Note: a “pre-marital agreement” is the current correct term for a “pre-nuptial agreement,” though many people use the two interchangeably.
I always advise engaged couples to sign a pre-marital agreement before saying “I do.” In my experience, divorce cases where both parties have already laid out plans for how they will part ways as amicably as possible are quicker, easier, and less heartbreaking than divorces with no agreement in place. In other words, it makes more sense to try and reach fair agreements when the parties are getting along as contrasted to trying to agree when there is more animosity between them.
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When we consider pre-marital agreements (or “post-marital agreements”, which are the same type of document that is created after marriage rather than before marriage), most of us think about divorce. Sure, 90% of the document will be detailing arrangements in the case of divorce, but did you know that pre-marital agreements should also address what should happen in the case of your or your spouse’s death?
Pre-Marital Agreements and Death
Under Colorado law, a person can set aside his or her spouse’s will to the tune of 50%. This is called the “elective share”. This means that, if your will says, “I leave everything to my sister,” and then you die before your spouse, he or she can decide, “I’m going to set aside the will and take 50% of everything that was supposed to go to the sister.”
Most pre-marital agreements stipulate that each spouse waives the right to set aside the other person’s will.
This becomes especially important when someone is getting remarried, but has children from the first marriage. For example: one man I worked with was in his 60’s. His first wife had passed away, and several years later he wanted to remarry a woman whose first husband had also died. Both of them had grown children from their first marriages.
On both sides, the parties wanted to leave their estates to their children. Knowing that, upon his/her death, his/her children would no longer have a live parent. Each wanted to have the “peace of mind” of providing for the children. By having this provision in the pre-nup, neither of them had to worry about his/her will being set aside for 50%. This removed this issue, and neither party had to worry about it.
In another case I heard about, a woman in her 70’s remarried. She had children from her first marriage, but her new husband didn’t have any kids. Together, they purchased a home on the coast and were careful to sign a pre-marital agreement.
Since they had purchased the house together, the concern was that, if she died first, her children could demand their half of the house and force the house to be sold. Instead, the agreement stated that if either of them dies, the surviving party would have a “life estate” in the house, e.g., he/she could live there for the rest of his/her life.
After he dies, the house would be sold and the kids would get her half of the house, and his half would go consistent with this will.
Avoid Litigation with a Pre-Marital Agreement
The purpose of a pre-marital agreement is always to avoid litigation. If you don’t have an agreement like that in place, things can easily get very complicated and antagonistic.
Think of the house I just mentioned: if there were no agreement in place, the kids could take their stepfather to Court and create a huge, expensive mess. Or in the case of the man in his 60’s who remarried: if he passed away and half his estate went to his new wife, imagine how furious the kids would be when they suddenly lost half their inheritance.
There are many reasons to have a pre-marital or post-marital agreement put in place. If you are ready to learn more, call my office at 303-449-1873 to set up a complimentary consultation.