– By Amy & Dan Smith
In Virginia, as in most states, a marital agreement can be entered into before or after marriage. It can cover a variety of topics but commonly addresses issues pertaining to the disposition of property upon separation, divorce or death of the parties, including spousal support. The agreement and any amendment thereto must be in writing and signed by both parties. Commonly, lawyers will require a list of assets and liabilities of the parties as an attachment to ensure that the agreement has been entered into with full disclosure. Each of the couple should have his/her own lawyer to avoid conflict of interest.
There is understandably a resistance to the idea of a marital agreement. To say the least, it would likely steal some joy after the marriage proposal for one to suggest to his/her betrothed that, while intending to live happily ever after, they should discuss terms of divorce. However, there is a place for the marital agreement even if divorce is not considered an option for the couple. It is important, especially with second marriages and blended families, that the rights and obligations of the parties upon death be addressed, even if separation and divorce are not included in the agreement.
Each state has statutes giving rights to a surviving spouse to elect a portion of the estate of his/her deceased spouse and to override provisions in a will. Such an election can disrupt a well-considered estate plan intended to benefit the children of the decedent. A marital agreement can specify the rights of the surviving spouse in the estate of the deceased spouse in return for a waiver of the statutory right of election. It can also contain provisions concerning who may serve as agent under a power of attorney and medical directive and as executor of the decedent’s estate. These can be very divisive issues in blended families.
Often, parents want to preserve within their bloodline the inheritance that they intend to leave to their child. They may insist that their son or daughter enter into a marital agreement as a condition to marriage in order to be sure that “grandma’s silverware” doesn’t eventually end up with the son/daughter-in-law either through death or divorce. If a marital agreement is not possible, an alternative is for the parents to leave the inheritance in a trust for the child. Properly structured, the trust could provide the benefit of the assets to the child (and grandchildren) while withholding ownership so that the assets are not available to the son-in-law or daughter-in-law in case of divorce or death.
As uncomfortable as the topic of a marital agreement may be, the fact is that a discussion of sensitive topics before marriage can be a very healthy exercise. Attitudes may be revealed which had hitherto not been apparent in the bliss of infatuation, and thorny issues can be resolved before they are allowed to disrupt family harmony.
Children of a blended family are often comforted to know that issues pertaining to their potential inheritances have been addressed and are being protected by their parent. Sharing the existence of – and in many cases the details of – a martial agreement with children can help to dispel distrust of the stepparent.
The foregoing article contains general legal information only and is not intended to convey legal advice. For legal advice regarding estate planning, the reader should contact his/her lawyer. The foregoing contains general information only and is not intended to convey investment advice. Amy V. Smith Wealth Management, LLC, an independent firm, CFP®, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC. Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel.703-669-5022, www.amysmithwealthmanagement.com) Dan Smith is not affiliated with Raymond James. Past performance may not be indicative of future results.