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Planning for Second Marriages

Do I Need a Prenuptial Agreement?

When you contemplate a second marriage, you need to consider a prenuptial agreement. I am always in favor of resolving in advance issues that may arise should the marriage terminate.

While prenuptial agreements are often considered as a protective device should the marriage end in divorce, it is equally important as an estate planning opportunity. Having a prenuptial agreement protects how your estate will be distributed if one of you dies during the marriage. A careful estate plan can be undone if the surviving spouse elects to receive the spouse's statutory share rather than accept your distribution plan. The surviving spouse's rights can be waived or modified in the prenuptial agreement.

There are a number of factors to be considered when negotiating a prenuptial agreement. The most important must be how to ensure that your agreement will be enforced if necessary. I always insist that both parties be represented by separate attorneys. The second factor is to make sure that there is full disclosure of all assets.

One important matter that is often ignored is how the prenuptial agreement effects qualified retirement plans (like your 401(k)). Under federal law a spouse has rights to receive a portion of the retirement distributions unless waived. Although the waiver of retierment benefits is included in most prenuptial agreements, a spouse can only waive the federally protected distribution rights after the marriage.