Marital Agreements. April 2017
By Timothy S. Barkley, Sr.
“Now last time, we were talking about marital agreements. Even if you hold everything separately, your spouse can have rights to the property when you die, and on a divorce.”
Michele and Herb both shook their heads. “No divorces. Been there, done that. We’re committed to working things out.”
“Good deal, but especially in this day and age when more marriages end in divorce than don’t, it can be good to at least think things through.
“And even if you never get divorced – and I hope you don’t – I have bad news for you. Every marriage in this room – yours, mine – is going to end, if not before, when one of the spouses dies.
“And without a marital agreement your spouse has rights in your estate that can mess up your plans. Your spouse gets 1/3 of your estate even if you leave them out of the will, and is the default bene of your retirement plan.”
Herb waved his hand dismissively. “I’d never do anything like that, and I know Michele wouldn’t, either.”
“I’m sure neither of you would,” the lawyer responded, “but if he or she is in a nursing home when you die, the creditors can try to force the exercise of spousal rights in your estate to get themselves paid.
“And the children of the surviving spouse can try to pressure the survivor to exercise spousal rights. The survivor might have dementia, and the kids might be acting under power of attorney, and not even know that you had agreed on anything.”
“Well, after our last meeting I went online,” she said, “and found a form. I tried to read it, but it’s long and just a bunch of legal mumbo-jumbo. Why can’t it just be simple – you know, ‘you keep your stuff and I keep mine’?”
“Well, you see, when you sign a prenup you’re giving up legal rights. For it to do what it’s supposed to do, you have to know what you’re giving up, and you have to do it voluntarily. So there are a lot of disclosures. A lot of them might not be applicable to you now, but might become important later. Whoever drafted the form is trying to cover every possible situation.
“With a marital agreement, you’re giving up – and asking your spouse to give up – four main rights: the right to division of family assets, the right to a share of the estate of the other on death, the right to control the other’s estate as his Personal Representative, and the right to the spousal share of the other’s retirement money.
“Each of these rights requires that you knowingly and voluntarily waive them. And it’s important to put them in writing. That way when people aren’t remembering so well, they can point to the paper to remind themselves and the other person.”
“What happens if we don’t have a lawyer write it? And I read that both spouses should have their own lawyer.”
“It’s not that it’s illegal if you write your own, but if you don’t have a lawyer advise you, then you might leave things out. It’s pretty technical. Kind of like playing quarterback in a game where you don’t know all the rules.
“If you have me draw it up, on behalf of both of you, nobody can claim that you didn’t know what you were signing, didn’t understand it, or were coerced to sign. But one of you could argue that I was working for one of you and not the other, or that you weren’t advised as to your rights and thus didn’t knowingly and willingly waive them.
“So you can go to your own lawyers to have the agreement drawn up by one of them and the other can review it. Or you can have me draw it up and then take it to your own lawyers to review and advise you on your rights.”
“That sounds expensive,” she countered.
“Well, it’s up to you. It’s less expensive than having your settlement fall apart when the first one of you dies.
“If you have me draw it up, I will have you sign something that says that I do not represent either of you against the other, that if you want advice as to your separate rights and interests you need to consult with separate lawyers, that I’m only drawing up an agreement that says what you told me you want to say.
“It’s up to you.”
Attorney Tim Barkley
The Tim Barkley Law Offices
One Park Avenue
P.O. Box 1136
Wills & Trusts | Estate Planning | Probates & Estates
Elder Law | Real Estate | Business Planning