In our last installment we explored the concept of taking an “elective share” and an augmented estate. It is an incredibly complicated legal concept that most people want to avoid. But how can we legally leave our spouse less than 50% of the estate without running afoul of these legal concepts?
This month we talked to Erica N. Vargas, Esq., of the Vargas Law Firm, P.C. about the concept of premarital and post-marital agreements. Erica is a family law attorney in the Lakewood area and is well versed in the subject.
As Erica explained, a premarital agreement (also known as a prenuptial agreement or marital agreement) is an agreement which is entered into by two people intending to be married. It is an agreement that primarily addresses how parties’ respective assets and debts will be treated during the marriage, upon a divorce or upon death. This is particularly important when it is the intention of the parties that assets remain separate or be handled differently than would occur by operation of law should there be a divorce or death.
A post-marital agreement is similar in nature but occurs after two people are married but, importantly, not in contemplation of divorce. A post-marital agreement can be a helpful tool if parties have disputes over how to maintain finances and do not want those issues to lead to divorce but feel they need clear parameters on how to maintain separate and joint property and debt. It can be a grey area when we are talking about “contemplation of divorce” as some issues, if left unaddressed, could arguably lead to a breakdown of the marriage even if the parties are otherwise content.
A Voluntary Estate Option
A premarital or post-marital agreement is required to be in writing and signed by both parties. It must be entered into voluntarily with a fair disclosure of each party’s financial circumstances. Voluntarily means that neither party was under duress when the agreement was executed. Parties are not required to have an attorney draft or review a marital agreement; however, there are many nuances in the enforce-ability of certain provisions in a marital agreement which make it advisable to have an attorney assist in the drafting or review of a marital agreement.
Determining a Waiver of Maintenance
In Colorado, marital agreements that are properly and fairly entered into will be enforceable at time of death or divorce as they pertain to property and debt division. However, many people include a waiver of maintenance (also known as spousal support or alimony) as part of their agreement and a waiver of maintenance is subject to review by a court to determine if waiver is fair at the time of divorce. If a court determines that, given the facts and circumstances at the time of divorce, a waiver of maintenance is unconscionable, the court will not uphold the waiver. Other provisions which would not be enforceable in a marital agreement include provisions agreeing to waive child support or address parenting rights.
Agreements as an Estate Planning Tool
As you can see from Erica’s excellent explanation, prenuptial agreements and post-nuptial agreements can be utilized to legally waive your right to an “elective share” and an augmented estate. These can be a great planning tool for many families and can help us support your wishes within your estate planning intentions.
If you have any questions regarding this concept, please reach out to Erica N. Vargas, Esq. She is happy to help.
Contact information for Erica N. Vargas, Esq:
The Vargas Law Firm, P.C., 2201 Kipling St., Suite 206, Lakewood, CO 80215