Did you know a prenup agreement can provide clarity and protect assets, debts, and even children’s inheritance rights but can also limit or even eliminate your right to inherit from your spouse? That’s why it’s important to understand how prenups interact with estate laws and to make sure your legal documents are working together, not against each other.
What is a prenup agreement?
A prenuptial agreement, or prenup, is a legal contract signed by a couple before marriage that outlines how assets, debts, and property will be handled in the event of divorce or death. It’s a proactive way to protect individual interests and clarify financial expectations from the start. While primarily focused on premarital assets, prenups can also address how wealth acquired during the marriage will be divided. Prenup agreements can also address the rights of the spouses to seek alimony (i.e., spousal support) in the event of a divorce.
When you hear prenup agreement, you might think of celebrity marriages or safeguarding assets in case of divorce. But did you know that prenuptial agreements can also influence what happens to your spouse’s assets if they pass away? Let’s take a look at how a prenup can impact inheritance rights.
Understanding Spousal Inheritance Rights
In the absence of a will, state probate laws typically grant surviving spouses a portion of the deceased’s estate. For instance, in many states, a surviving spouse may be entitled take from the deceased’s estate an “elective share,” often around one-third of the estate’s assets, regardless of the will’s provisions.
In Tennessee, spousal elective share is governed by Tenn Code Ann. § 31-4-101, which provides that upon the death of one spouse:
| If the decedent and the surviving spouse were married to each other: | The elective-share percentage is: |
| less than 3 years | 10% of the net estate |
| 3 years but less than 6 years | 20% of the net estate |
| 6 years but less than 9 years | 30% of the net estate |
| 9 years or more | 40% of the net estate |
These laws aim to protect spouses from disinheritance and ensure financial support after a partner’s death. However, these default provisions can be altered through legal agreements, including prenup agreements.
How Prenups Can Override Inheritance Rights
Prenup agreements can include clauses that waive a spouse’s right to inherit under state laws. By signing a prenup, both parties can agree to limit or eliminate spousal inheritance rights, allowing assets to be distributed according to their wishes rather than default statutes. Such waivers are generally enforceable, provided the prenup meets legal standards, including full disclosure and voluntary agreement.
Common Reasons to Waive Inheritance Rights in a Prenup Agreement
Couples may choose to waive spousal inheritance rights in a prenup agreement for different reasons, including:
- Protecting separate property to ensure that assets acquired before the marriage remain with the original owner.
- Clarifying obligations regarding pre-existing debt incurred by the spouses prior to the marriage.
- Protection for children from previous relationships to ensure assets pass directly to one’s children rather than a new spouse.
- Preserving family heirlooms or businesses and keeping certain assets within the original family lineage.
- Clarifying financial intentions in blended families and avoiding potential disputes among step-relatives.
Prenup provisions can provide clarity and prevent conflicts among surviving family members.
Potential Pitfalls and Considerations
While prenups can effectively manage inheritance expectations, they must be carefully crafted. An improperly drafted prenup might inadvertently disinherit a spouse without providing alternative support, leading to legal challenges. Additionally, if a prenup contradicts other estate planning documents, such as wills or trusts, it can create confusion and disputes among heirs. That’s why you want to ensure consistency across all legal documents.
Best Practices for Addressing Inheritance in Prenups
To effectively incorporate inheritance considerations into a prenup:
1. Clearly define separate and marital property.
Specify which assets are excluded from the marital estate.
2. Include specific clauses about inheritance rights.
Detail any waivers or entitlements regarding spousal inheritance.
3. Align prenup terms with estate planning documents.
Ensure consistency across wills, trusts, and beneficiary designations.
4. Regularly review and update the prenup agreement.
Reassess the agreement as circumstances change, such as the birth of children or the acquisition of new assets.
Consulting with legal professionals experienced in both family and estate law can help navigate these complexities.
The Bottom Line
A prenuptial agreement can indeed prevent a spouse from inheriting under default state laws, but this outcome must be explicitly stated and carefully documented. By thoughtfully integrating inheritance provisions into a prenup and aligning them with comprehensive estate planning, couples can ensure their assets are distributed according to their wishes, providing clarity and peace of mind for all parties involved.
If you’re considering a prenup or need assistance with estate planning, let’s talk. Hudson, Reed & Christiansen, PLLC is here to help. Our experienced attorneys can guide you through the process, ensuring your agreements reflect your intentions and comply with legal standards. Contact us today to schedule a consultation.