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The Important Role of Premarital Agreements in Personal Planning
Posted in Estate Planning

Most people know about premarital agreements from their unfair portrayal in movies and in the media. However, the reality is that the premarital agreement is an important tool for life planning and estate planning. More importantly, they can be drafted to treat each spouse fairly. Premarital agreements are best known for their application in the event of divorce. And, while it is true that a well-drafted premarital agreement can determine the property rights of spouses in the event of divorce, it is a common misconception that all premarital agreements leave one spouse with all of the property, and the other spouse bereft. 

Instead, premarital agreements can be tailored to fit the specific wishes of the couple, for example, protecting the parties’ respective premarital property and/or inheritances, yet providing that all property otherwise acquired during the marriage shall be shared equally. (In Indiana, premarital property as well as property acquired by gift or inheritance constitute “marital property,” subject to division in the event of a divorce, without a premarital agreement.)

Less widely known is that premarital agreements can also be used as an estate planning tool. For example, a party with children from a prior relationship may wish to get remarried later in life, but wants to make sure that, at death, all property is passed on to prior children – say, because the new spouse has independent means, or has been provided for with life insurance. In the absence of a carefully drafted premarital agreement, Indiana law will not permit a spouse to leave all property to his or her children from a prior relationship; the spouse at the time of death is entitled to receive not less than roughly 1/3 of the decedent’s estate. However, such rights can be waived under a premarital agreement, providing the greatest estate planning flexibility.

Premarital agreements are an increasingly popular planning tool to ensure that, when a marriage ends – and they all end, either by death or divorce – property rights are determined according to the parties’ wishes.

If you have questions about premarital agreements or other personal planning issues, contact a member of the Estate Planning Practice Group at Bingham Greenebaum Doll.

To learn more about Michael Kohlhaas and his practice, visit his profile.

  • Partner

    Mike is a partner in Bingham Greenebaum Doll LLP’s Estate Planning Department. The Estate Planning Department seamlessly coordinates and executes a wide array of legal services that cater to the unique needs of high ...

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