Premarital agreements affect how estate plans operate when one spouse passes away.
For this reason, it’s essential for married couples in Iowa to consider the potential impact that an estate prenup will place on their loved one’s inheritance and how the agreement’s terms will protect each party’s interest.
The estate dispute attorneys at Iowa Probate Litigation have been counseling married couples on the particulars of estate planning prenups and their influence on spousal elective share laws for more than a decade.
Let’s listen in on a brief Q&A session and find out what the experienced probate attorneys have to say about premarital agreements…
What is an estate planning premarital agreement?
Premarital agreements don’t just protect a party’s property interest from divorce proceedings, they also secure the future interests of beneficiaries in a will or trust.
When no premarital exists, the surviving spouse can either choose to take from the provisions found in the deceased’s testamentary documents or receive an “elective share” of the estate—prenup contracts avoid statutory elective share rules and replace them with the covenants and waivers found in the agreement.
How much can a surviving spouse take when choosing an elective share?
Probate Code §633.237 allows the surviving spouse to receive all personal property exempt from probate (i.e. joint tenant assets, life insurance proceeds), one third equity of all real property, and one-third of the remaining assets after settling estate debts during probate.
Iowa statutes further allow the survivor to occupy the family homestead for life in lieu of taking the one-third in equity.
What happens to the survivor’s elective share when no will exists?
If the courts declare the estate intestate, spouses may take a “statutory” elective share of one third of the estate. However, if the surviving spouse executed a prenuptial agreement before marriage, a probate judge may choose to examine the terms of the agreement carefully to discover if the estate prenup takes priority over statutory spousal election rules and succession law.
Why do married couples waive their elective share rights in premarital agreements?
Valid elective share waivers limit the surviving spouse’s inheritance to the terms of the prenup. Such constraints can secure the inheritances of beneficiaries identified in testamentary documents executed before the marriage.
This means children from a past marriage can keep their family home or valuable heirlooms can stay in the household, as the prenup will prevent the surviving spouse from taking an elective share of these assets during probate proceedings.
What events can void a premarital agreement after execution?
To override Iowa’s spousal election statutes, Iowa Code §596 requires parties to put their premarital agreements in writing and execute them properly. The courts will void estate planning prenups when married couples deviate from these rules. The law further requires spouses to fully disclose their property and financial interests held before parties waive their elective share rights.
Premarital agreements are therefore not legally enforceable, say, if the husband had a million dollars tucked away in an offshore account but presented himself as bankrupt before the marriage to secure a spousal election waiver.
Who drafts premarital agreements for couples?
There are many free draft-it-yourself prenup templates online and non-legal agencies that offer drafting services locally. However, Iowa Probate Litigation strongly recommends that couples seek the services of a qualified estate attorney to draw up and execute their estate planning premarital contracts.
Also, separate legal counsel should represent each spouse during contract formation—the courts may refuse to enforce spousal election waivers if they find the prenuptial agreement was fundamentally unfair to one party because the lawyer who drafted the contract favored only one side.
Besides elective share waivers, what other terms do premarital contracts hold?
Estate planning prenups are unique, and Iowa code does not mandate which express terms parties need to include in such agreements.
Most estate planning prenups however will document: the estate assets that each spouse owns and brings into the marriage; how the parties will share estate assets during the marriage; how the parties will divide estate assets if divorce happens; and whether a spouse will receive alimony if the marriage ends.
My premarital agreement contained ambiguous terms and waivers, is it still valid?
The law prohibits the courts from accepting parol evidence from parties when interpreting ambiguous contracts to find validity. This means if the terms of a surviving spouse’s premarital contract are unclear, the party cannot present new evidence outside the agreement to resolve the matter.
Probate judges instead use reasonable efforts to examine the parties’ intent when attempting to decipher ambiguous waiver statements and provisions found in poorly written estate planning prenups.
I helped my husband pay off his mortgage, but my premarital agreement holds elective share waivers, can I take part of the equity if my spouse passes away before me?
You most likely cannot claim an equity share in the home if the deed to the property is in your husband’s name and your prenup does not include shared property rights—one drawback to premarital agreements is that parties who increase the value of the other spouse’s asset through financial contributions cannot recover their support during probate proceedings.
If your contributions were “clear and decisive” however, some courts may hold your husband abandoned the terms in his prenuptial agreement by performing in a manner that was inconsistent with its provisions.
Simply put, if your estate prenup stipulates the husband’s home is his own separate property, but he “consistently” accepted your mortgage payment contributions, the spouse may have abandoned his right to declare the home a detached asset.
What happens when the premarital agreement conflicts with a will?
The terms in an estate prenup in most cases take precedence over the provisions found in conflicting testamentary documents.
That being said, probate courts will likewise carefully scrutinize both documents to discover the parties’ intent—when premarital agreements lack the requisite legal citations for interpreting how the document should operate, judges or juries may elect to invalidate them.
My husband and I want to redistribute the assets in our existing prenup, can we amend it or do we need to start over?
Married couples may revise their existing premarital agreement with the help of an experienced probate attorney. Both spouses must approve the changes and can make them by either adding a codicil (a document with amended terms) to the original prenup or by executing a separate contract that modifies the assets defined in the initial agreement.
I just discovered that my spouse tore up our premarital contract without my consent before he passed away, is the agreement still valid?
Your estate premarital agreement should contain specific terms that describe what needs to happen to destroy the contract completely. If the spouse did not adhere to such revocation performance, the agreement is still enforceable.
When the prenup contrarily lacks such language and one spouse unilaterally revokes the document without mutual consent, the agreement continues to exist and the courts will enforce it during probate proceedings.
