When you think of estate planning, you may not think about prenuptial agreements and how they interact and impact your estate. However, they have increasingly become an important part of estate planning as lawyers must make sure plans take into account existing prenups and outline where such documents should be created in the future.
A prenuptial agreement is a contract between two parties entered into before marriage which outlines each party’s rights, and responsibilities, during the marriage, in the event of a divorce, and after the death of one party. Often used by those who own a business or have significant family assets, prenuptial agreements and estate plans must work together.
Estate Planning and Spousal Shares
Without another agreement in place, regardless of whether a spouse is mentioned in your estate plan, your spouse is entitled to a spousal share of your estate. In Utah, this amount depends on the number of children and whether those children are mutual to both the surviving spouse and the deceased. Unless the spouse has specifically waived their elective share, then no amount of fancy language in the will or protests from the children can remove the spouse’s right to a portion of the estate.
In many marriages, especially those made later in life, both parties have children and assets already and do not want to leave a full spousal share. A prenuptial agreement can state, instead, that parties will execute a waiver of their spousal share. The agreement might also specify that there must be other mechanisms in place to provide for a spouse’s continued comfort such as a trust where the surviving spouse is the beneficiary or life insurance.
Protecting a Business
Business owners, whether or not their partners or family, may want the protection and certainty provided by a prenup. Without this agreement in place, the surviving spouse may be entitled to assets or income from the business as part of their share of the estate. Putting in place a prenup, as well as good business documentation regarding what happens to an individual’s ownership interest at death, can help forestall confusion, business complications, and cost.
Family-owned businesses also require family members to execute prenuptial agreements to help keep both the operating aspect of the business, as well as any real estate, within the family in the event of a divorce or death. While this protection is commonly cited in divorce situations, it is just as applicable when one spouse dies leaving the other with potential interests in family assets that they would have preferred go to their children or other relatives.
The team at Dunn Law Firm works regularly to help individuals with varying family structures and assets to craft estate plans that work to meet their goals. Sometimes, putting together a prenuptial agreement or including a requirement for one is part of meeting those goals. To learn more, reach out to the Utah and Nevada estate planning attorneys at Dunn Law Firm by calling (435) 628-5405 to set up a free consultation today.