You don’t need to be wealthy or a celebrity to care about your possessions and who will receive them. Wills and prenuptial agreements are both used to put others on notice of what you own. The goal is to outline how a spouse wishes their estate (or property) to be distributed rather than leaving the decision up to the state.
(Wondering how the prenup process works? Click here to access our free ebook on it.)
Though both documents are used to establish property that is owned and provide directives, each has its unique characteristics that contribute to the overall securement of your estate. In today’s blog, we’ll be comparing a will vs. prenup and the ways in which you can leverage the two.
A prenuptial agreement (“prenup”), is a contract that establishes the property and financial rights of each spouse in the event of a divorce or death. Though it’s not a very romantic document, more and more couples are signing prenups (especially those entering a second or subsequent marriage or those who have children from prior relationship).
Each state has its own laws that govern whether property is considered separate or marital. For example, let’s say you own and run an established family business prior to marriage. Having a prenup would protect that business in the event of divorce. Without a prenup, the divorce could result in your spouse being awarded an interest in your business.
In Oklahoma, a prenuptial agreement is the only way to waive certain homestead rights that attach at the time of marriage. A spouse has a homestead right in certain assets including the personal residence. Even if a home is titled only in one spouse’s name, the other spouse will have the right to live in the home for the remainder of his or her lifetime if the spouse owning the home dies. Entering into a valid prenup is the only way to establish the personal residence as the separate property of one party and to waive these homestead rights.
If you want to keep heirlooms or future inheritances in the family, you can specify this in your prenup. The prenup can also be used to protect yourself from your spouse’s debts and limit your liability. Creditors can go after marital property even if your spouse is the only debtor. With a prenuptial agreement, you can include specific provisions regarding joint account and ongoing finances.
Though a prenup covers a variety of aspects, it’s wise to remember it’s only one ingredient in securing your estate. Combining it with other documents like a living trust or will is the best way to ensure your property will be distributed according to your wishes.
Last Will and Testament
A will is a legal document in which you, the testator, declare your wishes with regard to the distribution of your estate upon your death. The term “estate” encompasses any assets that you own at your death, including your residence, a second home and items of personal property, like photographs.
Upon your death, the will would need to be filed with the Court and admitted to probate. Probate is the legal process of determining a person’s heirs and the validity of the will. In your will, you can name an executor, who will be appointed by the Court and responsible for carrying out your wishes as set forth in your will.
There are estate planning strategies that can avoid the probate process entirely, such as establishing and funding a living trust. Learn more about the differences between wills and living trusts here. In addition to distributing your assets upon your death, a will is also used to designate a guardian for any minor children or dependents.
If you die without a will, your property will be distributed in accordance with state statutes. The probate judge will appoint an administrator to administer your estate in accordance with the law.
Will vs. Prenup: What Are the Differences?
Now that we’ve discussed the basics of a will vs. prenup, let’s dive into their differences. Though they both protect and outline the distribution of your property, the prioritization of the two documents is determined by your goals.
For instance, a prenup is best used for establishing marital property and separate property, which is personal assets outside the marriage. It protects your money and property in the case of divorce or death. Though it can be used to plan the distribution of family heirlooms and inheritances, it cannot establish child custody.
A will provides clear instructions on the distribution of your assets at your death and names a guardian for minor children.
Things to Remember About Wills and Prenups
It is always a wise idea to protect your assets. Aim to have these discussions prior to marriage and hire separate attorneys to ensure good representation. If you have any questions or would like to discuss filing a will or prenup, we’d love to help. Reach out to trusted attorneys today at (405) 701-6376.
Wondering How the Prenup Process Works?
A prenuptial agreement might not be the most romantic way to celebrate an engagement. However, it ensures your financial matters will be handled according to your wishes. In this free guide, we’ll cover what a prenup covers, what it doesn’t and tips for drafting one! Click below to access your free copy of the ebook now.