Estate Plans Can Protect Families with a Restrictive Prenup
Virginia Beach, VA (Law Firm Newswire) August 26, 2014 – Sometimes, one of the partners constructing a prenuptial agreement is a business owner. Typically, the document will then be designed to ensure that preexisting assets are completely protected in case of divorce.
This often leads to restrictive prenuptial agreements that keep all preexisting assets separate. Unfortunately, that safe, restrictive prenup can prevent the surviving spouse from receiving assets upon the other spouse’s death.
“A prenup is essential for protecting your assets in case of divorce, but it doesn’t always account for problems that may occur if you were to die,” said Andrew Hook, a Virginia estate planning attorney with the Hook Law Center. “By forming an estate plan, you can make sure that your family is provided for in the case of untimely death.”
Even with a restrictive prenup, it is possible to leave money and other assets to a surviving spouse without sacrificing the integrity of the prenup.
Family limited partnerships are a strong option for individuals with a successful business who would like to allow their family to receive earnings from that business in the event of their death. A family limited partnership allows the surviving spouse to receive income from the business without gaining control over the business’s operations.
To protect both spouses from litigation against the business, general partnerships in family limited partnerships should be held through a limited liability company.
Initially, the business owner holds the majority of limited partner ownership in the family limited partnership. After the individual’s death, a portion of the limited partnership interest would be transferred to the surviving spouse, and the shares would be gifted into a testamentary trust, providing income for the spouse and family.