What does the world’s richest man, Jeff Bezos, the CEO of Amazon, have in common with all of us? Simply said, he did not properly prepare and think about estate planning. Jeff Bezos has a net worth of $134 billion dollars, which in the near future will be divided in half because he, and his “now” wife never signed a prenuptial or postnuptial agreement. Jeff Bezos will never be poor, but most of us in the same situation could lose a lifetime of earning and savings.
For many clients who are contemplating marriage (or re-marriage after the death of a spouse or after a divorce), an important estate planning consideration will be whether to enter into a premarital agreement with their intended spouse. A premarital agreement is a contract made between a husband and wife prior to the marriage in which the parties agree in advance regarding various legal rights and obligations, including inheritance rights, property division in the event of divorce, alimony and spousal support. Under most states’ law, once a couple marries, a spouse becomes legally entitled to various rights in the other spouse’s property in the event of the death of the spouse or in the event of the parties’ divorce.
For clients entering into a first marriage, a premarital agreement may be advisable, especially for those clients who have significant assets (including closely-held or family business assets) or who may expect to receive significant assets in the future through inheritance or a trust fund.
For clients considering re-marriage following the death or divorce from a previous spouse, a premarital agreement will enable a person to retain control over the disposition of his or her estate at death, free from claims of the new spouse. A premarital agreement can ensure your assets and estate will be preserved for your children from your prior marriage.
Premarital agreements are being used more frequently to determine the economic consequences of marriage, and for preserving assets for children and grandchildren. For business associates, premarital agreements offer an alternative to provide for a waiver of all rights to the spouse’s business interests upon divorce or death.
Be Educated! Be Proactive!