Once a tool for wealthy families to protect their assets when heirs got married, prenuptial agreements are now much more common in our society. Typically, such agreements cover property rights and other aspects of asset retention – but they can also set forth provisions for how each spouse will handle drafting their respective Wills. Since prenuptial agreements are increasingly more common today, it is important to understand how they could affect your estate plan. The following information can provide some insight into how prenuptial agreements might impact your estate planning goals.
Prenuptial Agreements and Priority
While you may think that your Last Will and Testament will take priority over other documents as long as it is executed in accordance with the law, that is not necessarily true. In fact, a prenuptial agreement is likely to take priority over your Will depending on the circumstances within the agreement and how it was drafted. Typically, the only way to avoid this would be for an individual to prove that a prenuptial agreement was signed under duress or that the agreement itself was designed in a way that encouraged divorce and exclusion from assets.
Prenuptial agreements may also affect intestacy statutes within your jurisdiction. For instance, if one spouse dies without a legally valid Will, it is possible for a court to look at a prenuptial agreement in order to determine how to distribute assets belonging to the deceased spouse. Often, prenuptial agreements are in fact used to clarify the rights and responsibilities of parties to the agreement and may even be used to settle disputes about the distribution of assets when an individual dies – whether they do so intestate or with a Will.
Prenuptial agreements also have limitations. For instance, you may not be able to use a prenuptial agreement to distribute a small portion of your assets to your spouse and a larger percentage to other heirs. Most jurisdictions, including New York, have what is known as an elective share statute. If the percentage of assets distributed to your spouse falls beneath the elective share, your spouse may be able to successfully challenge your asset distribution.
You Have Options
While prenuptial agreements designed in accordance with the law can have a significant impact on your estate plan, there are still vehicles available to you to ensure that your assets are distributed according to your wishes. Depending on the terms of your prenuptial agreement, you may be able to establish a trust to which you will pass your assets while still alive and then name a beneficiary for that trust. This option may not always be available, but it is one of several that could help you navigate comprehensive estate planning while also dealing with a prenuptial agreement. Not all prenuptial agreements are adversarial, but it is still important to discuss how your individual agreement might impact your estate plan with an experienced estate planning attorney that can help you devise a plan that complies with the law and best meets your needs.