Pre-Nuptial Agreements and Your Estate Plan
In the past, Pre-Nuptial Agreements were only used by the rich and
famous including millionaires, billionaires, and celebrities to protect
their assets in the event of a high profile divorce. However, with divorce
rates reaching 52% nationwide more and more people are using Pre-Nuptial
Agreements before they tie the knot pre and post nuptial agreements
have become more common. And, this is especially true when
“blended families” of his and her children are created by the marriage.
Furthermore, most people think that a Pre-Nuptial Agreement can be
used only when dealing with divorce. But a Pre-Nuptial Agreement can
be used to clarify the party’s rights and responsibilities in the event
of a death. Moreover, without a Pre-Nuptial Agreement in place your
significant other may have the authority to nullify your existing estate
plan by “electing: to take a sizeable portion of your estate.
This right of “election” is established by Pennsylvania law and
can only be waived by an informed and signed waiver
(usually contained in a pre-nuptial agreement).
A Pre-Nuptial Agreement is a legally binding document which is agreed
upon and signed before you get married. In order to be binding
in Pennsylvania, these agreements should fully disclose both
parties’ financial situations. For example, current and future earnings,
bank counts, stocks, bonds, saving accounts, business interests, as well as
interests in trusts and estates. Pre-Nuptial Agreements also deal with any
real estate that the two of you may own. Once all of the necessary
information, is disclosed the agreement will specify how everything
would be divided between the two of you in the event of a divorce
or upon death. The last thing that a Pre-Nuptial Agreement can do
is clarify if there will be any alimony or support and what
happens in the event of a death.
Pre-Nuptial Agreements are especially useful if you are about to
enter into a second marriage and have children from the previous
marriage. A Pre-Nuptial Agreements is a good tool when trying to
blend families but to also preserve and to balance assets.
A Pre-Nuptial Agreement will clearly state how you want your assets
to be divided or passed on to your heirs.
For instance, if you want your house or other assets to go to your
children (from the previous marriage), and not your new wife,
a Pre-Nuptial Agreement could make that happen. If you did not have
a Pre-Nuptial Agreement in place, your house and assets could easily
be passed to your new wife’s children leaving your own children without
the expected inheritance. As a result, it is important as you enter into
a marriage, to keep your marital and non-marital assets separate,
keep your non-marital assets in your own name, and keep a detailed
record of your non-martial assets. Many spouses will create trusts that
will provide income to a second spouse but will then pass to bulk of the
trusts to the children of the first marriage. By creating a Pre-Nuptial
Agreement you will be able to preserve your assets for your
heirs as well as enjoy the new marriage!
For more information on protecting your blended family,
pre-nuptial agreements in estate planning and using trusts
to protect your heirs from lawsuits call
David M. Frees, III, JD