The numbers behind divorce statistics, though improving over the last 10 years or so, paint a somewhat bleak picture. Between about 45 and 50 percent of first marriages end in divorce, while second and subsequent marriages survive less than 40 percent of the time. With all these marriages breaking up, anyone creating an estate plan should give serious thought to including a premarital agreement, also known as a prenuptial agreement or ante-nuptial agreement, in your efforts. Here’s why:
Reason 1: You Want to clearly divide your property in order to create an estate plan.
With a prenuptial agreement, both spouses can specify what property they will each receive in the event of a divorce. This will greatly aid your ability to create a retirement or estate plan that will not have to be significantly changed should you divorce. Through the prenup you can direct who will keep property the couple currently owns, property the couple acquires during the marriage, as well as property either of you owned before getting married.
Reason 2: You want to ensure your children receive a good inheritance even if you don’t divorce.
Let’s be optimistic and assume your marriage will last. Even if you never get divorced, a prenuptial agreement can ensure you have enough property to leave your children a healthy inheritance. If, for example, you or your spouse have children from previous marriages, both of you can choose to waive your right to receive a spousal inheritance. Spousal inheritance laws exist in all states and give spouses the right to inherit a share of a deceased spouse’s estate. Depending on the state in which you live, this can be as much as 50 percent. Through a prenup you can choose to waive this right so each of you can leave your property to your children or to those you select.
Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.