Often colloquially called prenuptial agreements or “pre-nup” for short, premarital agreements are not just for the wealthy. In the case of a subsequent marriage, if there are children from a prior marriage they are absolutely vital. The two general categories where a premarital agreement can help are to protect your rights to leave your estate how you wish (typically to the children of the prior marriage), and to protect your assets in the event of divorce. While premarital agreements can be a very useful tool for anyone getting married, this post focuses on premarital agreements for second or subsequent marriages of a person who already has children.
Estate planning considerations
If you have children and plan to remarry, a premarital agreement is absolutely necessary if you want to leave all of your assets to your own children. Put another way, a premarital agreement is necessary if you want to choose how much of your estate will go to your children versus to your new spouse. If you get married without a premarital agreement and you die before your spouse, your spouse has several rights that can affect your estate. The first is the survivor’s allowance of $25,000.00. Any surviving spouse or minor child is automatically entitled to this. The second is the option for your spouse to exercise his or her right to a spousal share. Even if you write a will or trust leaving everything to your children, without a premarital, your spouse can elect to take the spousal share of your estate. This is also called taking against the will. If a spouse does this, he or she can take a certain percentage of your probate property (in rough numbers, between 25% and 50% depending on your exact situation), thus leaving your children from a prior relationship with much less than you likely intended. The third is that your spouse has certain rights to your retirement accounts. Finally, under Indiana law, particularly if you do not have a will or trust, it would be fairly easy for your spouse to be appointed to serve as the administrator of your estate, even if you preferred that someone else (for instance, an adult child) serve in that role. All of these rights can be waived by the new spouse in a properly drafted premarital agreement.
Another category of protection relating to your estate is the question of who will pay for each other’s long-term care (meaning assisted living, nursing care, or in-home care). The cost of long-term care is high now and likely to increase as time goes on. For example, in 2019 the median cost of nursing care in Indiana was $8,517 per month for a private room. Absent a premarital agreement, you could end up paying for your spouse’s long-term care once he or she runs out of money. If your assets are used to pay for your spouse’s long-term care, there may not be much left to pass on to your children. Part of your premarital agreement can state that you are not responsible for paying for your spouse’s long-term care* and vice versa.
The use of a premarital agreement does not mean that you cannot or should not leave anything to your spouse or to help them pay for their long-term care, if that is what you decide to do. The point is to reserve the right to choose to give your money how you want.
Divorce considerations
We hope we have convinced you that premarital agreements are not just for people who ultimately divorce. However, it is true that these agreements can lay out what would happen in the event that you and your spouse do part ways. First, it can preserve the property that you bring into the marriage as yours and your spouse’s as theirs. It can also state that any property that you purchase jointly will be automatically separated 50-50 in the event of divorce. Additionally, while Indiana does not have alimony for ex-spouses, it does have spousal maintenance. Spousal maintenance is only granted in limited circumstances, however, a premarital agreement can waive that right, too. Including these provisions in a premarital agreement can save you thousands of dollars in divorce attorney fees. It may even save you from some of the headaches and heartaches that can arise during a divorce by reducing conflict surrounding property division and spousal maintenance.
While they may not be easy to talk about (they certainly are not romantic), premarital agreements are extremely helpful tools for someone considering marriage or re-marriage. In the case of someone with children, signing a well-crafted premarital is an absolutely crucial step to take before walking down the aisle a second time.
*Even with a premarital agreement that addresses long-term care, there are instances when a spouse may be required to pay for a part of the spouse’s medical care.