The Pre-Nuptial Agreement

Did you guess this was coming?

If either you or your future spouse has children from a previous marriage, we urge you to sign a prenuptial agreement that spells out all of your property, insurance, and inheritance agreements. The agreement should specify how your separate and marital property will be handled should you divorce. Here are some tips to simplify the process for you:

You'll need to gather together several important documents, including:

• Deeds for any property you own
• Statements from all checking and savings accounts
• Statements from brokerage accounts and mutual fund families
• Statements from pension plans and IRA accounts
• Statements from credit card accounts
• Outstanding mortgage or consumer loan notes

We strongly recommend that you draw up your prenuptial agreement at least 2–3 months before your wedding so that no one can say that either of you signed the agreement under duress.

In addition, make sure that both you and your future spouse have your own attorneys. To find an attorney near you who handles prenuptial agreements, contact your state bar association's referral service. You can get the number through the American Bar Association at 800-285-2221, or go to the ABA's Web site, www.abanet.org. You can also visit www.lawyers.com.

Your Estate Plan

And finally, as with any new marriage, we urge you to review your estate plan and make provisions for your children—and your stepchildren if you have any.

Dolan Smart Money Move: In addition to a pre-nuptial agreement and a will, we suggest you consider a trust because it is more detailed and therefore harder to contest than a will. You may change investments, terms or beneficiaries at any time.

A revocable living trust is best if you want to pass your estate on to your heirs quickly and in the way you wish. You choose a trustee who, when you die, will distribute your estate exactly as you wish.

If you want your spouse to receive financial support from your trust and then have your assets distributed after you're both gone, a qualified terminable interest property trust (QTIP) is a possible solution. The trust is managed by the surviving spouse and a co-trustee. The survivor gets income from the trust and may even take some of the principal (with the co-trustee's approval).

But the surviving spouse can't change the beneficiaries, who will receive the full assets of the trust, often free of federal estate taxes, after the second spouse dies. By making your children the beneficiaries, you protect them from being disinherited by a stepparent in the event that your widowed spouse remarries someone with gold-digging inclinations.

We recommend that you see a qualified estate planning attorney to discuss your particular circumstances.

Related links:

 

• Smart Estate Planning Strategies for a Remarriage

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