Prenuptial agreements may not be romantic but they are more than just protecting one’s assets in a divorce. These agreements are binding contracts that are being used more often these days to protect one’s separate delineation of wealth and assets.
Baby boomers are one demographic that is becoming more concerned about estate planning as they embrace this tool to protect assets and property acquired prior to a marriage. They may also be on their second or third trip to the altar and be concerned about keeping their children’s financial futures secure. A prenuptial can be a key factor in avoiding assets and possessions that could later be seized by virtual strangers in a messy divorce.
In estate planning, a prenuptial agreement should be aligned with final wills and trusts. These can sometimes override a person’s last will and testament or build evidence to contest a deceased person’s final wishes. Common mistakes many people make is to forget to redo a will when entering into a marriage or neglecting to keep their estate planning up-to-date with any new ventures they begin.
Lack of a prenuptial can be a roadblock to a surviving spouse’s right to claim up to one-third of a deceased spouse’s estate. It can affect being a beneficiary or becoming a designated recipient of income from a trust. A prenuptial agreement may impact the transferring of a business endeavor into a managed trust. Efficient estate planning that includes a prenuptial agreement can ensure that the business stays in the family and is not passed to a surviving spouse’s family.
Estate planning considerations can iron out problems before they occur. Who gets the vacation home? Where will my retirement plan benefits end up? Who will take care of my stocks and investments? These are not topics normally considered the best for pillow-talk, but having such preliminary conversations can avoid years of heartbreak and dissent for generations to come. Considering this prior to marriage can make estate planning a much more palatable discussion topic.
Source:onlinewsj.com, “Prenups and Estate Planning” Liz Moyer, Nov. 15, 2013