Should my estate plan include a prenuptial agreement?
A pre-nuptial agreement is entered into by future spouses before the marriage in order to specify each parties property ownership and their respective property rights in the event of a divorce. These agreements are beneficial because they provide a couple with financial clarity, reduce the potential of a contentious divorce, and avoid court intervention in questions of property division.
In order for a pre-nuptial agreement to be valid, it must be fair to each party and entered into without coercion. Moreover, both parties must completely disclose their assets, property and debt. While these agreements are often relied on to protect assets in a divorce, pre-nups can also serve as an effective estate planning tool.
Prenuptial Agreements and Estate Planning
By establishing which assets are considered separate property and those that are marital property before the marriage, these assets will not be misclassified in the event that a spouse dies. This is especially helpful for people entering into second marriages, or those who are marrying later and who have accumulated substantial assets.
A well designed prenuptial agreement that is part of a comprehensive estate plan can help to preserve an estate for children from prior relationships, and other family members. By eliminating discrepancies over property ownership, each party can clarify which assets they are legally entitled to give to their loved ones. These agreements can also protect the estate from claims by ex-spouses.
Without a prenuptial agreement in place, it is possible that your assets will not be distributed according to your wishes. This is so because Nevada is a community property state and a spouse is automatically entitled to a percentage of your estate. By having a carefully planned prenuptial agreement, however, you can leave a spouse less than his or her entitled share, provide a higher percentage to children from a previous marriage, as well as designate who will inherit specific property such as family heirlooms.
In short, prenuptial agreements allow both spouses to protect their assets, and ensure their loved ones are provided for, in the event of a divorce or death. In any event, anyone planning to get married needs to have an estate plan in place. If you have questions about how a prenuptial agreement can protect your assets, you are well advised to consult with an experienced estate planning attorney.