Prenuptial Agreement
The Relation Between a Prenuptial Agreement and a Will
A prenuptial agreement isn't always a pleasant topic that most people want to discuss with their significant other. People tend to take this subject not so lightly, they start to question trust and start to feel a bit betrayed by they're partner. Most people don't realize how beneficial a prenuptial agreement can be to their financial assets. While no one is thinking about a divorce when they get married, about one half of all marriages in America end up in divorce proceedings.
What is a Prenuptial Agreement?
A prenuptial agreement should be considered a legal solution for both parties involve should the marriage not work out. A prenuptial agreement or prenup is a common legal step taken prior to marriage. It establishes the property and financial rights of each spouse in the event of a divorce. A prenuptial agreement isn't just for the wealthy, it can also protect family businesses and serve other important functions.
A Prenuptial Agreement is Important...
A prenuptial agreement is a valuable tool to be used to ensure financial stability once the marriage falters. Many lawyers weave spousal support right into the prenup so division of assets is delineated before it becomes an issue. Likewise, there will be clauses pertaining to preserving the financial stability of the minor children, long before they arrive. Sometimes, of course, the children precede the marriage vows, so a legal expert, such as a divorce and family lawyer, may update your prenuptial agreement to ensure that the financial assets will be directed to your children, instead of your spouse. In the event of a second marriage, or blended marriage, where children from one or more prior relationships may live in the household, a prenup will ensure your spouse will not acquire assets or property for his or her children as opposed to YOUR children.
Under New Jersey law, a spouse generally cannot fully disinherit the other. Instead, the surviving spouse has the option of taking what is granted to him or her under her will, or electing against the will. The surviving spouse usually has the right to 1/2 of their deceased spouse's estate. A spouse who chooses to claim the elective share is entitled to 1/3 of the estate. However, the right to an elective share can be waived in a prenuptial agreement.
Why a Prenuptial Agreement?
Prenuptial agreements protect assets that may be subject to marital property laws. These documents may be used to: clarify financial responsibilities of the parties, determine the manner in which property is passed on after death, simplify property division in the event of divorce, protect specified assets of one party, and protect one party from taking the debts of the other.
Pros and Cons
Pros
- Protect the family business and its assets. If you have your own business or professional practice, a prenup can protect that interest so that the business or practice is not divided between you and your spouse upon divorce.
- Supports your estate plan without the court having to be involved in the future.
- Limits the amount of spousal support to be paid upon divorce.
- It protects the inheritance rights of children and grandchildren from a previous marriage.
- Fewer property conflicts during a divorce.
- Avoids shared debt liability. If one spouse has significantly more debt than the other, a prenup can help protect the debt-free spouse from assuming the obligations in case of a divorce.
Cons
- It can create distrust and dull the relationship.
- A prenup may require you to give up your right to inherit from your spouse's estate when he or she dies.
- One spouse may agree to the terms that are not in his or her best interests in the beginning of the relationship, and he or she may not be too concerned about the financial aspects at the moment. This could be a problem later on.
- If you contribute to the continuing success and growth of your spouse's professional practice or business by bringing in new clients, you may not be entitled to claim a share.
- You cannot address child support or child custody issues in a prenup.
- A judge may rule parts of the prenup unenforceable.
Last Will and Testament and Prenuptial Agreement
When entering into a prenuptial agreement it is important that couples understand the impact that the prenup could have to terms of their estate plan. Most people make the mistake of treating prenuptial agreements and wills as separate and unrelated protections. Your Last Will and Testament should work in conjunction with your Prenuptial Agreement to protect your separate property. Both documents should be consistent with your current wishes to prevent any issues in the future among your beneficiaries.
What is a Last Will and Testament?
A Last Will and Testament is a document created by an individual, known as the "Grantor", which is used to layout how a person's real and personal property shall be distributed after their death. It provides who will inherit your property, when and how they will inherit it, and who will be in charge of settling your final affairs.
Executor's Responsibilities Are....
The person in charge of settling your affairs will serve as the Executor, he or she will ensure that your beneficiaries receive their inheritance. The executor or personal representative of your estate has many responsibilities, among them, selling any real estate you have an interest in or pledging it to a designee of your choice, paying any financial obligations such as debts, funeral expenses, taxes and estate administration expenses. This permits your heirs to receive their shares without deductions or complications.
A personal representative, or executor, may also be instrumental, not only in the handling of the financial aspects of your will, but also may be the same person designated by yourself to make all funeral/memorial service arrangements as you may have pre-planned, thus sparing your family agony of doing these tasks during the initial grieving process.
You should...
Always make sure your Last Will and Testament reflects your current situation and is updated when need be. Some life events in which your Last Will and Testament should be updated are: in case of major illnesses or surgery, the birth or adoption of a child, marriage or separation, and increase or reduction in assets or debts.
Prior to having an estate planning attorney begin the draft of your Will, you will need to think about choosing your beneficiaries. The common types of beneficiaries are usually your spouse, children, extended family or charities. You will also need to appoint a guardian for your minor children. When one parent dies, the other automatically gets custody of the minor, but if both parents die, or if the other parent is unfit, your Will should state who you appoint as guardian. It is also important to appoint the right person as executor, as administering an estate can be a complex undertaking. It involves handling probate court process, locating beneficiaries, notifying government agencies of a person's death, and much more tasks.
Why is a Last Will and Testament Important?
A Will helps you decide how your estate will be distributed. If you die without a Will, there is no guarantee that your intended desires will be carried out. You decide who will take care of your minor children. A person you trust, who you want to raise your children. A Will helps avoid a lengthy probate process. It speeds the probate process and informs the court how you would like your estate divided. It also minimizes estate taxes and makes gifts and donations of your choosing. Since wills outline how you would like your estate distributed, without a Will your estate could end up in the wrong hands, with a Will in place you can disinherit individuals who would otherwise stand to inherit.