How does Prenuptial or Postnuptial fit into my Estate Planning?
Like a Revocable Trust, prenuptial and postnuptial agreements can give one more control over who receives one’s assets during one’s lifetime and upon one’s death. The agreements can limit the ability of individuals to contest Wills, save time and money on asset distribution, and protect one’s privacy. A prenuptial agreement or a postnuptial agreement can be useful when one spouse has substantial assets relative to the other spouse or anticipates getting a large inheritance or distribution from a family Trust. These situations require special attention because of the way that Connecticut Family Law Courts divide assets upon divorce.
A prenuptial agreement is entered into by a couple before marriage whereas a postnuptial agreement is entered into after marriage. Each legal document can protect assets acquired prior to the marriage. This is especially important in Connecticut because Connecticut is an “equitable distribution” state. Equitable distribution essentially means all property of the marriage is considered to be jointly owned regardless of how it is titled. In Family Law Court proceedings, Connecticut also does not distinguish between what each spouse owned before marriage and what they acquired after the marriage.
In addition to prenuptial agreements, another way that spouses are sometimes protected is through the use of a Revocable Trust. Because assets held in a Revocable Trust are not subject to the surviving spouse’s elective share, a Revocable Trust can protect assets that one spouse wants to keep within that person’s prior family.
Prenuptials And Re-Marriage
A prenuptial agreement with an accompanying Revocable Trusts can help individuals who are re-marrying ensure that the assets acquired before a new marriage will be distributed upon death to the intended beneficiaries. Each spouse may have children from a prior marriage to whom they want to leave some or all of their wealth. Prenuptial agreements coupled with Revocable Trusts will keep the assets out of the couple’s community property can help simplify divorce proceedings.
Connecticut law defines what constitutes a legally enforceable agreement in the Premarital and Postnuptial Agreement Act (PPA), which applies to all documents executed on or after October 1, 1995. Enforceability of a prenuptial was updated in 2015 and clarified in the courts.
Both types of agreements of have a simple purpose: detailing how to divide assets in the event of divorce. Achieving that goal becomes more complicated if one spouse has substantially more assets than the other, if one or both partners were previously married, or if either spouse has children from a prior marriage.
The counsel of an experienced Connecticut Trust and Estate attorney and a Family Law attorney can help an individual or couple avoid legal conflicts.
Under the Premarital and Postnuptial Agreement Act and updated in 2015, a prenuptial agreement is not enforceable if the spouse proves any of the following:
- Such party did not execute the agreement voluntarily.
- The agreement was unconscionable when it was executed or when enforcement is sought.
- Before execution of the agreement, such party was not provided a fair and reasonable disclosure of the amount, character and value of property, financial obligations and income of the other party.
- Such party was not afforded a reasonable opportunity to consult with independent counsel.
The law further states that:
- If a provision of a premarital agreement modifies or eliminates spousal support and such modification or elimination causes one party to the agreement to be eligible for support under a program of public assistance at the time of separation or marital dissolution, a court, notwithstanding the terms of the agreement, may require the other party to provide support to the extent necessary to avoid such eligibility.
- An issue of unconscious-ability of a premarital agreement shall be decided by the court as a matter of law.
As to the last point, states generally do not allow one spouse to completely disinherit the other spouse. In Connecticut, the surviving spouse is entitled to one-third of the value of the property passing under the deceased’s Will. This is sometimes referred to as a “spousal share” or an “elective share”. As noted above, a Revocable Trust can be used to minimize the assets which would be subject to this “elective share”. This is because assets in a Revocable Trust prior to death are not subject to the “elective share” of a surviving spouse.
The marital agreements must be carefully crafted and properly executed with the help of a Connecticut lawyer such as Paul G. Holland Jr. in Stonington. An experienced Trust and Estate attorney can answer questions, explain options, and draft legal documents that meet a client’s needs.