Asset Protection in Second Marriages
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What asset protection strategies should an individual consider after divorce if they play to re-marry? Whether a marriage is a first or fifth, some planning tools always offer a degree of protection. Every couple’s goals, life stage, and assets are unique. A review with an asset protection lawyer prior to marriage helps address risks and preserve the couple’s intentions for their respective assets.
An effective asset preservation plan does not hinge on a single asset protection tool. A prenuptial agreement combined with properly structured trusts allows a spouse to provide for persons they designate, while at the same time protecting selected assets from spousal claims that may arise in a future divorce. TrustCounsel’s Chapel Hill asset protection lawyers review a few issues that are commonly addressed when an individual is planning to re-marry:
Property. Prenuptial agreements can include provisions for how real property and personal property acquired during marriage must be distributed if the couple divorces. Property can also be held in trust for the benefit of children and/or spouse.
Children. To ensure specific assets are passed to children and not tapped by claims from a former spouse or spouse-to-be, trusts should be utilized to ensure protection for the children. For parents concerned about assets passing to a minor child or an adult child with financial mismanagement issues, trusts can include spendthrift provisions with distribution requirements. For current minor children from previous marriages and future children from the next marriage, discuss guardianship options with a North Carolina estate planning attorney.
Beneficiary designations. Beneficiary designations trump the terms of a prenuptial agreement and instructions in a Will or Trust. Although an individual may have updated their Will or Trust with the best intentions of providing for their children or new spouse, if retirement accounts, pension plans, and other assets still name the former spouse as the designated beneficiary, the intended beneficiaries will not have any right to these assets.
If an individual is considering marriage, a prenuptial agreement should be drafted far in advance. This is important for a number of reasons. Advanced planning allows for identifying and addressing a couple’s concerns, managing negotiations, preparing documents properly, and ensures ample time is present to avoid claims of coercion. Learn more about timing premarital agreements in North Carolina.
