When you think of marriage, you likely think of doves, flowers, white dresses, cake, and eternal love, right? When a lawyer thinks of marriage they think of something a little less romantic: contracts! I know it’s not exciting to think of your upcoming nuptials as a contract, but hey, it is what it is. Why not set aside your weird feelings about it and define the financial terms of the marriage instead. Think of a prenuptial agreement as an extra document in your estate plan.
What is a prenuptial agreement?
A prenuptial agreement (better known as a prenup) is a legal document that couples enter into before getting married. This agreement sets out the terms and conditions of what happens if the couple splits up. It can be something as simple as specifying how property will be divided or who will financially support whom in the event of a break-up.
A will vs a prenup
A will and a prenup are very similar. Both are legal documents that set forth the wishes of an individual regarding their estate. Like a will, a prenup can also address a surviving spouse’s rights upon the death of the other spouse. Spouses may choose to waive their inheritance rights entirely or specify what each spouse should receive upon the death of the other.
Best practices for obtaining a prenuptial agreement
Follow these steps if you want your agreed-upon inheritance rights upheld in court.
Before the Save the Dates
It is best to begin the prenuptial agreement process long before your desired wedding date. Waiting until the week or even the month before your wedding may indicate to a future court that the agreement was signed under duress and should not be enforced.
Both parties must disclose all of their assets and liabilities to each other. You should gather your most recent records for any stocks and bonds, retirement accounts, checking and savings accounts, and even an appraisal for your house and car. Make a list of any student loans, personal loans to family or friends, mortgage debt, and car loans. If you do not disclose all of your assets and liabilities, your prenuptial agreement may be invalidated by the court.
After the Honeymoon
After you have signed your prenuptial agreement and married your spouse, your attorney may advise you to record your prenuptial agreement with the clerk’s office. While this is a great option to ensure you will always have access to a copy of your prenup, it is important to note that if recorded, your prenup will become a public record. A more private alternative would be for each spouse to keep a copy of the agreement in a fire and waterproof lockbox with other important documents.
Create an estate plan after the marriage
Shortly after your marriage, you should create or update each of your estate plans with your marital status. Update the estate plans again if you have children.
In conclusion: A prenuptial agreement is financially smart
Prenups are becoming more popular and are perfect for young couples who are still learning how to navigate being an adult in this world. Overall, a prenuptial agreement is not an indication that your or your spouse believes the marriage will fail; instead, it lays a strong financial foundation for the marriage. Both parties walk away feeling protected and confident that there will be no ambiguity or surprises later in life.
If you are not sure if a prenup is right for your situation, consider reaching out to our office. Our attorney can help you figure out what to do. Book your free 15-minute initial call now!
Many people do not begin to think about estate planning until well after they have started a career, gotten married, or had children. By the time we reach the point in our lives where we begin to think about what will happen to our belongings and our loved ones after we die, we have often already experienced big life changes. For many of us, that could mean multiple marriages and a blended family. So when we sit down to work out our estate plan, how do we navigate the murky waters of estate planning for blended families?
Can I use a prenuptial agreement in an estate plan for my blended family?
Just like with other estate planning tools, a lot of couples do not want to think about obtaining a prenuptial agreement. After all, who can blame an engaged couple for not wanting to think about how their marriage might end? However, just like other estate planning tools, prenups have a bad rap. They can be incredibly useful for couples with a lot of assets, or blended families who want to keep certain properties separate. Through a prenuptial agreement, you and your spouse will be able to delegate which property is joint and which is to remain separate. This can make the division of your assets among your blended family a lot easier in the event one spouse predeceases the other.
What is a Life Estate on property in Tennessee?
A lot of the time, when a couple remarries, one spouse will move into a home owned by the other. If this is the case for you, it may be worth considering a life estate.
What is a Life Estate?
A life estate is an ownership interest in real property for the duration of a person’s life. In other words, a life estate will allow the surviving spouse to continue living in the marital home until the end of their life without them inheriting the house outright or passing it down to their own children.
Use a Trust when Estate planning for blended families with multiple children
I want to make sure my children inherit from my estate
In some cases, your spouse may not distribute your estate to your children the same way you would. If you have certain assets or a specific amount of money you wish to go to your children, your best bet is to leave it directly to your children through a trust. Of course, this can be a difficult discussion to have with your spouse, but it may be the best decision for your family.
These are just three estate planning tools to consider for your blended family. There are dozens of others that you, your spouse, and your lawyer may find better suit your needs. Blended families are exciting and rewarding, but it is important to maintain your estate plan through one of life’s biggest changes!
If you’re a blended family with questions about how to create your estate plan in Tennessee, consider contacting an estate planning attorney to discover what is best for your situation.
Every family is different and has different needs. The family unit can be as simple as a married couple or as complex as a blended family with committed partners. Regardless of who makes up your family, you need to ensure that you have adequate legal protection for your partner and any children. This week we will discuss why legal documents like wills, trusts, and powers of attorney are appropriate for unmarried couples and why these documents are important to make sure your family comes first.
*One caveat before we discuss what you can do, let me say what you cannot do. You cannot disinherit your spouse. So if you are in a new relationship but still legally married to someone else, your options will be limited. To read more about this topic, click here.
Tennessee does not recognize common law marriage
Many people believe that even without a marriage certificate, couples who live together for a certain number of years and hold themselves out as spouses to the community become “common law married.” Only about ten U.S. states allow common law marriage, and if you meet the requirements for common law marriage in one of those states before moving to Tennessee then you may qualify to inherit from your partner as a spouse, but it would be an uphill battle if anyone challenged your right to inherit as a spouse. The better (and less expensive) option is to create an estate plan.
Make it as official as you can
While there are some rights and privileges that you cannot achieve without the formality of marriage, we can re-create many spousal rights through an estate plan. An estate plan requires evaluating your family situation, your assets, and your wishes to develop legally binding documents that will meet your goals for decision-making during your lifetime and asset transfer upon death.
Most people don’t like to think about their own death or their partner’s, but this is essential to having a solid plan in place. Estate planning is a big part of my Nashville law practice, and here is what I recommend for families choosing to forgo the traditional contract of marriage:
Create appropriate Powers of Attorney in Tennessee
If you are in a committed relationship and trust your partner to make decisions for you, you should both create the appropriate powers of attorney. A Power of Attorney will allow your partner to have decision-making authority in an emergency situation if you are unable to do so. This can include medical and financial powers of attorney. Depending on your personal comfort level, your partner may also be authorized to act on your behalf and at your direction even if there is not an emergency, for example, if you were out of town for something that had to be done in person like a real estate closing.
Create a Will
When you die, your family of origin may feel entitled to an inheritance in favor of your life partner. Without a Will, Tennessee law is on their side. In order to protect the family you have created with your partner, you will need a properly executed Will. A Trust may also be appropriate depending on your situation.
Consider what will be important to your family of origin when you are gone. Will they be upset if you pass family heirlooms to your partner or children who are not legally related to them by blood? Are there significant assets that they expect will “stay in the family?” If so, and assuming it is safe to do so, I encourage you to discuss your wishes with your family of origin and see what provisions can be made for them. It is often easier for your loved ones to accept your wishes if they heard them directly from you, rather than reading them on paper when you are gone.
In order to make sure that your companion receives any inheritance that you would like them to have, you will need to have a Will and make them a beneficiary of whatever share you would like them to receive. I encourage you to speak to your loved one about your resources and how they would be passed in three scenarios- (1) if you die first, (2) if they die first, (3) if you die together in a common accident. Particularly if you have kept your finances separate, think about how you would gain access to each other’s accounts, how long it would take, and how the family would support itself in the meantime.
Add Beneficiary Designations to your accounts
Many types of accounts allow you to add beneficiary designations to them. The most familiar type is life insurance, but there are many others. If you have retirement accounts like IRAs and/or 401k accounts, look at adding your partner as the beneficiary to those funds when you pass. The same can be done with brokerage accounts and bank deposit accounts.
Rather than going through your “estate” as laid out in a Will, the financial institutions holding money for you will essentially cut a check to your beneficiary when they learn that you have died.
Think about who depends on you?
You need to consider what might happen to your partner when you pass away. Similarly, how would you care for the family if they were to die or become disabled? How can you ensure that any serious long-term disruption to your family life is a bump in the road (at least financially speaking) and not a train going off the rails?
Whether you make significant earnings at your career or you make valuable contributions within the home or both, your family would be lost without you. That’s why it’s important to have a plan in place. If you are a Tennessee resident committed to helping your family, whether married or not, schedule a call with us to talk about how you can protect your family when they need it the most.
Estate planning offers legal protection for families and individuals through all of life’s transitions. Wills, trusts, powers of attorney, and healthcare directives are the most common estate planning tools we use to help clients protect their wishes, safeguard their assets, and ensure provision and care for their loved ones following their death or incapacity.
What Does My Estate Plan Have to Do with My Divorce?
Your estate plan can be impacted greatly if it’s not updated after a divorce. For example, if your ex-spouse has been named as a beneficiary on your life insurance policy, they may still be able to collect the proceeds if you suddenly pass away without updating your documents. Your ex-spouse may also retain authority roles as your power of attorney or healthcare agent unless you revoke such power. As a single adult, you must also name the people you now want to act on your behalf or manage your affairs in an emergency once the role is no longer filled by your ex-spouse.
Won’t a Divorce Automatically Stop My Ex-Spouse from Having Such Power?
While this topic has been introduced in the Tennessee General Assembly, no laws have been passed yet to prevent it. Although a divorce decree will remove your ex-spouse from inheriting under your will or serving as Personal Representative/Executor, it does not remove them from serving under other documents like your power of attorney or healthcare directive. And it doesn’t remove them from inheriting anything they receive as a beneficiary outside of probate such as life insurance, bank accounts, retirement accounts, or trust funds. That is why you must update your documents after a divorce to be certain that your ex no longer has this power.
What Documents Should I Update?
During your divorce, the law prevents you from making many changes to your financial situation or medical insurance. Once the decree is signed though, you will want to review and update the following documents:
Power of Attorney
Beneficiary Designations on Life Insurance Policies
Beneficiary Designations on Retirement Plans
Beneficiaries on any accounts with Payable on Death Provisions
Tennessee has laws that dictate when documents can be updated or altered as you move through the divorce proceedings. It’s important to speak with an experienced Davidson County will and trust lawyer before you make any changes, as any unapproved transfers or changes to your documents could be considered fraudulent. If you need help getting started, we are here to assist you with your planning. Contact our office by calling (615) 846–6201 or click here to schedule an appointment.
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