Rory B. Weiner, P.A. is a law office practicing Business Law, Civil Litigation, Real Estate Law, Closing Services, Short Sales, Probate and Wills & Trusts.
Our Law Firm office is located in Brandon, Florida at the Lumsden Executive Park.
We also represent clients in Riverview, Apollo Beach, Seffner, Valrico, New Tampa,
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Prenuptial agreements: No longer just for the rich and famous
Prenuptial agreements used to be only for celebrities, but in the last five years they have become dramatically more common in the U.S., and now it’s quite ordinary for middle-class couple to ask for them.
There’s no one single reason for the change. Rather, a number of factors are working together to make prenups more acceptable – including:
The recession. Many people have seen the value of their homes, pensions and investments shrink dramatically, and they are concerned about protecting what they have left. In addition, a lot of people want to shield themselves from debts brought to a marriage by the other spouse.
Women are more likely to bring substantial assets to a marriage. Years ago, the vast majority of prenups were initiated by men, but today it’s increasingly common for women to ask for a prenup.
A growing number of people are entering into second marriages (or third or fourth marriages), and they want to protect children from prior relationships.
Many people today have memories of bitter divorce battles between their own parents, and they want to prevent that from happening to them.
The social stigma of prenups is far less than it used to be, as more and more people view them as a straightforward financial planning device.
At the same time, the law involving prenups has become clearer, so people can enter into them with more certainty.
Prenups can be a valuable technique for sheltering assets, avoiding expensive divorce battles, and protecting children. However, it’s important to remember that signing a prenup doesn’t solve every problem. Even if you sign a prenup, you have to remember to take certain action (and avoid certain actions) during the marriage in order to preserve the validity of the agreement.
For instance, even if a prenup says that your pension or 401(k) plan will remain separate, your spouse must generally still sign a waiver after the marriage takes place in order to satisfy the requirements of federal pension law. If your spouse doesn’t sign the waiver, then the federal law will override your prenup, and your spouse may be entitled to a share of your pension.
Also, suppose you have an investment account and your prenup says that it will remain your separate property. You’ll want to be careful not to add your spouse’s name to the account, file joint tax statements that include the account, or use joint assets to pay taxes relevant to the account. Each of these things could potentially undermine the agreement by suggesting that you have made the account joint property.
Be careful with joint property and ‘payable on death’ accounts
If you intend to leave your children equal shares of your estate, don’t forget to consider any money or property held jointly with a child. If you have recently added a child to a bank account, own property jointly with one of your children, or have set up a payable-on-death account with a child as the beneficiary, you might want to revise your will, or at least reconsider how the asset is titled.
Here’s why: Property in a joint account passes outside of your estate. If you add a child to one of your bank accounts, perhaps as a convenience because the child is helping to manage your finances, the account will pass to that child alone when you die. This is true for any property held in joint tenancy, or any property in a payable-on-death account.
If your will says that your estate will be divided equally between your children, then only your other property will be divided equally between them. The child named on the joint account will get all that money or property alone.
If you don’t intend for that child to receive a bigger share of your estate, you can add a provision in your estate planning documents stating that any property passing to a beneficiary through joint ownership will be treated as an advance on that beneficiary’s share. In that way, all your children will be treated equally (assuming you have enough assets in addition to the joint property to equalize the shares).