A premarital agreement addresses a couple’s rights and obligations to one another when their marriage ends by divorce or death. A recent Virginia Circuit Court case, In re: Algabi v. Dagvadorj, et al., highlights the importance of ensuring that a decedent’s estate plan is consistent with the terms of his or her premarital agreement; or, in the case where a decedent intends to depart from the terms of his or her premarital agreement, the importance of making this intent clear in the testamentary document. In Algabi v. Dagvadorj, the parties executed a premarital agreement in which they each waived all claims to the other’s estate at death. After the parties were married, husband executed a will under which he arguably intended to leave a share of his estate to his wife. However, because it was not clear from husband’s will whether he intended to provide for his wife, the Circuit Court held that the husband’s entire estate should be distributed to his brother.
It is not uncommon for a couple’s premarital agreement to include a waiver of all spousal property rights at the death of either spouse. Such a waiver allows the parties to achieve certainty with respect to their obligations to one another. When a waiver is included, it may simply be left at that; neither party is obligated by the terms of the agreement to leave any property to the other. Alternatively, the agreement may include a waiver and also go on to provide that either or both parties are obligated to provide for certain assets to be distributed to the other party upon death. Common examples: the agreement may provide for the parties’ primary residence, titled in the sole name of one party, to be retitled in the parties’ joint names within a certain time period after the marriage, so that the surviving party will automatically become the owner of 100% of the property upon the death of the other party; or for a certain percentage of one party’s estate to be distributed outright or held in trust for the benefit of the other party; or for the surviving spouse to be designated as beneficiary of a certain dollar amount of life insurance.
Even when there is a complete waiver, or a limited obligation to a surviving spouse, a party may voluntarily provide for greater benefits for his or her surviving spouse than what is required under the agreement. It is important to understand that a premarital agreement sets forth the parties’ minimum rights and obligations to one another; it does not prohibit the parties from being more generous if they wish to do so.
If you are the party who is obligated to provide for certain property to be distributed to your surviving spouse, or if you are providing for your surviving spouse in a manner that is more generous than what is required under your premarital agreement, make sure the terms of your estate plan are consistent with the terms of your agreement and consistent with your wishes. If you are the party who is to be the recipient of certain property under the terms of a premarital agreement, it is important that you protect your rights. Request a copy of your spouse’s estate plan and any other relevant documents (e.g., beneficiary designations) and ask your attorney to review the documents on your behalf. Understandably, after executing a premarital agreement, oftentimes a couple would rather forget about the process and move on to the marriage. However, there are often post-execution issues, like updating one’s estate plan, that need to be addressed. Don’t neglect these issues. The objective is for your premarital agreement and your estate plan to be prepared in a manner that facilitates the efficient administration of your estate and avoids litigation between your surviving spouse and other beneficiaries. If you have yet to address your estate plan after the execution of your premarital agreement and marriage, or if you question whether your or your spouse’s estate plan is consistent with your premarital agreement or your wishes in general, you should arrange for your attorney to review your premarital agreement and your or your spouse’s estate plan to ensure that your estate plan does not violate the terms of your premarital agreement and that it carries out your wishes.
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A marital agreement can take the form of a premarital agreement, a postmarital agreement, or a separation agreement, i.e., an agreement that settles property rights (and other issues) between parties who intend to divorce. A marital agreement may provide for the disposition of assets at death; it may require one or both parties to provide for the other or […]
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A premarital agreement is a contract between persons intending to marry. It determines spousal rights when the marriage ends by death or dissolution. All states enforce properly made premarital agreements. However, laws governing validity vary among the states. What if a couple signs a premarital agreement in Virginia and later moves to Maryland? Will a […]
Jan White and Linda Ravdin were named yet again on Washingtonian’s list of Washington’s Top Divorce Lawyers. Congratulations, Linda and Jan!