Prenuptial Agreements and Estate Planning

As an experienced Folsom estate planning lawyer, I work with clients who have signed prenuptial agreements prior to getting married. They often ask about how the agreement plays into estate planning. Prenuptial agreements, often referred to as prenuptial contracts or prenuptial agreements (prenups), serve as legal documents that outline how a couple’s financial and property matters will be handled in the event of a divorce or the death of one spouse. While they are primarily associated with divorce planning, prenuptial agreements can also intersect with estate planning in several ways:

1. Asset Protection: Prenuptial agreements can be used to protect the assets that each spouse brings into the marriage. By specifying how these assets will be treated in the event of divorce or death, a prenup can help ensure that they are not subject to division or distribution according to default marital property laws.
2. Inheritance Rights: A well-drafted prenuptial agreement can establish the rights of each spouse regarding the inheritance of the other’s assets upon their death. This can be especially important when one spouse has children from a prior marriage and wants to ensure that their assets go to those children rather than the surviving spouse.
3. Waiving Spousal Rights: Prenuptial agreements can waive certain spousal rights, such as the right to inherit a portion of the deceased spouse’s estate or the right to claim an elective share, which is a statutory share of the deceased spouse’s estate that a surviving spouse is entitled to in some jurisdictions. These waivers can be crucial in controlling the disposition of assets. In California, spouses cannot be completely disinherited unless they sign a legally valid agreement agreeing to the disinheritance. More on that can be found here.
4. Clarifying Property Ownership: Prenuptial agreements can clarify the ownership and division of property acquired during the marriage, helping to prevent disputes in the event of a divorce or death. This can be particularly important when one spouse owns a business or has significant separate property.
5. Reducing Estate Taxes: Prenuptial agreements can be used strategically to reduce potential estate taxliability. By stipulating the division of assets and the use of estate tax exemptions, a couple can maximize the available tax benefits.
6. Protecting Family Heirlooms: Prenuptial agreements can specify the treatment of family heirlooms and sentimental items in the event of divorce or death, helping to ensure they remain in the family.

Conclusion

It’s important to note that prenuptial agreements are subject to legal requirements and restrictions, and they must be executed with full transparency, voluntary consent, and legal representation for both parties. California has specific laws regarding the enforceability of prenuptial agreements, and it’s essential to consult with a Folsom attorney experienced in estate planning and also a family law attorney to create a prenup that is legally sound and aligned with your objectives.

Moreover, prenuptial agreements should be reviewed and updated periodically, especially when significant life events or changes in financial circumstances occur. To ensure that a prenuptial agreement serves its intended purposes in both divorce and estate planning scenarios, legal counsel and careful consideration are paramount. If you have any other questions about prenuptial agreements and estate planning, contact Thapar Law at 916-579-0605 or send us a message.