the legal and financial questions and the moral one.”
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Dear Confused,
There is a lot of uncertainty in your letter about what happened on the day you signed this postnuptial agreement — and how you felt about signing it. The most revealing and yet confusing word you use is when you say your in-laws “had” you sign. It appears that you did so voluntarily and exercised your free will, but also that you felt pressure to do so. An attorney should walk you through the events of that day. But you do not say that you were forced to sign or did so under duress.
However, there are other aspects to this scenario that should be considered if you consult your own attorney — one who represents you exclusively. You say you were given no time to think it over. According to the New York City Bar: “If either you or your spouse uses pressure to get the postnuptial agreement signed or does not give the other enough time to consider the postnuptial agreement, the court may not enforce the postnuptial agreement.”
It adds: “The postnuptial agreement takes the control over your property and assets away from the state and places it in the hands of you and your spouse. A postnuptial is valid and can be enforced as long as it protects both you and your spouse and it was entered into with a full and fair disclosure of all assets by both you and your spouse. The agreement must also be executed and acknowledged with the full formality required for a property deed to be recorded.”
You say $100,000 was deposited into a joint account. I assume you mean it was one held by your in-laws and your husband, and your postnuptial agreement deals with this $100,000 as a separate gift before it was used as a down payment. (An aside: This strikes me as bizarre behavior, given that you are both buying a home — I assume you will both be on the deed as well as the mortgage — and you have been married for 14 years.)
Marital property versus separate property
“In order for an agreement waiving your right to marital property to be valid and enforceable under New York law — in this case the apparent postnuptial agreement at issue — it would have to be (i) in writing, (ii) subscribed by you and your husband and (iii) acknowledged or proven in the manner required to entitle a deed to be recorded,” says Ory Apelboim, partner in the Matrimonial & Family Law Practice Group at Blank Rome.
And if these conditions were met? “Then other issues might come into play,” he says. “New York has a strong public policy favoring individuals deciding their own interests through contracts. However, an agreement between spouses may be invalidated if the party challenging the agreement demonstrates that it was the product of fraud, duress or other inequitable conduct, or if the terms are unconscionable or the product of overreaching.”
The fact that you had no counsel and that it could be considered manifestly unfair could also play in your favor. “There could be an inference of overreaching by your husband, which he would be required to rebut,” Apelboim adds. “Additional considerations are the existence of a fiduciary relationship between you and your husband and the fact that postnuptial agreements are contracts which require consideration that is a benefit to each party.”
You have three questions to ask yourself: the legal and financial questions and the moral one. Do you have a legal basis to challenge the postnuptial agreement? Do you believe challenging your husband for half of this down payment ($50,000) would be worth it in the event you divorced? Or is this a matter of principle — you should have been given more time to consider your options, especially given that you have been married for 14 years?
If you do decide to contest this agreement, do it because you would not have signed under any other circumstances. How would you have responded if your in-laws had given you time to think this over? It seems like a big ask by your in-laws after 14 years of marriage. I could better understand their rationale if they had asked you to sign a prenuptial agreement. If you genuinely believe this is unfair, and you signed this contract under duress, ask an attorney for an opinion.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
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Previous columns by Quentin Fottrell:
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I want my son to inherit my $1.2 million house. Should I leave it to my second husband in my will? He promised to pass it on.
Dear Quentin,
I have spoken with an attorney, but I see several online will services that are very inexpensive that include a will and a healthcare power of attorney. Is an online will service sufficient for most people? I am in the process of trying to figure out the best way to go about getting a will written as clearly and, hopefully, as affordably as possible.
Can my will specify that my life insurance and other money be used to pay off my mortgage, so I can then leave my home to a family member or friend?
“‘I plan to leave everything to my husband, but I would like my will to specify that if he predeceases me, our estate be split among others in our families.’”
I work as a consultant with my own LLC, taxed as an S corporation, but I have no employees. I live in sunny Florida. Outside of my business bank account, I believe my finances are fairly straightforward and typical — a few retirement accounts, one primary residence, an investment property, a term-life insurance policy. My husband and I have mortgages on two properties, but we should have our primary home paid off in about seven years.
I plan to leave everything to my husband, but I would like my will to specify that if he predeceases me, our estate be split among others in our families. My in-laws are moving in with us, so I would like them to inherit our home. We have no children but have very close relationships with our nieces and nephews.
I appreciate any guidance you have on writing a will.
Hoping This Won’t be Needed for a Very Long Time
Dear Hoping,
If you have a home and a business and enough assets to pay off your mortgage, pay for an attorney. You can scrimp on eating out or take one less vacation this year if you need to save money, but don’t scrimp on making sure your will is rock solid.
You should be able to find an attorney who can create a last will and testament for $300 to $500 and a durable power of attorney/living will for the same amount. The latter covers issues like end-of-life care and what happens if you become incapacitated.
You can instruct the executor of your will to use assets from your estate to pay off your mortgage, thereby allowing you to leave the house free and clear to a third party. Everyone should have a will, even people who are in their 20s and 30s or who don’t have children.
What’s more, if you leave your entire estate to your husband — that is, whatever you own that is treated as separate rather than community property — he too will need to make a will, and his may or may not align with your wishes.
“If you leave your separate property to your husband, he too will need to make a will, and his may or may not align with your wishes.”
A person making a will or signing a power of attorney must be of sound mind — also known as “testamentary capacity” — and not be under or subject to duress, restraint, fraud or undue influence. But laws do vary by state.
For example, in Pennsylvania, each spouse can write a separate will, but you can’t can’t create a will that cuts your husband out of all inheritance, according to Karen Ann Ulmer Attorneys at Law, which has offices in that state.
There are many cautionary tales of people who died without a will — like Prince and Michael Jackson — or decided to do an online will. One lawyer told me a wealthy client wrote a will with an online service, but he forgot to sign it.
If you die without a will or without a legal will — one that is not notarized or that has some other legal anomaly that invalidates it — it will be left up to the laws in your state to decide who gets what, which could get complicated if your husband dies before you do.
And when you do write a will, you should review it every three to five years. But here’s to many more years before your executor needs to step up to the plate.
“You can scrimp on eating out or take one less vacation this year if you need to save money, but don’t scrimp on making sure your will is rock solid.”
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The Moneyist regrets he cannot reply to questions individually.
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