When most people hear the words ‘prenuptial agreement,’ they think divorce. Although protection upon divorce is the main purpose of prenuptial agreements, these agreements are also becoming part of routine estate planning for more and more couples. A recent article discusses the estate planning benefits of prenuptial agreements.
Prenuptial agreements are contracts signed by soon-to-be spouses before they marry. The purpose of the agreement is to protect specified assets and income upon divorce. However, a prenuptial agreement can also be used to keep a married couple’s assets separate upon the death of one spouse.
Assuming a couple did not sign a prenuptial agreement and was married upon the first spouse’s death, the surviving spouse is able to claim between one-third and one-half of the deceased spouse’s assets outright. The exact amount that the surviving spouse can claim – which is referred to as an ‘elective share’ – varies by state. Importantly, if the amount that the first-to-die spouse left the surviving spouse is less than the elective share amount, the surviving spouse can take the elective share instead. Through a prenuptial agreement, spouses can avoid this fate.
To effectively incorporate a prenuptial agreement into an estate plan, individuals should be sure that the agreement and their estate planning documents coordinate with each other. Additionally, should a person remarry after putting an estate plan in place, he or she should be sure to revisit that estate plan in light of the new prenuptial agreement to ensure that the documents coordinate.
For assistance coordinating your prenuptial agreement with your estate plan, contact us at (626) 696-3145.
