When preparing for marriage, most couples think about the future of their relationship, their finances, and their family. A prenuptial agreement can help address many of these issues before the marriage begins. What is sometimes overlooked, however, is how a prenuptial agreement relates to an existing or future estate plan.

A prenuptial agreement and an estate plan serve different purposes, but they can address some of the same property and inheritance issues. For this reason, it is important to make sure these documents work together rather than unintentionally conflict with one another.

UNDERSTANDING THE PURPOSE OF A PRENUPTIAL AGREEMENT

A prenuptial agreement is a contract entered into by two people before marriage. It can address how certain property and financial rights will be treated during the marriage and what may happen if the marriage ends.

For individuals who already have significant assets, own a business, have children from a previous relationship, or expect to receive an inheritance, a prenuptial agreement can provide an opportunity to establish certain expectations before the marriage takes place.

However, a prenuptial agreement is not a replacement for a will or trust.

HOW A PRENUPTIAL AGREEMENT RELATES TO AN ESTATE PLAN

Estate planning documents determine what happens to your property during incapacity and after your death. A will or trust can identify beneficiaries, appoint individuals to manage your estate, and establish how assets should ultimately be distributed.

A prenuptial agreement can affect some of these same issues by addressing the rights of a spouse.

This means the two should be considered together. If a prenuptial agreement provides one set of expectations while a will or trust provides another, questions and disputes may arise after death.

PRENUPTIAL AGREEMENTS AND PROPERTY RIGHTS

California is a community property state. Generally, property acquired during marriage may be considered community property, while certain property owned before marriage or acquired separately may be considered separate property.

A prenuptial agreement can address how the couple intends certain property to be characterized and managed.

This can be especially important for someone who wants to preserve certain assets for children, protect family property, or maintain separate ownership of property brought into the marriage.

COORDINATING YOUR PRENUP WITH YOUR TRUST OR WILL

If you have a living trust or will before getting married, your estate plan should be reviewed when preparing a prenuptial agreement.

For example, you may have previously named family members as beneficiaries or established a particular plan for distributing your assets. Marriage can change the legal and financial circumstances surrounding that plan.

Rather than treating the prenuptial agreement and estate plan as separate matters, it is important to review them together and determine whether updates are necessary.

WHAT ABOUT BENEFICIARY DESIGNATIONS?

Your estate plan may include more than a will or trust. Life insurance policies, retirement accounts, investment accounts, and other assets may have separate beneficiary designations.

These designations should also be reviewed when preparing for marriage and entering into a prenuptial agreement.

A carefully prepared estate plan can still create unintended results if beneficiary designations do not match the overall plan.

SECOND MARRIAGES AND FAMILY CONSIDERATIONS

The relationship between a prenuptial agreement and an estate plan can be particularly important for someone entering a second or subsequent marriage.

A person may want to provide for a new spouse while also preserving assets for children from a previous relationship. A coordinated prenuptial agreement and estate plan can help address these competing goals.

Planning ahead can also reduce uncertainty and the potential for family disputes later.

KEEPING YOUR PLAN UP TO DATE

Creating a prenuptial agreement is not necessarily the end of the planning process. Life continues to change after marriage.

The birth or adoption of a child, the acquisition of property, an inheritance, a new business, divorce, or other major financial changes may all provide a reason to review your documents.

Your prenuptial agreement, trust, will, and beneficiary designations should continue to work together as your circumstances evolve.

FINAL THOUGHTS

A prenuptial agreement and an estate plan serve different purposes, but they can have an important relationship when it comes to property ownership, inheritance, and the rights of a surviving spouse.

Taking the time to coordinate these documents before marriage can help prevent inconsistencies and provide greater clarity for you and your family.

If you are preparing for marriage and already have an estate plan, or if you are considering a prenuptial agreement, it may be worthwhile to have your documents reviewed together by an experienced California estate planning attorney.

LEGAL DISCLAIMER

This article is intended for general informational purposes only. Any legal analysis or other content should not be construed as legal or professional advice or as a substitute for such advice. No attorney client or confidential relationship is formed by the transmission of information. If you require legal or professional advice, please contact an attorney or other suitable professional advisor. The choice of an attorney or other professional is an important decision and should not be based solely upon advertisements and blog postings.