Planning to get married is an exciting time. Beyond party details and honeymoon planning, however, there are many practical legal considerations that need to be taken into account, particularly for a second or third marriage. There are legal avenues for protecting pre-marital assets and interests, and many people have children from a prior marriage that they wish to protect and provide for. If your first marriage ended in divorce, and you are receiving or paying alimony, or have minor children, you should consult with a family law attorney prior to your remarriage; remarrying may have a significant impact on child support, alimony and/or custody.
A prenuptial agreement addresses the marrying parties’ rights, obligations and interests in the event of a separation, divorce or death. Having a prenuptial agreement in place prior to marriage is the easiest way to protect your assets and interests, and to streamline or avoid conflict in the event of divorce. If you have not executed a prenuptial agreement prior to the marriage, it is also possible to achieve these same goals with a post-nuptial agreement, which is negotiated and entered into after the marriage, but prior to separation, divorce or death of either party.
In an agreement, whether pre- or post-nuptial, you negotiate provisions for how assets will be distributed in the event of separation, divorce or death. Typically, all property acquired during the course of a marriage is considered by Maryland courts to be “marital property” regardless of how it is titled. This may include any increase in the value of your business interests or real property. In a pre- or post-nuptial agreement, you are able to carve out assets from that marital property characterization. This is accomplished by agreeing that such assets will remain non-marital in nature (in whole or in part), and/or that they will remain your sole and separate property in the event of divorce or your death. Many couples also address payment (or waiver) of alimony in the event of divorce, allocation of certain expenses during the course of the marriage, and other issues.
Regardless of whether you’ve entered into a pre- or post-nuptial agreement, there are some strategies you should consider to protect your pre-marital or non-marital assets. Pre-marital assets are those you owned prior to marriage. Non-marital assets include gifts and inheritances accrued at any time, as well as assets acquired with funds that are directly traceable to pre-marital or non-marital assets.
First, you should consider keeping your non-marital and pre-marital funds in separate accounts from any marital funds. Marital funds include income earned during the marriage, with some exceptions. An easy way to maintain the non-marital nature of assets is to keep them separate from marital assets, to avoid commingling them. This can also be accomplished by using only non-marital funds to maintain and keep up any non-marital assets. If you do not have sufficient non-marital funds to contribute and must use marital funds to maintain those non-marital assets, then you should keep detailed records regarding all funds contributed toward that non-marital asset, and the source of those funds. You should keep any pre- or non-marital property that carries a title in your sole name. For example, adding your spouse to the title of the home that you owned prior to the marriage could be considered by a Maryland Court to be a “gift” to the marriage and may result in a spouse making the argument that the entire home is marital property in the event of divorce.
A pre- or post-nuptial agreement is a contract between two parties that can include provisions to waive the estate rights that exist for a spouse. Accordingly, it is imperative to have estate planning documents that are consistent with your pre- or post-nuptial agreement to ensure that your plans are carried out in the manner you wish in the event of your death. In Maryland, your surviving spouse has an interest in your estate once you pass, despite provisions in your Will to the contrary. A pre- or post-nuptial agreement can deal with this issue, particularly in conjunction with appropriate provisions in your Will, which is why it is important for the two documents to align with each other.
If your prenuptial agreement conflicts with provisions in your Will, it opens the door to challenges against your estate and estate litigation within your family following your death. Furthermore, you may want to provide that certain assets are passed directly on to your children from a prior marriage. Keeping your Will, power of attorney, and advanced medical directive up to date throughout your life is an easy way to protect yourself, your interests and assets, and your family.