Smart Estate Planning Strategies

A pre-nuptial agreement allows you to get around state laws that dictate how your estate should be distributed. The key to a rock-solid pre-nup is complete honesty between you and your spouse.

We recommend you draw up your pre-nuptial agreement at least 2 - 3 months before your wedding (so no one can later say that the agreement was signed under duress.) In addition, make sure that both you and your future spouse have your own seasoned matrimonial lawyer. (Contact your local bar association's referral service or the American Bar Association, 312/988-5000.)

Straight Talk Tip: If you're already in your second marriage, it's not too late (and never a better time!) to get your finances squared away. Simply use a post-nuptial agreement. A post-nup works the same as a pre-nup with one twist: A post-nup lets your spouse waive his or her rights to your retirement benefits.

In addition to a pre-nuptial agreement, we suggest using a trust. We recommend a trust over a will because it is more detailed and therefore harder to contest than a will. You can 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 receive the full assets of the trust, often free of federal estate taxes, after the second spouse dies.

Update your trust whenever there is a life changing event, like a remarriage or birth of a grandchild. Otherwise, revisit your trust every three to five years to ensure it's up to date. (For more on trusts, click here.)

All of the strategies and information discussed in this section do not apply to everyone in all circumstances. Consult an estate planning attorney to fashion a specific estate plan that makes the most sense for you, your spouse and family.

We know it's not very romantic stuff, but it's the best way to kick off your new life together.

Want to learn even more smart estate planning strategies? Check out these links:

• The Best Way to Draft Your Will
• Give Away Your Home the Right Way
• Choosing the Right Guardian

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