Most people think of a prenuptial agreement as something that matters only if a marriage ends in divorce.

That is a mistake.

A well-drafted prenup can be just as important when a marriage ends because one spouse dies.

The same is true of a postnuptial agreement, which is signed after marriage.

These agreements can affect who inherits, whether a surviving spouse can claim against an estate, what happens to jointly owned property, whether children from a prior marriage are protected, and how trusts should be structured.

That means a prenup or postnup should never be viewed in isolation from an estate plan.

If the documents conflict, the result can be expensive litigation, unintended inheritances, disappointed children, and an estate plan that does not operate the way either spouse expected.

What Is a Prenuptial Agreement?

A prenuptial agreement—often called a prenup—is a contract entered into before marriage.

It can address issues such as:

• which assets remain separate property;
• how property acquired during marriage will be treated;
• responsibility for debts;
• rights to income and business interests;
• spousal support;
• what happens upon divorce; and
• what rights each spouse will have if the other dies.

For estate-planning purposes, that last category is especially important.

A prenup may provide that one spouse waives some or all rights to inherit from the other spouse.

Or it might guarantee the surviving spouse a certain amount.

For example, a prenup could provide that the surviving spouse receives:

• the marital residence;
• $500,000;
• a percentage of the estate;
• income from a trust for life; or
• nothing beyond specifically designated property.

Those terms can dramatically change how the estate plan should be drafted.

What Is a Postnuptial Agreement?

A postnuptial agreement, or postnup, addresses many of the same issues but is signed after the couple is already married.

Postnups are often used when:

• one spouse starts or acquires a business;
• a couple receives a large inheritance;
• one spouse has children from a prior relationship;
• spouses want to clarify separate and marital property;
• the couple is reconciling after marital difficulties;
• circumstances have changed significantly; or
• the original prenup needs to be updated.

From an estate-planning perspective, a postnup can be particularly useful when a couple realizes that their existing plan no longer reflects their financial or family situation.

But postnuptial agreements are heavily dependent on state law. Their enforceability requirements can differ from those applicable to prenups, and courts may scrutinize them carefully.

Why Marriage Changes Estate Planning Rights

Marriage creates rights that an unmarried partner generally does not have.

Depending on state law, a surviving spouse may have rights involving:

• an elective share of the estate;
• homestead rights;
• exempt property;
• family allowances;
• intestate inheritance;
• retirement accounts;
• jointly owned property; and
• certain rights to administer the estate.

That means simply writing:

“I leave everything to my children.”

may not be enough.

A surviving spouse may have statutory rights that override portions of a will or trust.

A properly structured prenup or postnup can sometimes waive or modify those rights.

That can be crucial in second marriages.

The Second-Marriage Problem

Consider this situation.

Michael has two adult children from his first marriage.

He owns a business, investment accounts, and a home.

He later marries Lisa.

Michael tells his attorney:

“I want Lisa comfortable for the rest of her life, but I want everything ultimately going to my children.”

That sounds straightforward.

It often is not.

If Michael simply leaves everything outright to Lisa, Lisa becomes the owner.

Once she owns the property, she may be free to:

• change her estate plan;
• remarry;
• make gifts;
• spend the assets;
• leave the assets to her own children; or
• leave them to someone else entirely.

Michael’s children may ultimately receive nothing.

But if Michael leaves Lisa too little, she may have statutory rights to make claims against his estate.

A prenup plus coordinated trust planning can help solve both problems.

Example: Prenup Plus Marital Trust

Michael and Lisa sign a prenup.

The agreement provides that Lisa waives certain inheritance rights in exchange for receiving lifetime benefits from a trust.

Michael’s estate plan then creates a trust for Lisa.

Lisa might receive:

• all income;
• distributions for health and support;
• use of the residence; and
• other benefits during her lifetime.

After Lisa dies, the remaining property passes to Michael’s children.

Now the documents are working together.

The prenup defines Lisa’s rights.

The trust fulfills those rights.

And Michael’s estate plan protects the inheritance intended for his children.

Prenups Can Waive Inheritance Rights

One of the most important estate-planning functions of a prenup is the ability, where permitted by state law, to waive inheritance rights.

A spouse might agree to waive rights to:

• an elective share;
• intestate inheritance;
• homestead interests;
• family allowances; or
• other statutory claims.

The exact rights that can be waived—and what language is necessary—vary by state.

That means generic language such as:

“Each party waives all rights in the other’s property”

may not always provide the certainty people assume.

The agreement should specifically address death and estate rights if that is the intent.

A Divorce Prenup Is Not Necessarily an Estate-Planning Prenup

This is an important distinction.

Some prenups focus almost entirely on what happens if the couple divorces.

They may carefully address:

• marital property;
• separate property;
• alimony;
• business valuations; and
• division of real estate.

But then they barely mention death.

That can create a significant gap.

A prenup should separately address:

What happens if we divorce?

and

What happens if one of us dies while we are still happily married?

Those are different events.

The financial arrangement appropriate after divorce may be very different from the arrangement a couple wants after death.

Your Will Cannot Simply Ignore the Prenup

Suppose a prenup says:

“If Husband dies first, Wife will receive $1 million.”

Husband later signs a will leaving everything to his children and nothing to Wife.

The will does not necessarily erase the contractual obligation.

The surviving spouse may have a contractual claim against the estate.

Now the estate could face litigation that might easily have been avoided if the estate plan had been coordinated with the prenup.

The reverse problem can occur too.

Suppose the prenup waives inheritance rights, but the will later intentionally leaves substantial assets to the spouse.

A waiver generally does not necessarily prevent someone from voluntarily leaving property to a spouse.

The key is making sure the later estate plan reflects the person’s current intent.

Beneficiary Designations Can Create Another Conflict

Estate planning is not limited to wills and trusts.

Many important assets pass by beneficiary designation.

These include:

• retirement accounts;
• life insurance;
• annuities;
• payable-on-death accounts; and
• transfer-on-death accounts where permitted.

A prenup may say one thing while a beneficiary designation says something completely different.

For example:

A prenup might provide that each spouse waives rights to the other’s retirement assets.

But federal law may impose special requirements regarding retirement plan beneficiary rights and spousal consent.

The agreement alone may not be sufficient in every circumstance.

That is why beneficiary designations should be reviewed along with the prenup and estate plan.

Retirement Accounts Require Special Attention

Retirement accounts deserve their own discussion because federal law can complicate the analysis.

Certain employer-sponsored retirement plans governed by ERISA generally provide significant protections to spouses.

A spouse may have rights that cannot simply be eliminated through a prenup signed before the marriage.

In some situations, valid spousal consent after marriage may be required to name someone else as beneficiary.

IRAs operate under different rules.

This is an area where estate-planning lawyers, family-law lawyers, and financial advisors need to coordinate carefully.

A statement in a prenup saying:

“I waive your retirement accounts”

should never be assumed to resolve every beneficiary issue.

Life Insurance Can Be Used to Satisfy the Agreement

Life insurance is often a useful bridge between marital agreements and estate planning.

Suppose a couple agrees that if Husband dies first, Wife will receive $750,000.

Instead of requiring the estate to produce $750,000 in cash, Husband could maintain a life insurance policy naming Wife as beneficiary.

That may preserve:

• business interests;
• real estate;
• family property; and
• investment assets

for other beneficiaries.

But if the prenup requires life insurance, the estate plan should address practical questions.

Who verifies the policy remains in force?

What if the coverage lapses?

What if Husband changes the beneficiary?

What if the policy value is less than required?

A promise to maintain life insurance is useful only if the agreement provides a meaningful mechanism for enforcing it.

Business Owners Have Even More at Stake

Prenups are particularly important for business owners.

Imagine that one spouse enters a marriage owning a closely held company.

The owner wants the business to pass to children who already work in the company.

The new spouse does not work in the business.

Without planning, death could create a difficult problem.

The surviving spouse may have estate rights.

The children may expect to inherit the company.

The estate may lack enough liquid assets to satisfy both.

A coordinated plan might use:

• a prenup;
• a business succession plan;
• life insurance;
• a trust;
• a buy-sell agreement; and
• carefully drafted beneficiary provisions.

The goal may be to make sure the surviving spouse receives financial security without forcing the children to sell the family company.

Real Estate Can Be a Major Source of Conflict

The family home is often emotionally and financially significant.

Suppose a husband owns the residence before marriage.

The prenup says it remains his separate property.

After marriage, however:

• the spouse contributes to mortgage payments;
• the couple renovates the property;
• title is changed;
• marital funds are used; or
• the home is refinanced jointly.

Now the estate-planning picture may be different from what the original prenup contemplated.

Couples should decide specifically:

• Can the survivor remain in the home?
• For how long?
• Who pays taxes and insurance?
• Can the survivor sell the home?
• Does the survivor receive the home outright?
• Does the home eventually pass to children?
• What happens if the survivor remarries?

These questions belong in both the marital agreement and estate plan.

Postnups Can Repair an Outdated Estate Plan

Not every couple thought about these issues before marriage.

That doesn’t necessarily mean it is too late.

A postnuptial agreement can sometimes be used to address estate-planning concerns that develop later.

Consider a couple married for 15 years.

Husband has children from an earlier marriage.

During the marriage, he builds a business now worth $8 million.

The couple realizes that their existing wills simply leave everything to one another.

They are now concerned that if Husband dies first, the business may never reach his children.

A postnup can potentially redefine the spouses’ respective financial and inheritance rights.

The couple can then update their trusts and wills accordingly.

Postnups Require Careful Drafting

Postnuptial agreements can present additional enforceability concerns because spouses already owe one another significant legal and financial duties.

Depending upon state law, courts may examine factors such as:

• full financial disclosure;
• voluntariness;
• independent counsel;
• fairness;
• consideration;
• timing; and
• absence of coercion.

The safest approach is generally for each spouse to have separate counsel.

Trying to save money by using one attorney for both spouses can create significant problems later if the agreement is challenged.

Separate Lawyers Are Important

A prenup is a contract between two people whose financial interests may differ.

That means one lawyer generally should not attempt to advise both parties about whether the agreement is fair to them.

Independent counsel can help demonstrate that each spouse:

• understood the agreement;
• understood what rights were being waived;
• had an opportunity to negotiate;
• received financial disclosure; and
• entered the agreement voluntarily.

This becomes especially important when the agreement contains significant inheritance waivers.

Timing Matters

Signing a prenup days—or hours—before a wedding is an invitation to trouble.

One spouse may later argue:

• there was insufficient time to review it;
• the wedding would have been cancelled;
• deposits had already been paid;
• guests had arrived;
• there was no meaningful opportunity to obtain counsel; or
• the agreement was signed under pressure.

Estate-planning discussions should ideally begin well before the wedding.

The earlier the process begins, the easier it is to create a thoughtful agreement rather than a rushed one.

Financial Disclosure Matters Too

A person cannot meaningfully waive rights to property he or she does not understand exists.

Prenuptial and postnuptial agreements frequently include schedules identifying assets, debts, business interests, income, investments, retirement accounts, and real estate.

Incomplete financial disclosure can later become a basis for challenging the agreement.

This is especially important when one spouse has considerably greater wealth than the other.

Trusts Can Make the Arrangement More Flexible

A prenup does not have to say:

“Spouse gets $1 million outright.”

It could instead require that assets be held in trust.

For example:

If Husband dies first, $2 million will be placed into a trust for Wife’s lifetime benefit, with the remainder passing to Husband’s children.

That can provide significantly more protection than an outright gift.

Depending on how the trust is drafted, it may help address concerns involving:

• creditors;
• remarriage;
• overspending;
• incapacity;
• children from prior marriages; and
• preservation of family wealth.

QTIP Trusts and Prenups Can Work Together

A Qualified Terminable Interest Property trust, or QTIP trust, can be particularly useful in second marriages.

A QTIP structure can provide lifetime benefits to the surviving spouse while allowing the first spouse to control where the remaining assets pass after the survivor’s death.

For example:

Husband has children from his first marriage.

Wife has children from hers.

Their prenup provides that each spouse will receive lifetime income from a marital trust if the other dies first.

Each spouse’s trust then provides that after the survivor’s death, the property returns to the deceased spouse’s respective children.

That can create financial security for the survivor without disinheriting either spouse’s children.

Credit Shelter Trusts May Also Fit Into the Plan

For higher-net-worth couples, a Credit Shelter Trust may also be used.

A prenup could establish the parties’ rights while the estate plan allocates assets among:

• a Credit Shelter Trust;
• a marital/QTIP trust;
• outright transfers;
• descendant trusts; and
• other structures.

The agreement and trust should be coordinated so that funding one does not accidentally violate obligations created by the other.

What Happens If the Documents Conflict?

Conflicts between estate-planning documents and marital agreements can produce litigation.

Imagine:

Prenup: Wife receives the residence.

Trust: Residence goes to Husband’s children.

Now what?

Or:

Prenup: Husband must maintain $1 million of life insurance for Wife.

Beneficiary designation: Husband names his children.

Or:

Postnup: Each spouse waives rights against the other’s estate.

Will: Husband leaves Wife 50% of his estate.

The outcome may depend on contract law, probate law, beneficiary rules, federal law, the exact language of each document, and the order in which documents were executed.

The better approach is avoiding the conflict altogether.

A Prenup Should Trigger an Estate-Planning Review

Once the prenup is signed, the estate plan should be updated.

That means reviewing:

• wills;
• revocable trusts;
• irrevocable trusts;
• powers of attorney;
• health care directives;
• retirement beneficiaries;
• life insurance beneficiaries;
• payable-on-death accounts;
• transfer-on-death accounts;
• property titles;
• deeds;
• business agreements; and
• digital assets.

The marital agreement is only one piece of the plan.

Marriage Should Trigger a Beneficiary Audit

People frequently forget old beneficiary designations.

A newly married person may still have:

• a former spouse on life insurance;
• a parent on an IRA;
• a sibling on a brokerage account; or
• an old trust listed as beneficiary.

The effect of marriage on those designations depends upon the particular asset and applicable law.

Do not assume the will fixes them.

Many beneficiary-designated assets pass outside probate.

Divorce Should Trigger Another Review

The same is true if the marriage later ends.

Divorce can affect certain estate-planning provisions automatically under state law, but relying on automatic statutory rules is dangerous.

Following divorce, a person should review:

• wills;
• trusts;
• powers of attorney;
• beneficiary designations;
• life insurance;
• retirement accounts;
• deeds;
• joint accounts; and
• business succession documents.

The original prenup or postnup should also be reviewed to determine whether any obligations survive the divorce.

What About Children Born After the Prenup?

Family circumstances change.

A couple may sign a prenup when neither has children.

Ten years later, they have three.

Or one spouse may have children from a first marriage and then have additional children with the new spouse.

Estate planning should address whether children are treated equally and whether the prenup creates any restrictions that affect those plans.

A marital agreement signed years earlier should not simply sit in a drawer while the family evolves around it.

When Should a Prenup or Postnup Be Reviewed?

A review may be appropriate after:

• marriage;
• birth or adoption of a child;
• purchase of a home;
• receipt of a substantial inheritance;
• sale or creation of a business;
• major increase in wealth;
• retirement;
• relocation to another state;
• serious illness;
• separation or reconciliation;
• substantial changes in tax law; or
• significant changes in estate-planning law.

Even a perfectly drafted agreement can become outdated.

One of the Biggest Mistakes: Different Lawyers, Different Plans

A family lawyer drafts the prenup.

Years later, an estate-planning lawyer drafts the trust.

Neither reads the other’s work.

That can be disastrous.

The estate-planning lawyer needs to understand:

• what inheritance rights were waived;
• what benefits were promised;
• how separate property is defined;
• whether life insurance is required;
• what happens to business interests;
• what happens to the residence; and
• whether the marital agreement restricts gifts or transfers.

Similarly, the attorney drafting the prenup should understand the couple’s estate-planning goals.

These documents should be designed as parts of one strategy.

Questions Every Couple Should Ask

Before signing a prenup or postnup, couples should discuss questions such as:

What happens if one of us dies first?

Does the survivor inherit anything outright?

Will the survivor receive assets in trust?

Can the survivor remain in the house?

Will children from prior relationships be protected?

Does either spouse waive an elective share?

Are retirement rights being waived?

Is life insurance required?

What happens to a family business?

What happens if our net worth increases dramatically?

What if we move to another state?

Those questions often matter just as much as what happens in divorce.

The Bottom Line

A prenup or postnup is not merely a divorce document.

It can be one of the most important estate-planning documents a married couple signs.

It can determine what a surviving spouse receives, what rights are waived, how children from previous relationships are protected, what happens to businesses and real estate, and whether trusts are needed to carry out the couple’s agreement.

But the marital agreement cannot operate in a vacuum.

The prenup, postnup, will, trust, beneficiary designations, deeds, retirement accounts, life insurance, and business succession documents all need to tell the same story.

When they do, a couple can create significant certainty.

When they do not, the result may be exactly what estate planning is supposed to prevent: conflict, litigation, unintended beneficiaries, and family disputes.

For couples entering a marriage—particularly second marriages, marriages involving substantial wealth, business owners, or families with children from prior relationships—the better question is not simply:

“Do we need a prenup?”

It is:

“How should our marriage agreement and estate plan work together if one of us dies?”

That is where family-law planning and estate planning truly intersect.

This article is for general educational purposes only and does not constitute legal or tax advice. The enforceability and effect of prenuptial and postnuptial agreements vary substantially by state, and special rules may apply to retirement plans, spousal inheritance rights, and beneficiary designations. Couples should consult appropriate family-law, estate-planning, and tax professionals regarding their particular circumstances.