SIGNED AWAY YOUR FLORIDA INHERITANCE WITH A PALM BEACH PRENUP ? –Why “staggered” prenups are best for late-life and second and third marriages

Second or third marriage?

In Florida, particularly Palm Beach and Broward County Florida, second, third, and fourth marriages are very common.

These so-called “late-life” marriages can be a blessing to seniors in their golden years on a personal level: companionship, company, love. But like any other relationship, and let’s not forget, that a marriage is a contract, they come with good points and bad points–financially. And let’s not forget, that the divorce rate is very high in the United States, particularly Florida. And finally, let’s not forget that with a marriage, or death, there are many distinct financial, investment, inheritance and property rights issues. Often, un-intended consequences can occur if you sign a prenup but don’t consider what can happen to Florida residents late in life.

So, did you sign a prenup? If you did, you probably signed away all your rights to the property of your spouse upon a divorce, but, perhaps more importantly, you also gave away all your inheritance rights.

In Florida, prenuptial and other marital agreements are very common. Florida courts, both probate courts, and divorce courts, recognize the validity of prenuptial agreements, postnuptial agreements, and other marital settlement agreements which, in writing, limit a spouse’s rights to the property of the other spouse upon divorce and death. In short, prenups are valid in Florida and they work.  But

Florida prenups make a lot of sense for late life marriages and second, third and fourth marriages. You can limit how much you lose if the marriage doesn’t work out.  But if the marriage does work out?  You don’t want to hurt your spouse financially.   A typical “Palm Beach” prenup includes a wordy, multipage document, which essentially says “you keep your property, I’ll keep my property if we divorce or if we die.”  In other words,  a so-called “Palm Beach” prenup has each spouse keeping their own property, and not getting a share of any of the other spouse’s property.

That’s all well and good, except in late life marriages where one spouse later becomes disabled or incapacitated.  A common mistake is for spouses to unintentionally limit the financial rights of the other spouse if the marriage works out.  A second common mistake is that , over time, as the marriage gets stronger, the spouses don’t revisit or revise, or abolish the prenup.

Consider the following example. Johnny and Janey are 70 and are getting married. Johnny wants Janie to sign a prenup. It’s a “Palm Beach” prenup: if they die or if they divorce, each spouse takes their own property and doesn’t get any inheritance, or any property of the other spouse.

Flash forward 10 years: Johnny and Janey are both 80 years old. Johnny starts losing capacity. Johnny needs round-the-clock care. Johnny and Janey have used a lot of Janey’s assets over their life to go on cruises, trips, vacations, and to assist Janey’s  grandchildren, nieces and nephews with college and graduate school. As Johnny has aged, like many Florida seniors, he’s been stricken with dementia. Johnny’s body is fine but his mind, and his cognitive abilities, are breaking down: his mental capacity is decreasing. Dementia is progressing. Janey quit her job when she married Johnny and has not worked for the duration of their marriage.  Her savings are few because she and Johnny intended and planned on living on Johnny’s money.

Johnny’s kids, who until recently have not shown any interest in Johnny, come back into the picture and file a guardianship petition. The kids argue that Johnny is not competent and that a guardian should be appointed. Everybody is in agreement that Johnny needs a little assistance, a little help with his day-to-day living, and also with his financial affairs. Oh  yes…….you probably guessed why Johnny’s kids came back into the picture…..Johnny’s kids receive an inheritance from their father, Johnny, when Johnny dies, under Johnny’s will. You can see where this is going can’t you?

The less that Johnny’s money is spent during his life, the more the kids inherit.

Johnny’s kids don’t want to use Johnny’s own money for his benefit, or the benefit of his spouse, Janey. A year after the guardianship was established, and in a Florida probate court, the kids file a motion, asking the probate court judge to divorce Johnny from Janey.

Janie is absolutely shocked.

She is hurt, and she is affronted. While Johnny’s physical and mental health have decreased. Janey loves Johnny and wants to take care of Johnny. Johnny’s kids don’t feel the same: they want Janey out of Johnny’s life. If Janey were divorced from Johnny, if the probate court were to grant the children’s wishes, Janie would be on the street. That’s because the prenup that Johnny and Janey signed was the so-called “Palm Beach” prenup: Janey doesn’t inherit any property from Johnny if he dies, and Janey doesn’t get any property it Johnny divorces Janey.  This was NOT intended for these spouses so late in life.  Johnny loves Janey and always intended to take care of her. In fact, many times, Johnny stated “my money is our money.”

But the kids are fighting for the money. It’s a power grab. It’s a money grab. And the kids are now pitted against the stepmother, Janey.

This could have all been avoided if Janie simply asked for a staggered prenup.

Janey and Johnny, when they married, understood that if they divorced, that each party would not get property of the other. That often makes sense, particularly when there is a very short marriage. But what about longer marriages? What about if someone becomes incapacitated? In Florida, a spouse has absolute duty to support their other spouse during the marriage. These rights cannot be altered, or changed by a prenup. The Florida Supreme Court has already ruled on the subject. In Florida, you cannot just abandon your spouse: you have a duty to support your spouse.

But what if Johnny dies? Janie gets nothing. How is she going to live? Also, what if the kids divorce Johnny from Janey? Janie has nothing to live on. This was never intended by Johnny and Janey and this will cause severe financial hardship to Janey.

That’s why a staggered prenup is the better solution. Prenups also need to address the issue of death. What happens to the other spouse if one of the spouse dies? Spouses that love each other often want to take care of each other – – – even if there is a premature death.

So, if you’re entering a late life marriage, or second or third marriage, and you’re asked to sign a prenup: call a good probate lawyer. Call it the divorce attorney. Call a good family law attorney.

What you should get is a staggered prenup. Do two things: one carry (purchase) term life insurance on the life of the spouse who wants you to waive your rights. If that spouse dies during the marriage you at least have the life insurance proceeds to live on. Having term life insurance on one spouse is a reasonable request and a reasonable term. Term life insurance is also just about the most inexpensive type of life insurance and should be readily affordable, even for senior citizens in their 70s living in Florida.

Get a prenup with staggered payouts depending on the duration of the marriage.

If you divorce during the first year, take nothing. If your spouse dies within the second or third year, take $100,000. If your spouse dies in year four, take $200,000. If your spouse dies within year five, take a half million dollars. If your spouse dies in year 10, take $2 million or more.

Prenuptial agreements in Florida are valid. They are often a good way to ascertain and limit rights and property interests upon the death or divorce of two spouses. Florida prenups are often an excellent planning tool and a protection tool for late life or second or third marriages.

But often, attention is not paid to what happens if there is a death, not divorce, during one’s last decade of life. How are you going to protect senior citizens? Adding staggered payouts or term life insurance can avoid a spouse being destitute or burdened with financial hardship. In the end, the lawyer who advises you on this, and protects you is your best friend. Who’s looking out for your best interests? Advocate hard. Litigate smart.