Postnuptial Agreements and Your Vermont Estate Plan

A well thought out and comprehensive estate plan can help you manage the distribution of assets, appoint key fiduciaries, and ensure that loved ones are protected after one’s passing. For married couples, an often underutilized yet highly effective addition to a well-constructed estate plan is a postnuptial agreement. Though commonly associated with safeguarding financial interests during a divorce, a postnuptial agreement can also play a vital role in reinforcing and refining your estate planning goals. With that in mind, the attorneys at Unsworth LaPlante, PLLC explain postnuptial agreements and your Vermont estate plan.

What Is a Postnuptial Agreement?

While similar to a prenuptial agreement which is created prior to entering into a marriage, a postnuptial agreement is a legally binding contract between spouses that is created after marriage. Like a prenuptial agreement, a postnuptial agreement outlines the management and division of assets and debts during the marriage and in the event of separation or death. Couples choose to enter into postnuptial agreements for many reasons, such as one spouse receiving a significant inheritance, starting a business venture, or taking on personal debt. A postnuptial agreement can also be part of a larger plan to rebuild trust after marital difficulties. It can also offer a way to preserve inheritance rights for children from a previous relationship without causing friction within the current marriage. Whatever the motivation, a postnuptial agreement can have far-reaching consequences, particularly when it comes to estate distribution and asset control.

Legal Standing of Postnuptial Agreement in Vermont

In Vermont, postnuptial agreements are enforceable as long as they meet certain requirements. Courts evaluate these agreements to determine whether they were entered into freely, with full disclosure of each party’s financial circumstances, and without coercion or extreme unfairness. To ensure that a postnuptial agreement is enforceable, it is best for each spouse to be represented by their own attorney.

The Importance of Alignment between Your Postnuptial Agreement and Your Estate Plan

Estate plans and postnuptial agreements can affect one another in unexpected ways and if the provisions in your estate documents do not reflect the terms of your postnuptial agreement, confusion and conflict may arise. For instance, your Will may designate certain property to your children, but if your postnuptial agreement treats that property as jointly owned, your spouse might have a legal claim to it under Vermont law. When properly aligned, a postnuptial agreement can reinforce your estate plan by establishing clear expectations and reducing the potential for disputes among beneficiaries. To accomplish this, your estate documents should be reviewed and updated whenever a postnuptial agreement is signed.

Within your estate plan, a postnuptial agreement can play a critical role in defining which assets are to be treated as joint and which as separate which may override the presumptions under state law. Joint assets may automatically pass to a surviving spouse, while separate property can be directed to children, other family members, or charitable organizations. Your postnuptial agreement may be used to:

• Designate specific assets, such as a business or inheritance, as separate property.
• Establish financial responsibilities for debts and obligations.
• Clarify ownership and division of property upon death.

Your postnuptial agreement may also help with estate planning for blended families, ensuring that children from prior marriages receive their intended share of an estate. In Vermont, surviving spouses often have automatic claims to a significant portion of the estate unless those rights are explicitly waived. A postnuptial agreement can:

• Specify that certain assets will go directly to children.
• Waive a surviving spouse’s right to specific property.
• Acknowledge beneficiary designations and trust structures.

Under Vermont law, spouses are entitled to certain statutory rights, including elective shares of the estate and roles in the probate process. These rights can be waived in a postnuptial agreement which can allow for things such as:

• Relinquishing claims to specific accounts or real estate
• Waiving the right to act as executor
• Forgoing property distributions in probate

Can We Help You Incorporate a Postnuptial Agreement into Your Vermont Estate Plan?

For more information, please attend one of our upcoming FREE seminars. If you would like assistance incorporating a postnuptial agreement into your Vermont estate plan, contact an experienced Essex Junction estate planning attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.