Protecting Estate Rights When Wills, Prenups and Divorce Converge

A comprehensive guide to estate planning and prenuptial agreements in New Jersey. Learn how these legal tools interact, especially concerning divorce and death.

When planning a life together, couples consider their financial and personal resources when facing significant life events. Though no one plans for divorce or death when they draft a prenuptial agreement or a will, both of those life events will trigger legal questions about the validity and effect of those documents. Understanding the roles of these legal documents in divorce and upon death helps you make better plans.

How Spousal Inheritance Works in NJ Estate Law

A spouse inherits property through their deceased spouse’s will or a revocable trust. A will or trust determines what the surviving spouse and other beneficiaries get. A will is a written legal document that expresses the will-maker’s wishes as to where their assets will go after they die. For example, a spouse can leave everything to their spouse, which is one way they inherit.  A revocable trust is like a will, except the maker entrusts an individual, individuals, or company (trustee) with their assets while the trust makers (trustors) are alive. The trustee must pass estate assets to named beneficiaries once the trustor(s) are gone. A will passes inheritances only upon the death of its maker. A revocable trust does not go through probate, the legal process to determine who gets what from a deceased person’s estate, either by will or intestacy law. In probate, a spouse has a legal right to a proportion of their spouse’s estate, which is the total assets and debts of a deceased spouse. The surest way to give your property to the people you love is to have a valid will. A probate court will oversee the distribution of your assets by the will terms so long as your will is legally valid.

Another way is to inherit without a will, which is called intestate succession. New Jersey’s intestacy laws determine who inherits when someone dies without a will or living trust. When someone dies without a will, New Jersey law determines what the spouse gets, which can vary based on the total amount of the estate and whether the deceased has other familial relations such as children and parents.

The Surviving Spouse’s Right of Election

In a will probate, a spouse has a legal right to a percentage of their spouse’s estate, which is a deceased spouse’s total assets and debts. Their right to a percentage of the estate is their “elective share.” A spouse has a right to take their elective share over the will’s designated estate share for the spouse. N.J.S.A. 3B:5-3 governs intestacy inheritance and a spouse’s elective share, which depends on who else is inheriting from the deceased spouse. By will, a spouse has a legal right to one-third of their spouse’s estate. Intestacy laws state a spouse inherits the first 25% of a deceased spouse’s intestate estate within prescribed limits, $50,000.00 minimum to $200,000.00 maximum, and half of the rest. However, a spouse’s share may be the entire estate when no other heirs, such as children, parents, grandparents, grandchildren, siblings, nieces, and nephews, exist. In any event, a spouse takes the lion’s share of the estate when the deceased spouse leaves no children behind.

Once couples divorce, portions of their wills may become invalid. For example, a will that gives all property to a spouse may be invalid or revoked after a divorce. Additionally, any designations under the will of the divorced spouse as executor or healthcare power of attorney.

The Basics of Asset Protection through Prenups in New Jersey

One way couples control where their assets go is by a premarital contract known as a prenuptial agreement. It is a legal document with a couple’s written wishes for their premarital assets should they divorce. The document’s purpose is to resolve property disputes in the event of a divorce so that the parties are not forced to divide their assets solely according to New Jersey divorce law.

Each party to a prenuptial agreement can protect separate property assets acquired before marriage so that those assets remain separate after marriage. Once married, the parties’ assets are typically considered marital property for divorce purposes, so a premarital agreement legally preserves ownership of property belonging to one future spouse. One such premarital asset is an inheritance. According to New Jersey law, an inheritance belongs to the inheriting spouse. However, commingling inheritance property with marital property may subject an inheritance to equitable division in a divorce. Thus, premarital agreements ensure inheritances and other prioritized valuables stay separate.

However, they can also protect other property going into a marriage, such as business interests, stock portfolios, real estate, income, and other valuables. Spouses can choose to maintain ownership of certain financial items, such as retirement accounts, as well as protecting future earnings from the other spouse’s claim on them.

The Impact of Prenuptial Agreements on Spousal Estate Rights in NJ

A prenuptial agreement can also determine what a surviving spouse gets after the death of their spouse. A prenuptial agreement can affect how much a spouse inherits from a deceased spouse’s estate by segregating separate property that goes to other beneficiaries. Spouses can also agree to give up their elective shares upon the death of either spouse so that children can get more than the surviving spouse, ultimately changing the surviving spouse’s legal inheritance rights. A prenuptial agreement may prevent spouses from claiming their elective share in probate.

So, a spouse gets a proportion of the deceased spouse’s share of their marital property and all or a proportion of separate property specified in a will or revocable trust. However, an individual’s separate property in a prenuptial agreement may not go to the surviving spouse. It may pass to children from a prior marriage or other beneficiaries who stand to inherit from the deceased spouse if their will or trust says so. In other words, the surviving spouse’s legal share may be smaller by the prenuptial agreement terms.

Understanding the Gap Between Prenups and Estate Plans

Although prenuptial agreements can control inheritance rights to some extent, they are insufficient in the absence of an estate plan. An estate plan is much broader and covers the entire estate, whether that includes a will or revocable trust, a healthcare power of attorney, a general power of attorney, or a guardianship for minor children. An estate plan determines who inherits estate property and appoints who makes health and financial decisions for a person who is unable to do so should they become incapacitated, including end-of-life decisions and burial and funeral wishes.

Strategic Estate Planning Tools to Protect Your Assets and Beneficiaries

Since an individual may enter a marriage with property or children, the safest way to ensure that their beneficiaries are cared for the way they wish is to have valid legal documents, like wills, trusts, and prenuptial agreements. They can protect their assets for those they want to receive them through a comprehensive estate plan that accounts for divorce and death.

Secure Your Assets By Choosing an NJ Attorney With Expertise in Both Estate Planning and Family Law

Since prenuptial agreements, wills, and trusts must be legally valid to fulfill an individual’s wishes, an attorney who is highly familiar with family law and estate planning is crucial. If you want to protect your assets, get help from an experienced estate planning and family law attorney at Montanari Law Group, who can help you prepare your estate plan and prenuptial agreement to fit your needs.  We proudly serve clients in Caldwell, Wanaque, Essex Fells, Teaneck, Ridgewood, Franklin Lakes, Short Hills, Woodland Park, New Milford, Millburn, Montclair, and throughout the northern region of New Jersey. Our seasoned lawyers will ensure that your documents are legally compliant and express your wishes clearly and accurately. We can propose ideas to resolve conflicting interests or special concerns for your property or loved ones, creating a complete plan that allows you to control what happens in the event of a divorce or death. Consult with a dedicated member of our team today at (973) 233-4396 or contact us through our web form to ensure your assets and plans are covered.