Estate Planning and Prenuptial Agreements

 Posted on May 07, 2015 in Uncategorized

When people hear the words prenuptial agreement, they usually think of beginnings—the beginning of a new life together. Estate planning usually brings to mind then end—the end of life. However, these two phrases should really go hand-in-hand, especially when there is a family business involved.

It can be devastating to parents who have worked hard all of their lives to build up the family business to leave to their adult child, only to see half—or more—of that business lost to a child's spouse in a messy divorce.

A prenuptial agreement can be one of the strongest legal documents in estate planning for protecting a family business if a marriage ends in divorce. A prenuptial agreement is essentially a binding contract between spouses which clearly spells out how a marital estate will be divided in the event of divorce. An agreement can also detail what will happen to an estate in the event of a spouse's death.

Under Illinois law, a prenuptial agreement must be in writing and must be signed by both parties, willingly. If it is later proven that one party signed an agreement under duress or coercion, the agreement can be invalidated by the court. Both parties must also provide full disclosure of all assets or the court may throw the agreement out based on fraud. Although attorneys are not required under the law for drafting up prenuptial agreements, the majority of financial and legal advisors recommend both parties consulting with their own individual attorneys.

In terms of estate planning, a prenuptial agreement can protect assets in a variety of ways. As mentioned above in regards to situations where there is a family business, a prenuptial can spell out that any claim to that family business stays with the spouse whose family owns the business. In a situation where an adult child refuses to get a prenup or a future spouse refuses to sign, parents can make legal arrangements to ensure that the business is protected. This not only applies to family businesses, but it can also apply to any major assets the parents want to make sure stay in the family.

Prenuptial agreements can also assist older couples who are marrying by ensuring their estates are divided the way they wish. This is particularly true for couples who have children from prior relationships and want property, financial accounts, etc. to pass to their children in the event of their death.

Whatever your situation, if there are impending nuptials in your family's future, contact an experienced DuPage County estate planning attorney to discuss what the best legal options are to protect your family's future.