Premarital, or prenuptial, agreements are usually associated with pre-marriage planning and divorce.? However, they also provide several benefits for estate planning.? Premarital agreements can protect one spouse from liability for the other spouse?s separate debts and help to implement other estate planning strategies.? When premarital agreements and estate plans are considered in concert, couples can maximize financial planning and estate planning goals and avoid potentially triggering unintended tax consequences or inconsistent estate planning.
In California, a community property state, a surviving spouse has a 50% interest in all community property.? This right supersedes the terms of a will but may be waived in a premarital agreement, which does not necessarily equate with disinheritance.? Waiving community property rights allows spouses to specify the manner in which their assets will be distributed and helps to ensure that estate plans will be carried out as intended.? This may be helpful, for example, in a family business setting.? If one spouse runs a family business with his or her children, a waiver of community property rights will allow the business to pass more easily to the children without the other spouse acquiring an interest in the business, through divorce or inheritance.
There are several other scenarios in which a premarital agreement may affect an estate plan.? Premarital transfers may trigger income and gift taxes; estate tax exemption opportunities for surviving spouses may be missed; and premarital agreements may not comport with estate plans for a family home.? Premarital agreements often provide for the disposition of the family home or give the surviving spouse a right to continue living there.? However, these provisions in a premarital agreement should be drafted such that they will not impede an estate plan?s ability to execute home-related strategies such as transferring the home to a qualified personal residence trust.
If you are interested in learning more about premarital agreements and estate plans, please contact the experienced family law and estate planning attorneys at Lonich & Patton for further information.? Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.? While this post may include legal issues, it is not legal advice.? Use of this site does not create an attorney-client relationship.
Source: http://blog.lonichandpatton.com/2012/partnering-your-prenups-and-estate-plans/
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