Why Marital Agreements are an Important Estate Planning Tool for Re-Married Couples
By Kiley Stuchlik, Attorney at Law
Individuals often come to second marriages with children from a previous relationship. Additionally, they often already own real property or other significant assets. This dynamic makes estate planning for remarried couples even more important.
In Idaho, if one dies without a testamentary instrument such as a last will, then state law provides that the surviving spouse is entitled to one-half of the separate property of the decedent spouse (if there are surviving issue or parents of the decedent) and all of the decedent spouse’s interest in community property. See IC 15-2-102. At the beginning of the marriage, what is separate property is clear but throughout the marriage, deeds may be exchanged between spouses, joint debt may be incurred with real property pledged as collateral, and property may be bought and sold, all of which, makes the distinction between separate and community property less clear. Given that reality, one can imagine the difficulty in dividing an intestate estate between a surviving spouse and a decedent’s spouse’s heirs upon death, especially if the surviving spouse and the decedent’s other heirs (issue or parents) do not get along.
The good news is that what constitutes separate versus community property can be addressed by agreement. For remarried couples, a common estate planning tool is a marital agreement, also known as a prenuptial agreement, if the agreement is executed before marriage. A marital agreement is simply a document wherein each spouse has an opportunity to not only list the separate property that they own in the marriage, but also to release and waive any interest they would have in the other spouse’s separate property. The reason this is important is because it gives each person an opportunity to give away their separate property to their own children without the property being in jeopardy of being distributed to the surviving spouse and then to the surviving spouse’s children in a way that would exclude the decedent’s own children from receiving any portion of the decedent’s estate.
For a marital agreement to be binding, spouses must engage in a full disclosure of their respective assets. The agreement should include a complete description of all property, with a list of each spouse’s separate property and a list of the property (if any) that the couple will treat as community property. Each spouse must have an opportunity to use a separate attorney of the spouse’s choosing to assist in negotiating the language of the marital agreement. Finally, neither spouse can be coerced or forced into signing a marital agreement. The marital agreement itself will state that each individual is signing of his or her own free will based on each spouse’s knowledge after consulting with an independent attorney or after having been given the opportunity to do so and voluntarily choosing not to consult with an attorney.
Once a marital agreement is in place, it is binding on each spouse and their respective heirs. Each spouse is then free to use their estate planning documents, such as a last will and testament, to provide for specific gifts of separate property upon death. A marital agreement can make distribution of an intestate estate, where a spouse dies without a last will, much easier since the agreement will be binding on the intestate heirs with respect to what is community versus what is separate property. There will be no presumption, or grounds for any claims that the property is community and is thus owned by the surviving spouse.
Besides making distribution upon death more clear and potentially much less contentious, marital agreements can bring peace of mind to the couple and their families. If you’re ready to move forward with a plan of your choosing and gain some peace of mind through executing a marital agreement, a last will and testament, or both, we can help.
Steve Stuchlik - Attorneys at Stuchlik Law PLLC practicing estate planning, probate, real property, and local government law.