Did you know a postnuptial agreement can give you more control over your assets than a will alone? If you want to ensure that your assets are divided according to how you want them to be and not your state laws, then a postnup may be for you. Some states have something called a spousal elective share right, which allows surviving spouses to take a portion of their deceased spouse’s estate (even if they are written out of the will). Say what?! Yeah, that’s right. If you’re in your second or third marriage, this may sound scary to you, especially if you are planning on passing everything down to your kids. Postnuptial agreements are a valuable tool for married couples (especially in blended families) to define how assets will be handled, both during the marriage and in the event of death or divorce, allowing for greater control over how wealth is transferred. Let’s dive in to learn more about passing down assets with a postnup.
First…what is a postnup?
A postnuptial agreement (better known as a “postnup”) is a contract between two spouses who are already married. It differs from a prenup because it is signed when the parties are already married, whereas a prenup is signed before the parties are married. People get postnups to clarify property ownership and division, address spousal support, address financial obligations during the marriage, protect businesses and inheritances, and plan for estate distribution. While a postnup is *not* a type of estate planning document, it is a supplement to an estate plan.
To create a valid postnup, you must follow the rules set out by your state for creating an enforceable agreement. This may include signatures, notarization, witnesses, financial disclosure, and sometimes legal representation.
Why use a postnup to pass down assets?
So, the big question here is why someone would use a postnup to “pass down assets.” Well, a postnup can be a supplemental tool to a fully fleshed out estate plan, such as a will and/or trust. It can help protect assets in the event of a divorce (to ensure assets eventually get to the correct beneficiaries and don’t get lost in a divorce), and it can also specifically ensure spouses don’t receive assets upon death (if that’s what the parties want).
Postnups as part of an estate plan are typically common in blended families where the married couple is on their second, third, or fourth marriage, and they want their children to inherit everything—not their spouse (or maybe they only want to give a small portion of their estate to their spouse but not 50% or more).
What provisions to include for passing down assets in a postnup
Let’s talk about the nitty-gritty of postnups in estate planning. How do you do it? It’s fairly simple—there are several different provisions to include that can assist you in “passing down your assets” vis-a-vis a postnup.
Separate property provisions
First and foremost, make sure your assets don’t get lost in a divorce. If you want to protect your children or other beneficiaries once you pass away, part of protecting their inheritance is making sure that you don’t lose half in a divorce. In your postnup, you should clearly identify which assets you want to make sure remain your separate property in the event of a divorce.
Spousal elective share waiver
An “elective share right” is something some states have that says a surviving spouse can take a portion of their deceased spouse’s estate even if they were written out of the will. It’s a way for states to protect accidental disinheritance and/or purposeful disinheritance. This law typically says a surviving spouse can still take a significant portion of the estate (such as ⅓ or ½). If you are steadfast on wanting your children or other beneficiaries to take most or all of your stuff when you die, then making sure your spouse signs off on a spousal elective share waiver in a postnup is crucial.
Note: even if you waive spousal elective share in your postnup, you can still provide for your spouse in your will or trust in any way you want. For example, you can say that your spouse gets a smaller percentage of your estate or your prized antique collection.
Addressing concerns about postnups
Postnups sometimes get a bad rep. Whether it’s because people think it’s a bad omen to sign a contract with your partner or because they’ve heard postnups don’t stand up in court—we’re going to debunk these for you.
Postnups aren’t a bad omen. They are a way to get on the same page with your spouse. They can facilitate communication, transparency, and proactive planning. You can walk away with a stronger sense of trust in your significant other.
Postnups aren’t always thrown out. While some states may have harsher laws about postnups than others, there are plenty of states that regularly uphold postnup agreements in divorces. Speak with a lawyer in your state if you’re questioning the laws in your state.
Final thoughts on passing down assets with a postnup
The bottom line is that a postnup can be a great supplemental tool to an estate plan. A postnup itself doesn’t pass down assets, but it can help with other things, such as keeping assets separate in a divorce and making sure a surviving spouse doesn’t have a right to an elective share. Postnups for estate planning can be especially important for couples with blended families who have children from previous relationships. Definitely consider adding a postnup to your estate planning strategy if you want to protect your stuff in the case of a divorce and/or if you want to ensure your spouse doesn’t have a right to take a significant portion of your estate after you die.
Nicole Sheehey is the Head of Legal Content at HelloPrenup, and an Illinois licensed attorney. She has a wealth of knowledge and experience when it comes to prenuptial agreements. Nicole has Juris Doctor from John Marshall Law School. She has a deep understanding of the legal and financial implications of prenuptial agreements, and enjoys writing and collaborating with other attorneys on the nuances of the law. Nicole is passionate about helping couples locate the information they need when it comes to prenuptial agreements. You can reach Nicole here: Nicole@Helloprenup.com
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