Marital Agreements and Estate Planning
Marital Agreements and Estate Planning
by Bart Rice, P.C.
|
As part of estate planning, Marital Agreements are used by those couples wishing to be clear about a division of property at a later time. The number of second marriages and blended families dictates that people at least consider preparing a Marital Agreement sometime during their relationship.
Interestingly, in Colorado, Marital Agreements may be prepared prior to marriage or after two people are married. The rules and procedures for developing a Marital Agreement require integration with Wills, Trusts, and other estate planning documents currently in place or being contemplated.
Laws regarding issues such as Corporations, Partnerships, Limited Liability Companies, Real Estate, Wills, Trusts, and Marital Agreements are state specific. Therefore, new residents should be aware that the laws in Colorado might be very different from the laws where they previously resided.
The following requirements to establish a valid Marital Agreement are set forth only as an overview explanation. Each person expecting to enter into such an agreement should consult with an attorney since the laws, issues, and procedures are complicated and must be explicitly followed.
Requirements to Establish a Valid Marital Trust:
-
- The agreement must be in writing and signed by both parties
- The parties must enter into the agreement voluntarily
- A full disclosure of the financial condition of each party must be provided to the other party
- The agreement cannot violate public policy
- A Marital Agreement must not affect the right of children for child support
- Provisions of the agreement must not be unconscionable
- Each party should be represented by legal counsel
Some relevant issues to be addressed within the Marital Agreement:
- Separate property
- Division of debt
- Retirement accounts
- The rights of a surviving spouse in the event of death
- Payment of various kinds of taxes, i.e. income tax, gift tax, and federal estate tax
- Jurisdictional questions such as the enforcement of the Marital Agreement in the event someone moves to another state
Additional issues which must be addressed:
- Life insurance and disability insurance proceeds
- Distribution of retirement accounts
- Division of business entity interests, such as Limited Liability Company ownership, Corporation interests, and Partnership interests
- Distribution of property to specific beneficiaries
In this age of blended families and multiple marriages, people many times find themselves in disastrous situations when a divorce occurs or when a spouse becomes incapacitated or disabled, or passes away. The cost for legal and accounting representation without planning will be much more costly compared to the preparation of an integrated estate plan and a Marital Agreement.
Click here to visit Mr. Rice's website.
To return to the article archive, click here.