Prenup 101: Are Prenuptial Agreements Still Necessary for Couples with Inherited Wealth?
Prenuptial agreements usually establish property rights for each individual, grounds for and amounts of spousal support in the event of divorce, and a surviving spouse's rights in the event of death. Each state has its own laws determining these issues. When a state law evolves, rights change. When a couple moves to another state, rights change. When individuals or couples come to us without a prenuptial agreement, they are often shocked by their rights.
We recommend prenuptial agreements to educate couples about marital property rights before entering the marriage and establish an agreement addressing marital property rights in the future. Prenuptial agreements let the couple decide property rights, spousal support, and surviving spouse rights, no matter how the law or their lives change.
This series will address the common benefits of a prenuptial agreement.
- Inherited Wealth
- Separate Wealth
- Multiple Domiciles
- Second (or Subsequent) Marriages
1. Control of inherited wealth
There are a variety of methods of separating inherited wealth such as using separate accounts or establishing an irrevocable discretionary trust. Usually, some of the wealth is used to support the marriage. Wealth can be used for home improvements, vacations, education, or a monthly stipend. This can become a problem because the distributions can be considered marital property and income. A prenuptial agreement can specify the nature of distributions from inherited wealth in the event of divorce.
2. Inherited Family Business
Problems can arise when determining the nature of an inherited family business, whether it is a marital assets or inherited asset. This typically happens when the beneficiary or the beneficiary's spouse works for the business. The couple will argue about contributions to the business or whether either party's income included growth in the business, among other issues. Because courts default to a marital asset and there are frequently enough facts to support such a determination, a prenuptial agreement will protect the business as an inherited asset for the beneficiary.
Information from a Blog for Jeffer Mangels Butler & Mitchell LLP, "The top 10 reasons 21st-century couples should consider a prenuptial agreement".
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