21st Oct 2016
While some might consider Prenups to be old fashioned or only for those with substantial amounts of wealth and property, the need for Prenuptial Agreement is actually becoming quite commonplace these days due to the increase in the divorce rate and the fact that many couples are marrying later in life. Prenups are also helpful in the unfortunate event of the untimely death of a spouse.
This type of legal document is especially important when it comes to estate planning. If you do not have a prenuptial agreement in place, your spouse has the ability to override your current estate plan. A prenuptial agreement can also protect your children if you wish to will your home to your offspring in the event of your passing. Without the proper documentation in place, such as a Prenup, your spouse could take possession of your home after your death. This is particularly helpful in cases when there are children from a previous marriage.
A Prenup offers protection for both spouses in the event of death or divorce. It helps to start off a marriage with a clear and concise understanding of each other’s financial situations. This will prevent conflicts relating to finances and property, and help build a solid marital foundation. Prenuptial agreements have prevented many conflicts regarding finances and have provided couples with peace of mind for centuries. Couples with Prenuptial Agreements in place have fewer disagreements as to who controls what assets, and what is legally theirs.
A prenuptial agreement is also useful if one of the partners is the co-owner in their family business. This can prevent future issues from arising over business shares and ownership in the event of death or divorce.
It is important to remember that in order for a prenuptial agreement to be seen as legally binding; both parties must disclose any and all property, possessions, debts and assets fully in the document. If there is no Prenup in place, in the event of a death, the remaining spouse has the right to claim ⅓ to ½ of the deceased spouse’s estate (this varies by state). The standard Prenuptial Agreement will waive this claim in the event that the spouse is named the as beneficial in the deceased life insurance policy or if the spouse is the recipient of a trust fund.
Keep in mind that your IRA (Individual Retirement Account) will go to the beneficiary that is currently named in your IRA, regardless of what is sated in your prenuptial agreement. If you wish your partner to be the recipient of your IRA, you must submit the proper documentation to change your IRA.
However, this is not the case with your 401(k) or your personal pension. In the event of your death, the entire account automatically belongs to your spouse, regardless of the length or your marriage. If you had decided to leave part of this sum to your offspring, your spouse must file a waiver with the trustee to give up their rights, which must be signed and witnessed only after the marriage. This agreement must be included in the prenuptial agreement to be considered valid.
Why you should consider a Prenuptial Agreement
It will protect any assets that you have prior to your marriage. This includes anything that you wish to leave to your children from a previous marriage.
A prenuptial agreement will specify which funds from certain sources belong to which spouse (one or both). These include, but are not limited to: stock, business, inheritance, trust funds, bonds, etc.
If you wish to name your children as the beneficiary in your will, retirement fund, or health insurance policy in instead of your spouse.
A prenup can help determine which of the parties shall be responsible for banking, investments and business details.
A prenup can also indicate which partner is responsible for which bills, debts, loans, and other such financial obligations.
A prenuptial agreement will record which possessions, property, assets, etc are considered joint and which are considered separate in the event of death or divorce.
Important Things to Remember When Setting Up a Prenuptial Agreement
A prenup is null and void if it is discovered that one of the parties was pressured into signing the agreement by the other spouse.
A prenuptial agreement is not valid unless it is in writing and has been signed by both spouses. Verbal agreements will not be enforced by a court.
Both spouses must fully read and understand the agreement. If one of the spouses is asked to sign the form without first reading it in full, the agreement can be considered null and void. Both spouses must be given ample time to read and fully comprehend and consider the agreement before signing the it.
In certain states it is required by law from both supposed to consult a separate attorney before signing the prenup. Even if it is not required by law in your state, it is a wise idea to have your personal attorney look over the agreement to make sure your interests are protected before you sign the document.
A prenup may be considered invalid if the terms are grossly unfair to one of the parties.
If the agreement attempts to modify predetermined child support obligations, the agreement shall be null and void, or at least that particular provision shall be discounted.
The Prenuptial Agreement must be 100% truthful. Both spouses must fully disclose all liabilities and assets. In the event of omission or false information, the Agreement is considered invalid.
In the event that an already married couple wishes to form an agreement and did not previously have a prenup in place, they can come up with a postnuptial agreement. A postnup is susceptible to the same terms and conditions of a prenup and is legal and binding.
It is important that both you and your spouse are fully aware of these facts when planning a Prenuptial Agreement. Of course, laws vary by state and it is recommended that you seek legal counsel. A prenuptial agreement is practical and can prevent ugly issues from rearing their head in the unfortunate event of death or divorce.
When you are ready to enter into a prenuptial agreement, turn to the firm with the most knowledge and experience in estate planning and prenuptial agreements. Contact Tompkins Law at 1-714-0044 for a consultation.