What does a pre-nup have to do with estate planning? Let me tell you. A pre-nuptial, or pre-marital agreement, outlines how a married couple will handle their assets. It covers more than what happens in a divorce. If we assume the couple will be happily married forever, here are still at least 2 situations that may need planning ahead:
- Who will pay the household expenses during the marriage?
- How will the assets be divided at death?
As an estate planning attorney, I am working on more and more pre-nups. Here is an example of a situation:
A couple, both in their 50’s, are planning to get married. One is a widow, the other is divorced. Both have accumulated some assets and are having success in their careers. Each of them has a couple of kids. How important is it that their assets end up with their kids, rather than the step-kids? Without planning ahead, it will be very easy for the assets to go to the wrong people. How? Suppose they buy a house or hold bank accounts in joint ownership. The family of whoever dies first will lose those assets, unless the survivor voluntarily shares it with the kids. (Read more about Asset Protection HERE.)
They can protect their wealth and their kids by signing a pre-nup, having an up-to-date trust or will, and paying close attention to asset titling (what we call the “funding” of an estate plan). Then they can have peace of mind while living “happily ever after.”
Who do you know that’s engaged? Particularly if it’s the second time down the aisle, it really is best for everyone to consider a pre-marital agreement. Plan ahead now, and avoid the stress and heartache for the family later.