How a Prenuptial Agreement Can Protect Your Estate

Feb 2, 2018

There are many circumstances that can impact an estate plan, not the least of which is your marital status. Spouses are granted a wide variety of rights to each other’s property in the event of death or divorce.

While the laws do vary from state to state, there is often a difference in how marital property is treated compared to non-marital or separate property in a divorce. It is important to understand that difference.

Marital property is any property that is acquired during the marriage such as houses, cars, retirement plans, 401(k)s, IRAs, life insurance, investments and closely held business, regardless of who owns or holds title to the property. Separate or non-marital property includes any property owned by either spouse before the marriage, as well as gifts or inheritances received by either party prior to or after the marriage.

In the event of a divorce, the courts will divide marital property in a fair and equitable manner. Non-marital property can remain with the original property owner, provided the non-marital aspect of that property is proven.

One way to prove the non-marital aspect of property and protect an estate in the event of a divorce is to put in place a prenuptial agreement. This legal document specifies each party’s property ownership and clarifies their respective property rights should they end the marriage. A prenuptial agreement can reduce the conflict that is normally associated with divorce, avoid court intervention regarding questions of property division and also serve as an effective estate planning tool.

A prenuptial agreement is also beneficial to those who are entering into blended families because it will help to preserve the rights of children from prior relationships. A well-designed agreement will distinguish separate property from marital property so that those assets are not misclassified if one of the spouses dies.

In the end, a prenuptial agreement can enable each spouse to protect their assets and provide for their loved ones in the event of divorce or death. If you are considering marriage and have children from prior relationships or significant non-marital assets, it is essential to put a comprehensive estate place that includes a prenuptial agreement.