What Are Prenups?
A prenuptial agreement (also known as a premarital agreement, antenuptial agreement, or simply as a prenup) essentially spells out what will happen to your assets and certain other matters in the event of divorce or death, before you marry. It is a legally binding contract that you and your future spouse sign after full disclosure of your respective debts, assets and income. More specifically, it will identify how any property acquired during the marriage will be divided in the event of divorce, who will get custody of children in the event things turn ugly, and other matters that you want to directly address.
This arrangement is based on the legal principle of "freedom of contract" in which you have the right to enter into a legally binding contract with another party in which you can also waive certain legal rights. It is particularly useful for those who are getting married for a second time, or those who are entering a marriage in which either or both parties have considerable assets . They enable you to make unambiguous decisions and agreements about financial matters, property issues and even child custody arrangements.
Here are the most common clauses you may find in a prenuptial agreement: The above clauses, of course, are just the beginning. While some may seem less "romantic" than the more traditionally desired clauses of a marriage ceremony, they are very different from those found in a will. For example, if you do not have a prenup and you leave your entire estate to your wife in your will, but you divorce her, there is a good chance the former wife will still inherit everything, even if you intend to leave to her ex nothing in the event of your death. In the case of a prenup, however, the contract will hold up in a court of law provided the arrangements are fair and equitable, not strictly for the purposes of one party getting an unfair advantage over the other.
What Are Wills?
Wills and their function: In general, a will is part of a complete estate plan which names your beneficiaries, such as family members, friends or charities. Your will only takes legal effect when you pass away. From a legal standpoint a will is an important document because it names your beneficiaries and allows you to pass on your assets to the people you name, subject to certain provisions of law.
Once you pass away, there is a 30 or 60 day waiting period depending on whether you own real property or not before the executor under your will can distribute your assets. As part of your will, or alternatively as a separate document, you can also name a guardian for any minor children you may have at the time you pass away.
Typically, your will would name the following people: In making your will, you can also specify the particular assets, such as bank accounts, jewelry, or family heirlooms, that you specifically want to pass on to a particular beneficiary or to the named beneficiaries in equal shares. Of course, any debts which you owe to financial institutions or other creditors at the time of your passing must be paid off before your assets can be distributed to your beneficiaries.
How Prenups and Wills Rank in Law
As a general statement, if a conflict arises between a prenuptial agreement and a last will, the prenuptial agreement will normally override the will. This is particularly true when the terms of the will are in direct conflict with the terms of the prenuptial agreement and harmful to the other party’s legally protected interests.
For example, after signing a prenup, Joe received his inheritance from Aunt Edna in the amount of $500,000 and Joe put this amount in a joint account with Sally, Union Bank and Trust. Later, with the intention of abrogating Sally’s right of survivorship, Joe modified the beneficiary designations to provide that Sally is the beneficiary of all funds remaining in the account at the date of death. Because Joe’s action at his mother-in-law’s direction was meant solely to defeat Sally’s right to inherit from him, the court will likely give effect to the prenup. Sally may not be the beneficiary.
This outcome is in accordance with the estate plan created by Uncle Joe prior to entering into the prenup. Sally may now argue that the prenup was not valid because Sally’s inheritance from Joe is the product of fraud and misrepresentation and contrary to public policy. However, courts do not seem convinced by this argument; on the contrary, courts are concerned about disposing of the money in a way contrary to the wishes of the deceased by the probate process.
When Prenups Prevail Over Wills
In certain circumstances, prenups can take precedence over wills. To begin with, the terms of a prenuptial agreement can be explicitly set to supersede a will. Typically, this includes an express provision that the prenup is to take precedence in the event of a future dispute over its terms. However, there are also instances where a prenup by its terms takes precedence over any will, whether or not it expressly says so. Prenups can also take precedence over wills in the event of the unavailability of a will or any other factor that renders the will inapplicable.
In a hypothetical case, suppose that husband and wife enter into a prenup that specifies that his separate property will go to his two children, and the prenup would supersede any will to the contrary. Later, husband dies without a will or without knowledge at the time of his death whether another will legitimately exists. His wife has control over not only one potentially fraudulent will but a second will, which she claims is the actual will. The prenup will probably take precedence over both wills in this scenario.
In another hypothetical case , husband and wife enter into a prenup, which makes his children his heirs in the event of his death without a will. Later, wife dies without a will and is killed in an accident by a train strike. Her sister files an application for letters of administration, making her the administrator (equivalent to executor) of the estate. The administrator occupies the position of a creditor.
The theory of the prenup is that husband’s children have superior claims to the estate than any creditor, including an administrator. However, in this scenario, the wife cannot execute a will leaving anything to her husband. At best, the prenup gives wife’s heirs a claim against his other assets. In all probability, however, the prenup restricts the administration of the estate to exclude the children from claiming their portions. Because the prenup cuts off the kids entirely, then the prenup will probably take precedence over the wife’s sister, who stands in the place of a creditor.
How the State’s Laws Factor In
State laws can play a significant role in the interplay between prenuptial agreements and wills. Most states generally uphold the validity of these marital contracts, provided a set of requirements are met regarding their execution, fairness and voluntariness. However, the particulars can vary significantly from state to state.
For example, many states have adopted the Uniform Premarital Agreement Act, which sets forth certain procedural and substantive requirements for prenuptial agreements. To ensure enforceability, prenuptial agreements are typically required to be entered into voluntarily and must be in writing, signed by both parties. Some states also require that the terms of the agreement be fair and reasonable (although this standard is not widely adopted). Moreover, some states contain mandatory disclosure requirements and place further restrictions on waivers of statutory rights such as rights to alimony. In still other jurisdictions, a sunset provision may limit the duration of the agreement.
Florida also adheres to the Uniform Premarital Agreement Act and has adopted a highly detailed statutory framework setting forth the requirements for a prenuptial agreement. While very few Florida cases address the interplay between a prenuptial agreement and a will or other estate planning documents, the Florida Probate Code is instructive and requires further analysis of how courts will approach the effect of prenuptial agreements in a probate context.
Section 732.702, Florida Statutes, contains a rebuttable presumption that an interspousal agreement regarding the elective share (marital rights similar to dower and curtesy) is enforceable if the agreement evidences the signature of the surviving spouse, contains a form of acknowledgment as prescribed by statute under Chapter 117, Florida Statutes, and another requirement that it be executed before September 30, 2001.
Similarly, Section 732.7025, Florida Statutes creates a statutory presumption that an interspousal agreement regarding elective share waivers is enforceable if the agreement is made after the right to an elective share has arisen and is made between the spouses with full knowledge of the right and its current monetary value.
Additionally, Section 732.7025, Florida Statutes provides for elective share requirements regarding earnings acquired after separation. Further, under Section 732.7025(1), a waiver of the post-1975 elective share must comply with the requirements for revocable trusts under Section 732.5085. Conversely, a waiver of the pre-1975 elective share need only comply with the formalities of execution of a will.
Tips from Professionals on Creating Complementary Legal Documents
When preparing either a prenuptial agreement or a will, it is always best practice to have legal documents reviewed by the other’s lawyer. This is not unusual and can be minimized to a few paragraphs if there are lots of assets that would be discussed by the lawyers. It is usually the case that the assets won’t be specifically mentioned in the prenuptial agreement and the lawyers probably won’t have to address them in the will.
With respect to treating the prenuptial agreement and the will as the expression of the parties, it is recommended that they acknowledge within the will that the will was prepared with the knowledge of the prenuptial agreement. In other words, the will maker might consider a clause saying "[the prenuptial agreement] is hereby incorporated, by reference , into this my last will and testament." By doing so, if the prenuptial agreement speaks about pre-nuptial agreements between the parties or otherwise refers to one another, which is not unusual, the will can be read as referring to any such agreements. It is possible to draft a prenuptial agreement that states that there are no wills in existence. If you do prepare your own will, however, you should think about getting a will prepared by a lawyer, even if it is just to ensure that a current or former spouse does not get anything inadvertently.
An additional point made by Vieira is that one doesn’t have to name that you are the executor of your spouse’s will. You can simply provide that any such will will be administered by a court, and then your lawyer can take steps, if necessary, to reconvene the estate.