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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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.)
The questions you raise are obviously complex, and should be discussed at length with an attorney in the event you divorce. Could this postnuptial document be considered legal and fair in a future divorce proceeding? “The simple answer is, ‘yes it can,’” says William Monaco, a LegalShield partner attorney at Feldman, Kramer, & Monaco PC. “New York is an equitable-distribution state and all information relative to contribution to marital assets is fair game.”
The key issue here is your in-laws’ intent. “Did they intend to give a gift to their son, which in general would be considered separate property in a divorce unless their son changed the nature of it along the way?” he asks. “Or, did they intend to give the gift to both parties? Here, the request that she sign a document acknowledging the separate nature of the funds is a clear indication of their intent to give it just to their son. This is not uncommon.
Monaco agrees that whether the timing of the signing request constitutes “duress” is a murky one. It’s possible, he says, but probably not. “The timing might have been inappropriate as they should have been clear from the start, but they always had the power to not give the gift at all. Ultimately it would be up to a matrimonial judge to decide, but likely in this instance, they would consider this to be the husband’s separate property if the parties divorced.”
“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.
A ‘manifestly unfair’ contract
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.
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