Prenuptial Agreements and Estate Planning
Divorce is simply a fact of life these days, and the number of people who end up marrying more than once continues to grow. That makes prenuptial agreements a nearly essential element of estate planning these days. This is especially true for those who have children from a previous marriage, or if there are specific assets you want to keep on your side of the family.
For example, suppose your desire is to pass your home on to the children from your first marriage when you die. Without proper planning and a carefully drawn prenuptial agreement in place, your second spouse could potentially end up with the house, and could even pass it on to his or her children at the end. To make sure your wishes are carried out, you need to plan now.
For a prenuptial agreement to stand as a useful estate planning tool, however, you'll have to make sure it's valid, which means certain standards must be met. The agreement must be in writing and it must be signed by both spouses. No court will ever enforce a verbal prenuptial agreement. The agreement also won't be enforced if there appears that one spouse was pressured into signing, which means both spouses must have entered into the agreement of their own free will. Both spouses also must have read and understood the document, and everything disclosed in the agreement must be true and complete. In some states, spouses may be required to seek advice from separate attorneys, as well.
There are several things to consider while in the process of creating the prenuptial agreement as an estate planning tool. One has to do with retirement accounts. If the prenuptial agreement doesn't have a section dealing with wages, there will be a community property interest in that retirement account.
Another problem that crops up a lot comes with the concept of the life estate. This type of estate allows a property such as a family home to be used by the surviving spouse while alive, with the property reverting back to the children form a previous marriage once that spouse dies. This is a nice thing to do, but because those children are third party beneficiaries, they're entitled to inspect the property and express any concerns they might have about it in a probate court. What this means is, if the children from the first marriage don't like the second spouse, they can create a serious harassment issue, and could cause the property to have to be sold to eliminate the problem. One possible way to avoid such a problem might be to refrain from giving the asset to the second spouse, and transform that asset into cash and give that instead.
A prenuptial agreement can definitely be a great way to prevent legal problems from voiding your estate plan, or keeping your wishes from being fulfilled. You should consider looking into creating one.