05 Mar Importance of Prenuptial Agreement in Estate Planning
Importance of Prenuptial Agreement in Estate Planning
By: Barry E. Haimo, Esq.
March 6, 2020
Prenuptial agreements don’t have the best reputation. Because of this, couples – especially wealthy couples – may keep the act of “signing a prenup” secret. They may fear that signing this agreement gives the illusion of distrust or a lack of faith in the marriage.
But did you know that prenuptial agreements can benefit couples even after one member has passed away? They aren’t just used in divorce settlements.
Below, you’ll find information on how prenuptial agreements can be used in your estate planning strategy and what can be done if you did not sign one.
Prenuptials and Estate Planning
A prenuptial agreement is signed before a couple gets married. It lays out terms and obligations that must be fulfilled or recognized throughout the marriage or in the event of a divorce. These terms can vary, although they do not typically include personal matters. For example, the prenup could protect one spouse from the other’s debt liability or reserve assets and property for children from a previous marriage.
The prenuptial agreement can also specify what assets are considered separate property as opposed to marital property. These specifications can help partners in the event of a divorce, but will also make asset distribution easier after one partner has passed away. This separate property can more easily be left to children, charities, or other parties that the partner specifies in their Last Will and Testament.
What Happens if You Don’t Sign a Prenuptial Agreement?
Without a prenuptial agreement, the process of dividing your estate becomes more complicated. Florida is an equitable distribution state – it aims to divide property and assets fairly rather than always dividing property 50/50. This can complicate proceedings. After all, what is considered “fair?”
Spouses may also petition to receive a higher percentage of an estate if they are not satisfied with the original distribution. This can take assets away from the decedent’s children, former spouse, or other people who would have otherwise received assets.
The best way to prevent a drawn-out process or family conflicts is to create a solid estate planning strategy and update it when necessary.
What You Can Do If You Didn’t Sign a Prenuptial Agreement
If you did not sign a prenuptial agreement, all hope is not lost. There are ways to plan your estate to ensure that your assets go where you want after your death.
Sign a Postnuptial Agreement
Postnuptial agreements are becoming more accepted in courts throughout the country. They include generally the same terms as a prenuptial but are signed after the couple is officially married. Making the distinction between separate and marital property can help to clear up any questions after you or your partner’s death and make asset distribution an easier process. However, please note that without a prenuptial agreement or postnuptial agreement, your spouse will have inheritance and other rights whether you like it or not.
Update Your Will
You should update your will after all major life events, including:
- Marriage or divorce
- Moving to a new state
- The birth of a new child or grandchild
Reach Out to a Florida Estate Planning Attorney
Prenuptial and postnuptial agreements can make estate planning easier, but they should not be the sole documents in your estate plan. Learn more by reaching out to a Florida estate planning attorney.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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