Estate Planning
· My spouse and I have a prenuptial agreement. How does it affect our estate planning?
Any prenuptial agreement can dramatically alter or nullify an estate plan. For example, the agreement may contain provisions for the dis-position of assets at death, and, if not, it probably defines property ownership—which property is considered separate and which is considered joint. In any event, a marital agreement will likely have a very significant impact on both tax and nontax estate planning, so it is essential that you provide your estate planning attorney with a copy of the agreement.
Because the terms of a marital agreement may conflict with the estate planning goals of one or both spouses, ethical considerations may require that each spouse be represented by a separate estate planning attorney.
· I have substantial assets and am thinking about getting married. Could a living trust be used to keep the assets I own before my marriage segregated from property acquired by me and my new spouse during marriage?
Yes, a living trust is an excellent way to keep separate property assets, or assets acquired before a marriage, from being commingled with assets acquired during the marriage. Since the premarital assets are in a living trust, it would be impossible to commingle them with the assets acquired during the marriage unless the commingling was intentional.
To give even more protection, consider coupling a living trust with a premarital property agreement specifying that all the assets in the living trust, along with their increase in value, interest earned, dividends earned, and future appreciation, are immune from the claims of the other spouse and his or her creditors.
To properly accomplish your desire, you must discuss your state’s marital property laws with an attorney who practices in this area of the law.
· I am thinking about getting married. Should I consider a pre-nuptial agreement as part of my estate planning?
Many clients find it hard to consider the need for a prenuptial agreement when they are about to be married. To them, asking their future spouse to sign such an agreement implies a lack of trust. Consequently, they miss an important opportunity for estate planning. Obviously, a young couple without substantial assets usually does not need a prenuptial agreement. But when either of the parties brings significant financial worth to the marriage or when other factors, such as the existence of children from a previous marriage, come into play, a prenuptial agreement is particularly warranted.
A prenuptial agreement can cover a wide range of topics, from sharing future earnings to waiving rights of inheritance to dividing housework. The most effective prenuptial agreements result when each party is represented in the process by independent counsel. Independent representation reduces the chance that a party will be able to set aside an agreement on the grounds of undue influence, mistake, or fraud.
Full disclosure of assets is also an important factor in creating a durable prenuptial agreement. With full disclosure, the effectiveness of a successful attack on the agreement is remote.
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