Antenuptial agreements, also often referred to as prenuptial agreements, are sometimes derided as taking the romance out of marriage and transforming the event and institution into a business arrangement. Some claim that the use of an antenuptial agreement is an acknowledgement that a marriage is likely to fail. However, an antenuptial agreement addresses not only the possibility of divorce, but also the distribution of premarital assets upon the death of one of the spouses. These agreements can be an excellent tool when there is a significant difference in the ages of the parties or in their respective wealth. In situations in which one or both of the parties has/have previously been married and want(s) to preserve assets for his or her children upon death, an antenuptial agreement may be an essential component of a sound estate plan.
There are several basic elements of a valid antenuptial agreement. The agreement must be entered into in writing and signed by both parties in contemplation of an upcoming marriage. Both participants must be competent and must freely and voluntarily enter into the agreement without coercion or duress by the other party or anyone else. Both parties must be fully aware of all the assets and liabilities of the other party. Finally, the agreement must not be so one-sided as to be unconscionable and unfair on its face. Each party should have their own separate counsel to advise and review the document. There must be a meaningful opportunity for each party to consult with their respective attorney. It is unethical for one attorney to represent both parties.
An antenuptial agreement must contain a full and complete disclosure of both parties’ assets prior to their marriage. With respect to real property, this is the amount of equity owned in the property. Equity is determined by subtracting the mortgage indebtedness associated with the property from the fair market value of the residential property. All other assets must be disclosed, including the values of stocks, securities, bonds, bank, brokerage, retirement, pension and 401(k) accounts. Anticipated inheritances should also be included. An antenuptial agreement also often lists the premarital debts each party brings to the marriage. Just listing a total sum of money as being disclosure of all assets is insufficient under Ohio law. The more detail and specificity included in the agreement, the better. The antenuptial agreement will also address the distribution of assets and assumption of debts upon termination of the marriage or death of a party.
One of the two events addressed in an antenuptial agreement is a termination of the marriage during life, either through divorce, dissolution, legal separation or annulment. The antenuptial agreement sets forth the ownership rights of assets as well as the responsibility for payment of liabilities acquired before marriage should the marriage be terminated. An antenuptial agreement also often addresses the issue of spousal support (alimony), and whether spousal support is waived or whether the parties have already agreed to an amount and duration of spousal support if the marriage is terminated. Child support and custody matters cannot be included. However, the parties can address how “finances” will be handled during the marriage.
The other event addressed in an antenuptial agreement is the death of either spouse. This can be vital when creating an estate plan. An individual who brings significant assets into a marriage and who also has children from a prior marriage may want to protect those premarital or separate assets to pass down to his or her children. However, under Ohio law, a surviving spouse has certain statutory rights to prevent him or her from being disinherited. Under Ohio law, a surviving spouse has the right to the first $40,000.00 of the deceased spouse’s estate. The surviving spouse also has the right to live in the residence for one year rent-free and ownership of up to two of the spouse’s vehicles. The surviving spouse may purchase the residence at its appraised value. The surviving spouse may also “take against the will”. If the deceased spouse has one or more children from a prior marriage, the surviving spouse, in addition to the rights stated above, can elect to receive one-half of the net estate if there is one child and one-third of the net estate if there is more than one child. In an antenuptial agreement, a party may legally waive all of these rights and elect to receive only so much that the deceased spouse chooses to leave him or her by will, trust or other instrument. Thus, a party with significant premarital assets may preserve the right to pass those assets upon death in such manner and to such individuals as he or she chooses, free from the control of the surviving spouse. One caveat is that many employer funded retirement accounts require a spouse to specifically waive his or her rights as surviving spouse to those accounts after he or she has actually become husband or wife. Thus, it is common in antenuptial agreements for both parties to agree to execute any and all documents necessary, after the marriage ceremony, to waive his or her rights as surviving spouse to those retirement benefits.
Questions are routinely asked about the validity of postnuptial agreements in Ohio. Unlike most states, postnuptial agreements are not valid in the State of Ohio. Additionally, Ohio refuses to enforce postnuptial agreements written in other states if the couple is currently domiciled in Ohio. An Ohio a statute makes it clear that a husband and wife may not enter into a contract between themselves to divide assets, debts and responsibilities arising out of the marriage unless they are contemplating a divorce, dissolution or legal separation.
In summary, although the concept of an antenuptial agreement, when thought of solely in context of divorce, may have a negative connotation for some, when thought of in context of death, particularly with a second or subsequent marriage, is often just one of several components of a smart, thorough and comprehensive estate plan. The document must be prepared and executed prior to the marriage to be valid. Plan ahead. Remember that this document needs to be properly drafted to withstand subsequent scrutiny! These documents have been set aside if they are presented too close to the actual wedding date. Court’s have presumed coercion in such cases, recognizing the embarrassment attendant with the “sign it” or the wedding is off approach. Contact an experienced estate planning or family law attorney to properly address these complex issues.
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Joseph E. Balmer
Joseph Balmer manages the Probate, Trust and Estate Administration department at Dayton, Ohio, law firm, Holzfaster, Cecil, McKnight & Mues, and has been certified by the Ohio State Bar Association as a specialist in Estate Planning, Trust and Probate Law since 2006.