Prenuptial agreements are often mentioned in books and films when one half of an engaged couple wishes to make sure their assets will be protected in the event of a divorce, usually when one half of the couple owns significantly more assets than the other. This is certainly one thing prenuptial agreements are used for, but it is by no means the whole story.
Many people choose to draw up prenuptial agreements before getting married as part of asset protection or of efficient estate planning, which becomes useful not only in the event of a divorce but also if one spouse passes away.
Estate planning is one of the areas of expertise of Dr Edgar Paltzer, an attorney-at-law practising in Switzerland. Drawing up a prenuptial agreement can help ensure the wealth is fairly and equitably divided should a divorce or death occur.
Prenuptial Agreements for Second Marriages
Statistics from the West show that many people will marry more than once in their lifetimes. A prenuptial agreement in these cases can help to protect dependants such as children from previous relationships. These may be younger children who remain financially dependent on the parent, or grown-up, financially independent children that the parent wants to ensure will be made proper and fair provision for following their death.
Parties entering into a second or third marriage are also likely to be older and own more assets – they may each own property, have retirement plans in place, or have acquired substantial savings, for example. To protect these assets and avoid conflict in the future, having these assets outlined and ownership detailed within a prenuptial agreement is a good idea.
The short video attachment looks at how some courts deal with prenuptial agreements.
Control Over Personal Estate
A prenuptial agreement can work in conjunction with a Last Will and Testament to help ensure that the person who has passed away retains full control over their estate in terms of where assets go when they die, so their wishes can be carried out.
Where one half of a married couple dies intestate and without a prenuptial agreement, many jurisdictions automatically grant the residuary estate or a large part of the estate to the surviving spouse. The surviving spouse then has the right to grant these assets to whichever beneficiaries they choose upon their own death, with no obligation to include children of their deceased spouse from a former marriage, for example.
The embedded PDF explores the meaning of the term ‘residuary estate’ in a Last Will and Testament.
Legal Contract
For a prenuptial agreement to be legally binding, each party is obliged to provide full disclosure of the entirety of their income and details of any assets owned or financial liabilities. Once the contract has been drawn up, both parties must sign, each being represented by their own individual attorney. This contract must then be notarized, but there is no obligation to file it with the courts.
Within this contract, it is possible for rights provided to one or both parties by law to be waived by mutual agreement. The document can lay out not only the current assets and liabilities of each party, but also rules regarding how certain sums of money can be spent by either spouse during the marriage.
A prenuptial agreement as well as last will and testament can be used in estate planning for the settlement of property rights, to disinherit a spouse, or to remove a family business or asset from the marital estate. These types of clauses can also be set out at a later date, in what is known as a post-nuptial agreement.
The infographic attachment looks at other steps to protect personal assets in the event of a divorce.