Planning for the future is an exciting time. This is even more exciting if you are planning on getting married soon, and have a special person to help you plan for the future. Estate plans and prenuptial agreements are two steps that you and your soon to be spouse can review and execute to make sure that you reach your mutual goals. It is important to understand how these two issues may work together in the future.
The central issue with the interaction of prenuptial agreements and estate planning is classification of property. In a divorce in Minnesota, a court will make an equitable distribution of any marital assets or marital debts. However, with a prenuptial agreement, the parties can make an agreement as to which assets are marital assets and which assets are separate assets, and will not be divided in the event the parties are divorced. This is also crucial so that property is properly classified when one of the parties dies. Classification of property is important for an estate plan, for example, because a party cannot entail away what he or she does not own. Accordingly, a spouse cannot leave an asset or a portion of an asset to a loved one if that asset is clearly classified as belonging solely to the other spouse as separate property. Having a prenuptial agreement can also help with issues regarding the elective share. In Minnesota, you cannot simply disinherit your spouse. Instead, even if you totally leave your spouse out of your will, your spouse can claim what is called an “elective share” from the estate, and will inherit regardless of the provisions of your will. However, with a prenuptial agreement, you and your spouse can agree that neither spouse can claim the elective share. This is especially useful where both parties have significant assets, and have children from other relationships that they want to make sure are provided for after their death. Parties need to note that in order for a prenuptial agreement to be binding and valid, strict requirements must be followed, including total disclosure of all assets at the time the agreement is signed.
We have helped many people with prenuptial agreements and estate plans. Call us today at (320) 299-4249 to talk about your case.