Prenuptial Agreements in Estate Planning
As more people marry more than once and later in life, prenuptial agreements have become an important estate planning tool. Such agreements are especially helpful if you have children from a previous marriage or important heirlooms that you want to keep on your side of the family. They are also good for business owners who want to ensure that their business stays intact in the event that their interest in the business is subject to a claim in a divorce or an estate.
Prenuptial agreements are generally associated with the distribution of assets between spouses in the event of a divorce, but can also control the distribution of assets in the event of the death of either spouse.
It is important to make sure your prenuptial agreement will protect you and that it is valid. The following are the major factors needed to ensure this:
Written. To be valid, a prenuptial agreement must be in writing and signed by both spouses. A court will not enforce a verbal agreement.
Unpressured. A prenuptial agreement will be invalid if one spouse is pressured into signing it by the other spouse.
Read & Understood. Both spouses must read and understand the agreement. Both spouses must be given time to read the document and consider it before signing it.
Truthful. Both spouses must fully disclose all of their assets and liabilities. If either spouse lies or omits information about his or her finances, the agreement can be invalidated.
No Invalid Provisions. While spouses can agree to most financial arrangements, a prenuptial agreement that modifies child support obligations is illegal. If an agreement contains an invalid provision, the court can either throw out the entire agreement or strike the invalid provision. Similarly, if the terms of the agreement are grossly unfair to one spouse, the agreement may be invalidated.
Independent Counsel For Each Spouse. Regardless of whether it is required by state law both spouses should seek advice from separate attorneys before signing a prenuptial agreement, it is always best to make sure that each spouse has his/her own attorney and that his/her interest is protected.
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