“How Prenuptial Agreements Can Strengthen Your Estate Plan” by Attorney Jon Gasior (Audio)
A prenup, short for prenuptial agreement, is a legally binding contract signed by a couple before marriage. The law requires that prenuptial agreements be entered into voluntarily by both parties and not by coercion or undue pressure. The agreement must be fair, reasonable, and entered into with full understanding. Additionally, both parties must provide full disclosure of their assets and liabilities. It is recommended that both parties have independent legal representation when negotiating and executing a prenuptial agreement.
Here are four ways prenuptial agreements may strengthen your estate plan:
Protection of Separate Property
A prenup can state which assets will be kept separate or which will be considered marital property. This is especially important for the distribution of assets upon death. For example, if you want to ensure a vacation home that has been in your family for generations passes only to your children, a prenup can protect this asset.
Waiver of Rights to Inheritance
Both Maryland and the District of Columbia created the law of spousal elective share to protect spouses from disinheriting one other. Under this law, the surviving spouse can elect to take a fixed amount of the decedent’s estate. A prenuptial agreement is the only way to waive the right to this inheritance contractually.
Avoiding Probate Disputes
A well-drafted prenup can help avoid disputes over the distribution of assets during estate administration by outlining each spouse’s rights and expectations regarding property. Pairing a prenuptial agreement with a comprehensive revocable living trust will strengthen the intention of your wishes on how you wish to pass your assets and keep your estate from court interference.
Estate Tax Planning
In addition to the federal estate tax, both Maryland and the District of Columbia have their own estate tax laws. To minimize these death taxes levied on your assets, we can pair a prenup with additional tax planning strategies to restructure asset ownership or distribution upon death.
Annapolis Estate Planning Attorneys Can Help
Prenuptial agreements and estate plans involve complex legal issues and it is best to work with a trusted advisor. If you have an upcoming wedding date, please contact our office so one of our experienced attorneys can guide you through the prenup process that aligns with your estate planning goals.
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