More and more Americans are getting married multiple times. As multiple marriages become more common, proper estate planning becomes more important. Tools such as prenuptial agreements can create an additional level of protection for you and your loved ones.
Protecting Family Heirlooms: Dave & Mary
Prenuptial agreements can be especially helpful if you or your spouse have children from prior marriages. Many people who remarry would like all or part of their estate to go to their children. Heirlooms or even family homes are often passed on the children. However, without proper estate planning these wishes could be ignored.
Dave and Mary have been happily married for five years at the time of Dave’s death. Both were previously married and both have their own children from said marriages. Dave wants his son to have a watch that has been in the family for generations as well as the house that he grew up in. Sadly without an agreement in place, Dave’s assets and personal belonging will be passed to his wife, Mary. She will get the watch and the house which could then pass to her children when she dies.
This lack of planning was not a malicious act. While Dave and Mary may have discussed his wishes, a formal agreement was never made. Heirlooms important to Dave’s side of the family have been lost.
Protecting Accumulated Wealth: James & Donna
Marriages later in life mean both parties are more likely to come into the marriage with accumulated wealth. Prenuptial agreements can help to preserve property and assets. These agreements protect assets you bring into the marriage from becoming mixed in with assets accumulated during the marriage and simply divvied up as part of the estate after death.
James has a million dollar IRA from his years working at a large technology company. James and Donna get married shortly before he retires and live together on his comfortable pension; both have children from previous marriages. While he wishes his IRA to be split between his children, James never makes his wishes known by putting proper estate planning documents in place. When he passes away, the entire account goes to his wife, Donna. She receives an account which took forty-five years to accumulate and was only married to him for six months.
A Proper Plan
New York is a part of a minority of states that have not adopted the Uniform Premarital Agreement Act. Therefore a lawful prenuptial agreement under New York law needs to respect and conform to New York contract principles.:
- It must be in writing. Under New York Law, prenuptial agreements must be in writing, signed by both spouses and notarized. Verbal agreements will not be enforced by the court.
- It must be agreed to without undue influence or coercion. Both spouses must fully agree with the terms set forth in the prenup. The agreement may be considered invalid if one spouse is pressured into signing the document.
- It must be a truthful snapshot of both spouses’ entire estate. All assets and liabilities need to be fully disclosed. If either spouse lies, the entire agreement can be invalidated.
- It must be fair. A prenuptial agreement that leaves one spouse destitute or without the means to support him or herself, it is likely that a court will strike it down.
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