At some point after you get married, you and your spouse may agree to sign a postnuptial agreement. While you may think that a postnup will only affect your assets in case of divorce, it can affect distribution of your or your spouse’s estate too.
What Is a Postnuptial Agreement?
A postnuptial agreement is a legal contract entered into by married spouses after their marriage is finalized. The contract specifies how each spouse’s property will be treated in case of the couple’s divorce or one spouse’s death. For example, a postnup might state that each spouse agrees to give up the statutory share of the other’s estate that he or she would otherwise automatically inherit. Spouses decide to sign postnuptial agreements (commonly called “postnups”) for several reasons, including asset protection, unequal earning power or wealth among the spouses, and even to save on taxes.
Estate Planning Around a Postnup
Because postnups often contain broad waivers of each spouse’s right to receive property from the other, these agreements can substantially affect estate planning. Even if you sign a will that does leave part of your estate to your spouse, a court might still find that your postnuptial agreement is binding on your estate. As a result, your spouse might not receive any of the assets in your estate at all. Or the postnup might provide him or her only a modest stipend from the assets.
It is very important that people who have postnuptial agreements build their estate plans with the postnup language in mind. For example, your postnup could say that your husband will give up his statutory share and that he agrees that all property you acquired during the marriage will be separate (not community) property. You may still want your husband to inherit part of your assets. In that case, your will needs to reflect the existence of the postnup, and you may even want a trust that benefits your husband. There are many ways to plan around such an agreement, depending on your situation.
Changing Your Postnup
If you re-read your postnup while estate planning and realize that you no longer agree with its terms, you may want to change it. Just like for any other contract, you can make changes to the postnup as long as your spouse agrees and signs the revised contract. Once you make the changes, review your estate plan to ensure that it still matches up with the postnup terms and that it will achieve your wishes for leaving assets to your spouse.
Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.
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