Married couples can enter into postnuptial agreements that dictate how assets are divided up should a divorce occur or one of the spouses passes away.
The Wall Street Journal reports that the use of postnuptial agreements is increasing in "Why Postnuptial Agreements Are on the Rise." The article says that the most common reason for the agreements is to punish a wayward spouse as a condition of continuing the marriage. However, there is another reason couples might consider a postnuptial agreement.
They can be very useful in estate planning.
Every state has a law that gives a widow or widower the option of claiming a certain percentage of a deceased spouse's estate regardless what the estate plan says. This "election" is known as a spousal elective share. These laws are necessary to ensure that a spouse is not left without means of support.
However, in some cases they make estate planning more difficult, especially when both the husband and wife are independently wealthy or if one or both of them have children from a previous relationship.
Postnuptial agreements can be used in those situations to get around the spousal elective share. For example, they can be used to ensure that a family business goes to the owner's children instead of going to a spouse who could turn around and bequeath it to stepchildren or children from a future relationship.
Postnuptial agreements are not allowed in every state and many states that do allow them have strict rules to limit them.
An attorney can advise you on the laws of your state. However, this is a topic that is on the minds of many couples. The attorney's at Heritage Elder Law & Estate Planning, LLC. can help work through the possibilities in an estate plan. Visit our website to learn more about our FREE workshops.
Reference: Wall Street Journal (March 10, 2016) "Why Postnuptial Agreements Are on the Rise."