Dear Quentin,
My husband and I bought a house together in New York about a year ago. We have been married for 14 years. His parents gave us $100,000 to buy the house, and it was deposited in a joint bank account, which I don't have access to.
About a week later, my in-laws asked me to sign a document stating that the money was considered “separate property” and that I would not claim any of it in the event of a divorce. I signed this document on closing day with my family attorney, who was also a notary public.
Does this document have legal standing in a divorce in New York State? Is this a coerced signing since it happened on the day of closing, or a conflict of interest since the family attorney represents all of us?
Confused and curious
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Dear confused,
There's 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 obvious and confusing word you use is when you say your in-laws “signed off” on it. It sounds like you did it voluntarily and exercised your free will, but you also felt pressured to do so. The attorney should guide you through the events of that day. But you are not saying that you were forced to sign or did so under duress.
However, there are other aspects to this scenario that should be taken into consideration if you consult your own attorney – one who represents you exclusively. You say you haven't been given time to think about it. According to the New York City Bar Association: “If you or your spouse uses pressure to sign a postnuptial agreement or does not give the other party sufficient time to consider the postnuptial agreement, the court may not enforce the postnuptial agreement.”
He adds: “A postnuptial agreement takes control of your property and assets away from the state and puts it in the hands of you and your spouse. A postnuptial agreement is valid and enforceable as long as it protects you and your spouse, and is entered into with full and fair disclosure of all assets by you and your spouse.” The agreement must also be implemented and recognized with the full formalities required to register the title deed.
You say $100,000 was deposited into a joint account. Do you mean one between you and your husband? If so, it will likely be considered marital property. “An exception might be if the money was intended to be a gift to your spouse only and was transferred to the joint account solely for convenience in anticipation of the sale closing,” says Uri Appelboim, a partner in Blank's Marriage and Family Law Practice Group. Rome in New York City.
Marital property versus separate property
“Since the $100,000 was transferred to a joint account, it is presumed to be marital property,” Appleboim adds. “For an agreement to waive your right to marital property to be valid and enforceable under New York law — in this case the postnuptial agreement in question — it must be (1) in writing, (2) jointly by you and your spouse, and (iii) acknowledged or proven In the manner required to entitle the act to be registered.”
If these conditions are met? “Then other issues may come into play,” he says. “New York has a strong public policy that favors individuals who decide their own interests through contracts. However, an agreement between spouses may be invalidated if the party challenging the agreement proves that it was the product of fraud, coercion, or other unfair conduct, or if the terms are unfair.” Reasonable or the product of excess.
The fact that you did not have a lawyer and that this could be considered clearly unfair can also play in your favor. “There may be an inference of your husband's transgression, which he will be asked to refute,” Appleboim says. “Additional considerations are the existence of a fiduciary relationship between you and your spouse and the fact that postnuptial agreements are contracts that require consideration that benefits each party.”
You have three questions to ask yourself: legal, financial, and ethical. Do you have a legal basis to challenge a postnuptial agreement? Do you think challenging your husband for half of this down payment ($50,000) would be worth it in the event of your divorce? Or is this a matter of principle, that you should have been given more time to consider your options, especially since you have been married for 14 years?
If you decide to object to this Agreement, do so because you would not have signed it under any other circumstances. How would you have reacted if your in-laws had given you time to think about this matter? It seems like a big ask of your in-laws after 14 years of marriage. I can understand their rationale better if they ask you to sign a prenuptial agreement. If you really think 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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My partner is against our marriage. I'm not on the deed to his house, but he has a revocable trust. What could go wrong?
I want my son to inherit my house worth $1.2 million. Do I leave it to my second husband in my will? He promised to pass it on.
