Prenuptial agreements (also known as premarital agreements) usually are associated with divorce, but they also can play an important role in estate planning. A prenup can help preserve your estate by protecting your assets against creditors and help ensure your property is distributed as you intend.

Election Reform
Virtually every state has laws that make it difficult — if not impossible — to disinherit your spouse. Community property states give spouses a one-half interest in the couple’s community property. Other states give surviving spouses a right of election that allows them to bypass your will and take an elective share of certain property.

The elective share may be a set portion of your estate — one-third, for example — or it may increase the longer you’re married. Even in states without an elective share law, a surviving spouse may have the right to take “against the will.” Regardless of the approach your state uses, your spouse’s right to disregard the terms of your will can wreak havoc on your plans. Perhaps you have children from a previous marriage and you want all or most of your property to go to them. Or maybe your biggest asset is a business and you want to be sure your children or other family members working in the business continue to control it after you’re gone.

A properly written prenuptial agreement can be used to designate which of your assets constitute community or marital property and which remain your separate property. It can give your estate plan “teeth” by waiving community property or elective share rights, ensuring the terms of your will are obeyed. Also, by maintaining certain assets as separate property, you can shield them from your spouse’s creditors.

True Confessions
To ensure a prenup endures even after the marriage ends, it’s essential for each spouse to fully disclose his or her assets and to include a complete inventory of these assets in the agreement. By detailing the property covered by the agreement and making sure any waiver of marital rights is clear, you can avoid future claims that your spouse didn’t understand what he or she was giving up.

It’s also a good idea for each spouse to have a separate attorney. Independent legal representation can help fend off any attempts to annul the agreement on grounds of undue influence, mistake or fraud.

Once you’re married, it’s important to keep your separate assets separate. Even an iron-clad prenup can be rendered ineffectual if you commingle your assets.

To Have and To Hold
One of the benefits of estate planning is the comfort that comes from knowing how your wealth will be distributed when you die. But if your plan calls for your spouse to receive less than he or she can claim under a right of election or community property laws, some of that certainty is lost. A prenuptial agreement can help ease your mind.

Second Thoughts? Consider a Postnuptial Agreement.
What if you’re already married? Is it too late to take advantage of a prenuptial agreement’s estate planning benefits? Many states also recognize postnuptial agreements. They may be scrutinized more closely, however, for signs of fraud or undue influence.

Like all contracts, postnuptial agreements require adequate consideration. The marriage itself provides the consideration for a prenuptial agreement, but a postnuptial agreement requires something more. Some courts find that a mutual release of marital property rights is sufficient consideration, although this argument may not hold up if one spouse owns most of the couple’s wealth. Other courts demand more, such as a transfer of rights to specific assets from one spouse to the other.