Marital agreements are typically utilized to help protect individual or family assets. Potential creditors of an individual may come in the form of a divorcing spouse, or a child’s divorcing spouse. Reliance on trusted counsel to help navigate these dealings is critical to developing a plan for asset protection. At Troutman Sanders, we regularly help clients protect themselves from marital and other creditors as a basic part of most estate plans, often in the form of trusts or entities such as limited liability companies. We prepare prenuptial agreements for clients of all ages and stages of life, and we also help clients consider alternatives ways to protect assets, such as the use of trusts, that in certain cases may obviate the need to have a prenuptial agreement.
Pre- and Post-Marital Agreements
State laws govern the disposition of assets in the event of a divorce; however, state laws vary greatly. With more people marrying later in life, and sometimes more than once, these agreements allow a couple to decide how best to divide their assets. By addressing these issues prior to a marriage, when tensions are low, the couple may be able to make any future divorce less acrimonious. Most marital agreements are entered into prior to the marriage (and known as “prenuptial” or “antenuptial” agreements), but agreements may also be entered into after the marriage. A prenuptial agreement also may be amended after the marriage, so long as each side provides adequate consideration for any change.
State laws often permit a surviving spouse to elect to inherit a specified portion of the estate of the first spouse to die, regardless of the provisions of the deceased spouse’s will. In addition to specifying the division of property in the event of divorce, marital agreements often change these default inheritance provisions, limiting or expanding a spouse’s right to inherit property from the other in the event the parties remain married and he or she is the surviving spouse. These agreements are particularly useful when a client wishes to preserve an inheritance for children of a prior marriage, or when the assets include a family business or real estate in which other family members have an interest. Post-marital agreements are also often used by couples that are experiencing issues and desire to separate, but do not want the law to consider all assets acquired during their time apart as marital assets.
Domestic Partnership Agreements
Domestic partnership agreements are typically utilized by those not married to outline the legal and financial details of their relationship. If a couple is not married, partners are not given rights under divorce or probate laws, making it increasingly important to address the manner in which assets brought to the relationship by each person are to be owned and shared. Having a domestic partnership agreement in place helps to avoid the struggles frequently encountered when sorting out commingled finances and shared property.