PRENUPTIAL AGREEMENTS AND POSTNUPTIAL AGREEMENTS
Couples who have a prenuptial or postnuptial agreement divide their assets according to their wishes and are not bound to follow the laws of their state when they divorce.
A prenuptial agreement makes divorce simpler, easier, with minimal legal fees because the parties’ have pre-agreed on all property settlement issues in advance.
COMMUNITY PROPERTY STATES
For persons divorcing in one of the nine community property states, your spouse is entitled to half of everything you earned or acquired during the marriage, alimony, and 50% percent of the amounts funded to your pensions and retirement savings plans during the marriage.
Community Property States
- Arizona 2. California 3. Idaho 4. Louisiana 5. Nevada 6. New Mexico 7. Texas 8. Washington 9. Wisconsin
- Remaining states are equitable distribution states
EQUITABLE DISTRIBUTION STATES
For persons divorcing in one of the forty one equitable distribution states, your spouse is entitled to an amount that is considered fair and equitable by the family court judge based on a number of factors, plus alimony. The divorce laws in equitable distribution states encourage combative and contentious litigation. Allegations (often false) of wrongdoing and bad behavior are common place in the divorce proceedings in equitable distribution states and are intended to gain the sympathy of the judge in order to obtain a greater share of the marital assets, and larger alimony payments.
A PRENUPTIAL AGREEMENT PROTECTS YOUR WILL
1.) A prenuptial and postnuptial agreement is not only necessary to protect your assets in the event of a divorce, a prenuptial and postnuptial agreement is also necessary to protect your estate and assure that your bequests are distributed to the inheritor’s according to the terms of your Will.
2.) If you don’t have a properly written prenuptial or postnuptial agreement, your Will can be revoked by a surviving spouse, based on the laws of “Elective Share” and “Homestead”. These laws are statutory rights afforded to a surviving spouse in almost every state.
3.) If it is your intent to bequeath property to your children, family members, or others upon your death, you must have a properly written prenuptial or postnuptial agreement, if you do not, your Will can not be administered according to your wishes.
DESCRIBED BELOW IS WHAT WILL TRANSPIRE IF YOU DIVORCE, AND WHEN YOU DIE WITHOUT A PRENUPTIAL OR POSTNUPTIAL AGREEMENT.
A DIVORCE WITH NO PRENUPTIAL AGREEMENT OR POST NUPTIAL AGREEMNT
If you divorce without a prenuptial or postnuptial agreement and live in one of the nine community property states the court will award your spouse half of everything you earned and acquired during your marriage: half of the appreciation of your assets, half of your salary earned during your marriage, half of your business income, and a percentage of your pensions and retirement plans based on the duration of your marriage.
If you divorce without a prenuptial or postnuptial agreement and live in one of the forty one equitable distribution states, the court will award your spouse an amount the court deems appropriate as determined upon consideration of a variety of factors and based on the current assets and liabilities of both you and your spouse including marital property and separate property, property either party owned prior to the marriage, or acquired during the marriage. Equitable distribution begins with a presumption of equality whereby each party should receive an equal share of the marital assets, however it is in equitable distribution states where a greater share can be realized by portraying the opposing side as having behaved badly within the marriage whereby the other party has been damaged and is deserving of a greater share of the marital assets.
UPON YOUR DEATH WITH NO PRENUPTIAL AGREEMENT OR POSTNUPTIAL AGREEMENT
Only a properly written prenuptial agreement can eliminate a surviving spouse’s ability to void your Will upon your death.
You might be surprised to learn, that at the time of your death, state law requires your surviving spouse to receive a minimum percentage of your estate whether or not she/he is listed as a beneficiary in your will. If you live in an equitable distribution state, of which there are 41, the percentage your surviving spouse will receive is typically between 30% and 50% of your estate. If you live in a community property state, of which there are nine, your surviving spouse is entitled to the 50% of your estate consisting of community property of the marriage.
You might also be surprised to learn, that a properly worded and constructed prenuptial or postnuptial agreement is required to assure that your wishes, as stipulated in your Will, are enforceable under state law. If you have a Will but don’t have a properly worded and constructed prenuptial or postnuptial agreement state law will provide to your surviving spouse an “Elective Share” [Also know as: widow’s share, statutory share, election against the will, or forced share.] An “Elective Share” is a legal term relating to inheritance that describes the portion of your estate that your surviving spouse is minimally entitled to under the law and may claim instead of what you bequeathed your spouse in your will, if anything or nothing. It is a statutory provision that empowers a surviving spouse to choose between taking that which is provided in the Will of a deceased spouse or taking a statutorily prescribed share of your estate. Typically 30% to 50%.
Whether or not stipulated in your Will, upon your death, state law in equitable distribution states, provides to your surviving spouse an automatic statutory right to between 30% and 50% of your estate, in addition to a life estate in your home, a family allowance, your personal property, home furnishings and appliances, up to 2 cars, pay on death accounts whether or not listed as a beneficiary, any and all property you transferred within one year of your death, any property inside a revocable trust, life insurance proceeds whether or not listed as a beneficiary, Individual Retirement Accounts (IRA), Pension Plan, Profit Sharing Plan, Retirement Plans, Employee Benefits Plans.
Homestead Rights/Life Estate: Is an automatic statutory right a surviving spouse and minor children have to occupy or use the family homestead. A surviving spouse has a statutory right to occupy a family homestead for the duration of her/his life. Minor children have the right to occupy the family homestead until adulthood. In most states it is an automatic statutory right of a surviving spouse to continue to occupy the family home for the duration of the surviving spouse’s lifetime, even if the family home has been bequeathed to a different beneficiary in the decedent’s Will. A surviving spouse, with no minor children, has the exclusive lifetime right to use and occupy the family homestead as if it were her/his sole property.
This is the right of a surviving spouse to take a life estate in your home at the time of your death.
Most states award a surviving spouse homestead rights. This means your surviving spouse will receive a life estate in your home, in order words your surviving spouse will have the exclusive right to occupy your home for the remained of her/his life. In the state of Florida a surviving spouse has an additional right to force a sale of the family home. The proceeds of the sale will be distributed fifty percent to your surviving spouse and fifty percent to the beneficiary to whom you bequeathed the family home in your Will.
Whether or not stipulated in your Will, upon your death, state law in community property states provide to your surviving spouse an automatic right to not less than half of the community property of your estate, a life estate in your home, a family allowance, your personal property and home furnishings, pay on death accounts whether or not listed as a beneficiary, any and all property you transferred within one year of your death, any property inside a revocable trust, life insurance proceeds whether or not listed as a beneficiary, Individual Retirement Accounts (IRA), Pension Plan, Profit Sharing Plan, Retirement Plans, Employee Benefits Plans, and up to 50% of your sole and separate property or non-marital property.
Elective share rights of a surviving spouse override pay on death accounts where the designated beneficiary is someone other than the surviving spouse. Banks allow account holders to designate the funds in an account to be transferred to a designated beneficiary upon the death of the account holder. However, a surviving spouse has the ability to take an elective share of your entire estate including pay on death accounts, as well as any and all property you may have transferred within the one year period immediately preceding your death, and any property inside a revocable trust.
Only a properly written prenuptial agreement can eliminate a surviving spouse’s rights to take an elective share against your estate and homestead rights.
If you have a Will but bequeath your surviving spouse less than one third or one half (depending on the laws of your particular state) your surviving spouse still has the right to take up to one half of your estate under state law unless you have a properly written prenuptial agreement.
If you do not include your surviving spouse in your Will your state will require that she/he will receive a pretermitted share of your augmented estate. This is typically one third to one half of your estate, all property owned by you, property transferred within one year of your death, property inside a revocable trust (also known as a living trust), and pay on death accounts.
Augmented Estate: An augmented estate can exceed what is contained in the decedent’s Will. For example, an augmented estate can include any property transferred or gifted to third parties within one year of the decedent’s death, Pay on Death Accounts, Transfer on Death Accounts, In Trust For Accounts with named beneficiaries, property or accounts held in survivorship estates the balance of which would otherwise automatically become the property of the other party named on the account upon the death of the testator. The decedent’s interests in joint accounts; revocable trusts, half of any property held as tenants in the entirety or in common, life insurance policies, the value of pension plans, property held jointly with the surviving spouse, property inside a revocable trust (also known as a living trust).
Pretermitted Share or Omitted Share: All states give spouses the legal right to inherit a portion of their deceased spouse’s estate. Assuming there is no pre-marital agreement, a surviving spouse who is not included in the decedent’s Will may take a pretermitted share or an elective share. The pretermitted share is the same as an Elective Share. See above. Only spouses who have expressly agreed to be excluded from a will, through a prenuptial or postnuptial agreement, will have legally forgone their right to an inheritance.