By David DePuy (originally published 4/24/2014)
Many parties marrying for the first time may wish to keep their finances separate. Certainly many parents or grandparents would like to ensure that inheritances or gifts to their children or grandchildren actually remain the property of the children or the grandchildren rather than having half go to the ex-spouse of a child or grandchild. Owners of family businesses similarly may wish that only members of the family become stockholders in the business – not former spouses of a family member.
Prenuptial agreements allow a couple to dispose of their assets as they wish upon death. In New Hampshire a spouse may “take against the will” of the marital partner. Generally, this right allows the spouse to take a one-third share of the other’s probate estate if inadequate provision is made for the surviving spouse under the will. There is a curious conflict under New Hampshire law between death and divorce. In Divorce Court, absent special circumstances, an equal division of all assets is presumed to be equitable. In Probate Court, however, the surviving spouse is only entitled to one-third of the decedent spouse’s estate or less. If the assets are titled in the name of one spouse, and if that spouse has set up a trust that leaves most of the marital estate to someone other than the surviving spouse, there may be little or nothing the surviving spouse can do to challenge that trust. The surviving spouse may not be entitled to any portion of the assets placed in trust by the other spouse.
Those are the rules and laws that generally apply to individuals who do not have a premarital agreement. Parties contemplating marriage may instead make their own rules. They may wish to provide that, upon the death of one of them, the other one will get one-half of all of the assets that individual possesses or they may provide that the surviving spouse receives all of the assets or whatever portion they wish. Prenuptial agreements often provide that parties to the marriage may bequeath property they own separately as they wish, but that all joint property, or such portion as they wish, be left to the surviving spouse.
In short, prenuptial agreements provide a means for parties to tailor their financial future to fit their specific wishes as to how assets and income should be treated in a marriage. In the absence of such an agreement, the laws of the State of New Hampshire will determine the parties rights in Divorce Court or Probate Court. Not only may those laws not fit the parties’ desire, they may change over time. As the saying goes, no one is safe while the Legislature is in session.
It is becoming much more common for individuals entering into marriage for the first time to address their wishes with regard to finances in a premarital agreement. Contrary to the thought that such agreements are not very romantic, in fact, the process of reaching such an agreement requires starry-eyed fiancées to address the practical financial aspects of marriage and recognize that marriage is a financial partnership.
Healthy marriages that stand the test of time often do so because the parties are of like minds with regard to finances. Most marriages fail because of issues involving sex or money. Prenuptial agreements can address one of those issues and one out of two is not bad.