Do you really need a prenuptial agreement?

Often prenuptial agreements get a bad reputation. I have had friends and clients say that they do not want to even discuss prenuptial agreements because they feel that signing a prenuptial agreement is “betting on the relationship to fail.” As estate planning attorneys, we don’t handle divorces and don’t want to handle divorces. Still, we often recommend prenuptial agreements, not because we are concerned about the possibility of divorce, but because we are concerned about the certainty of death.

Many people believe that having a Will that leaves everything to their kids should be fine, even if they get remarried. Unfortunately, nothing could be further from the truth. There are two laws that individuals in SC need to know about if they are considering or have recently entered into a second marriage – the first is the Omitted Spouse Law.

What is the Omitted Spouse Law? The Omitted Spouse Law says if you had a Will that predated your marriage – for example, you signed a Will in 2005, then got married in 2007 – and you never updated your Will, then the law assumes that it was an oversight. To protect spouses from being unintentionally left out of a will, our state legislature created the Omitted Spouse Law. The Omitted Spouse Law assumes that the spouse who died would have updated their Will after their marriage if they had thought about it. Since the spouse did not update their Will, the Omitted Spouse Law gives the surviving spouse the same share of the deceased spouse’s estate as they would have received had they never made a Will, which is 50%. Maybe, in some circumstances it really is an oversight, but we have often found that often it was actually a misinformed person who believed they did not need to update their Will or sign a prenuptial agreement because their current Will, that left everything to their kids, was still perfect. In this instance, poor planning caused their kids to lose 50% of their estate.

The second law is the “Elective Share” law. This one is even trickier than the Omitted Spouse law. Basically, the “Elective Share” says that you cannot disinherit your spouse, unless you have a valid prenuptial or ante-nuptial agreement. Using the same example as above, where a person signs a Will in 2005 and gets married in 2007, but where the person then updates their Will in 2008 after their marriage, but still leaves everything to their kids, does that solve the problem? Well, the surviving spouse cannot claim “Omitted” status, because the updated Will was signed after the marriage. But, the surviving spouse can claim an “Elective Share,” which says the surviving spouse is entitled to 1/3rd of the assets of the deceased spouse. The kids would still get 2/3rd, but the surviving spouse would receive 1/3rd.   This means that, again, the children are getting less than their surviving parent intended for them to. This can be especially troublesome when the main asset left behind is the house, family farm, or some other tough-to-divide asset. This can lead to forced sales and lengthy legal disputes.

Even if your new spouse promises they will never make a claim against your estate, if, for instance, they were in a nursing home when you passed away and were incapacitated, would their children feel the same way? Or would they consider asking for a third of your estate to help handle your spouse’s health care?

The better way to handle this situation is to consider going ahead and getting a prenuptial agreement before getting married. This way, both spouses can decide at the beginning exactly what they would want the surviving spouse to receive from their estate (if anything), and you can have peace of mind knowing your kids are going to receive exactly what you meant for them to. If you or someone you know is contemplating a second (or subsequent) marriage, we encourage you to give us a call to at least discuss whether a prenuptial agreement might be a good idea for your situation.

Post A Comment