Prenuptial Agreements - For Better or Worse
Prenuptial agreements are a useful planning tool, but many hesitate to utilize prenuptial agreements because such agreements may lead to hurt feelings. After all, "for better or for worse," right? However, a prenuptial agreement is not rigid and can provide flexibility for couples. A prenuptial agreement is essentially a legal contract between you and your new spouse (or postnuptial agreement if already married) governing your separate property and community property assets and debts. Prenuptial agreements are especially important in the context of second marriages or if one or both of the parties have acquired substantial assets, such as a business, or to protect against existing debts of the new spouse. Prenuptial agreements can help protect the character of your separate property and protect a child's inheritance if born from a prior marriage.
Prenuptial agreements can be changed at any time before one of the spouses dies or becomes incapacitated. After a few successful years of marriage, the couple may decide to amend the agreement or revoke the agreement entirely. The couple may decide to leave some property to the other spouse and likewise include these transfers in their individual estate plans. Other options include listing your new spouse as a beneficiary on retirement accounts so that such assets will pass to the spouse outside of your trust or will. If one spouse owns the family residence, then the spouse can grant the other spouse a life estate in the residence or provide for a period of occupancy after death. In regards to the life estate, after the surviving spouse dies, the residence will still be left for the first spouse's children or other heirs. Some of these options allow you to care for your new spouse, while simultaneously protecting your heirs and your estate.
Because the discussion of prenuptial agreements may offend a new spouse, it is often best to discuss these agreements with an attorney who can help provide options specific to your situation. Start having these conversations early - before the marriage, if possible. Depending on your family situation, it may be wise to discuss your estate planning intentions with your children. Many times children feel entitled to their parent's money and are resentful or suspicious that a new spouse will divest any or all of their inheritance. An explanation on your decision may help discourage these feelings and hopefully keep any negative emotions at bay.
Marriage is an exciting event in your life, but it can also be a stressful endeavor. Protecting your assets and your heirs prior to the marriage can create peace of mind before you say I do.
Ms. Clapp-Younggren is an associate attorney with the firm of Sandra L. Clapp & Associates, P.A. and can be reached at email@example.com or (208) 938-2660.
This article is not intended to replace legal advice applicable to your situation and should be used only for informational purpose. Consult with your legal or tax advisors before implementing any suggestions contained herein.