THE IMPORTANCE OF PRE-NUPTIAL AGREEMENTS
Question: A number of years ago, when my husband passed away, you handled the administration of his estate. Recently, I met a very nice gentleman, and we’re planning to be married in the near future. I am concerned, however, about protecting the assets I now own and about preserving my children’s inheritance when I die. Could you advise me in this situation? Thanks. And regards to all. Sarah D.
Answer: One way to accomplish this, Sarah is by signing a pre-nuptial agreement with your husband-to-be. A properly executed pre-nuptial agreement can safeguard your assets, protect your children’s inheritances, keep your business in the family, simplify a divorce (should that ever occur) and much more. Actually, we recommend a pre-nuptial agreement in advance of almost every second (or third) marriage. We also suggest a pre-nuptial agreement even in advance of first marriages where there is a substantial difference in the amount of the couple’s respective assets. And, yes, we understand that a pre-nuptial agreement is not a very romantic concept in anticipation of a new marriage—but there are compelling reasons to consider it.
What happens, for example, if your new marriage ends as the result of your death? The law says that your spouse has an absolute right to inherit a portion of your estate (generally one-third) no matter what your Will says. This is of particular concern when you have children from a prior marriage, or other close family members, to whom you would like to leave the bulk of your estate. A pre-nuptial agreement can avoid that problem by stating out exactly what each party agrees to leave to the other, if anything, in the event of death. Your future spouse, for example, can waive (give up) his rights to inherit from you in a pre-nuptial agreement. And while we hope the lyric “Love Is Wonderful The Second Time Around” pertains to you, there is nothing wrong with being smart about going into a new marriage.
A pre-nuptial agreement can also do the following: establish what property will be considered separate or joint; protect one spouse from the other’s creditors; decide whether one spouse will have to pay maintenance (alimony) to the other in the event of divorce; decide how gifts between spouses are to be handled; specify who will pay the mortgage and other bills; and how medical expenses will be dealt with. A pre-nuptial agreement can be as inclusive as you and your future spouse desire. In your case, Sarah, since you have children from a previous marriage, a pre-nuptial agreement is very important because it will make sure that their interests in your estate are protected. Incidentally, having a pre-nuptial agreement doesn’t prevent you from making a gift or bequest to your future spouse. It simply gives you, not a court, the right to make those decisions. In essence, then, a pre-nuptial agreement brings you peace of mind. It lets you know where you stand before you say “I do.”
To be valid, a pre-nuptial agreement must be in writing and signed before the marriage. The agreement must be fair and based on full disclosure of assets and liabilities. We cannot overemphasize its importance—especially in second marriages. Please feel free to contact us if you wish to further discuss this very important subject.
And good luck, from all of us, on your upcoming “nuptials.”