How Prenuptial Agreements are Used for Estate Planning in Kentucky 

When people hear the term “prenuptial agreement,” their minds often jump to contentious divorces and the division of assets. While these agreements do play a significant role in clarifying financial matters in the event of a marriage dissolution, their purpose and power extend far beyond that scenario. A well-crafted prenuptial agreement is one of the most effective and proactive estate planning tools available, particularly for individuals in Kentucky with children from a previous relationship, business ownership interests, or significant personal assets.

Thinking about a prenuptial agreement as solely a “divorce document” misses its greater value. It is, at its core, a financial and property agreement that allows a couple to define their economic partnership on their own terms. 

What is a Prenuptial Agreement in Kentucky?

A prenuptial agreement, legally known in Kentucky as an antenuptial agreement, is a written contract entered into by two people before they marry. The agreement outlines how their assets and debts will be managed during the marriage and how those same assets and debts will be distributed if the marriage ends, whether by divorce or by the death of one spouse.

To be legally binding in Kentucky, a prenuptial agreement must meet several conditions. It must be in writing and signed by both prospective spouses. Critically, it must be entered into voluntarily, without any fraud, duress, or coercion. Both parties are required to provide a full and fair disclosure of all their assets, liabilities, and income before the agreement is signed. This transparency is foundational to the agreement’s validity. An agreement that is unconscionable—meaning it is so grossly unfair to one side that it shocks the conscience—at the time it is signed could be set aside by a court.

How Does a Prenup Go Beyond Divorce to Shape Your Estate?

Kentucky law has specific rules about how a person’s property is distributed if they die without a will (intestate succession) and grants certain rights to a surviving spouse even if there is a will. A prenuptial agreement allows you and your future spouse to create your own set of rules, overriding these legal defaults to achieve specific estate planning goals.

Without a prenup, the assets you bring into the marriage can easily become commingled with marital property, making them subject to division in a divorce or subject to a surviving spouse’s inheritance claims. A prenuptial agreement acts as a powerful barrier, meticulously defining what constitutes “separate property” (belonging to one spouse) and what is considered “marital property” (belonging to the couple jointly). This distinction is the cornerstone of its utility in estate planning, ensuring that your separate assets are directed precisely where you intend for them to go after your death.

What Key Estate Planning Issues Can a Prenup Address?

A prenuptial agreement can be customized to address a wide range of specific estate planning concerns. By planning ahead, you can create certainty for your heirs and prevent potential conflicts between your new spouse and other family members, such as children from a prior marriage.

• Protecting Assets for Children from a Prior Marriage: This is one of the most common reasons for using a prenup in estate planning. An agreement can explicitly state that certain assets (like a family home, investments, or heirlooms) are the separate property of one spouse and will pass directly to their children, not to the new spouse. This prevents the unintentional disinheritance of your children.
• Defining Marital vs. Separate Property: The agreement can clearly list all assets and debts each person is bringing into the marriage and declare them as separate property. It can also dictate how property acquired during the marriage will be treated. For instance, you can specify that appreciation of separate property remains separate, even if it occurs during the marriage. This clarity simplifies the probate process and ensures your separate property is not inadvertently claimed by your spouse’s estate or their heirs.
• Waiving Spousal Inheritance Rights: A prenuptial agreement can include a waiver of specific spousal rights provided by Kentucky law. The most significant of these is the “elective share,” which allows a surviving spouse to claim a portion of the deceased spouse’s estate regardless of what the will says. By waiving this right, you ensure your will’s instructions will be followed completely.
• Clarifying Business Succession: For business owners, a prenuptial agreement is a vital tool. It can prevent a new spouse from gaining an ownership interest in a family business. The agreement can stipulate that the business remains the separate property of the owner-spouse and that its value will pass to designated successors, such as children or business partners, without interference.
• Addressing Responsibility for Debts: Prenups are not just about assets; they also address liabilities. The agreement can clarify that each spouse is responsible for the debts they bring into the marriage and that a spouse’s separate assets cannot be used to satisfy the other’s creditors, either during life or after death.

The Kentucky Elective Share: A Right Your Prenup Can Modify

One of the most powerful legal rights granted to a surviving spouse in Kentucky is the right to an “elective share.” Under state law, a surviving spouse has a right to claim a portion of their deceased spouse’s assets, even if the will leaves them nothing. This is designed to prevent a person from being completely disinherited by their spouse.

However, this statutory right can create immense problems for individuals with specific estate planning goals, especially in second or subsequent marriages. For example, if you want to leave your entire estate to your children from a first marriage, your surviving spouse could still override your will and claim a significant portion of your assets through their elective share rights.

A prenuptial agreement is one of the few legal mechanisms that can effectively address this. Within the agreement, both parties can voluntarily and knowingly waive their right to the elective share of each other’s estate. This waiver is a clear statement that you both agree to abide by the terms of each other’s wills or trusts, whatever they may be. This ensures that your estate plan will be executed exactly as you have designed it, without being disrupted by a spousal claim.

Are Prenuptial Agreements Enforceable for Estate Matters in Kentucky?

Yes, as long as the agreement is validly executed, Kentucky courts will enforce its provisions regarding the distribution of assets upon death. The same standards of validity that apply in the context of a divorce—full financial disclosure, voluntariness, and fairness at the time of execution—also apply when the agreement is presented during the probate process.

When a spouse passes away, the prenuptial agreement is presented to the probate court along with the will and other estate documents. The executor of the estate is bound to follow the terms of the prenup when identifying separate property, satisfying debts, and distributing assets. If the prenup contains a valid waiver of the elective share, the surviving spouse cannot make that claim against the estate. This makes the agreement a controlling document that works in tandem with the will to direct the final settlement of your affairs.

How Does a Prenup Interact with Other Estate Planning Documents?

A prenuptial agreement does not replace a will, trust, or power of attorney. Instead, it serves as the foundation upon which your other estate planning documents should be built. For your plan to be effective, all the pieces must work together harmoniously.

• Your Will: Your will should be drafted to be consistent with the terms of your prenuptial agreement. For example, if your prenup designates your brokerage account as your separate property to be passed to your son, your will should reflect this and not attempt to bequeath that same account to your spouse. Contradictions between the documents can lead to costly litigation.
• Trusts: Trusts are often used in conjunction with prenuptial agreements. You can create a revocable living trust and fund it with the assets you have defined as your separate property in the prenup. This provides an additional layer of protection and can help avoid the probate process altogether, ensuring a seamless transfer of assets to your intended beneficiaries (like your children) upon your death.
• Beneficiary Designations: Life insurance policies and retirement accounts (like 401(k)s and IRAs) pass outside of your will to the person you name as a beneficiary. It is very important to ensure your beneficiary designations align with your prenup and will. For example, your prenup may state your spouse waives any right to your 401(k), but if you still list them as the beneficiary on the account paperwork, the beneficiary designation will likely control. All your documents need to be consistent.

What Makes a Prenuptial Agreement Valid in Kentucky?

For a prenuptial agreement to stand up in court, either during a divorce or in probate, it must meet specific legal requirements. Lacking any of these can render the entire agreement unenforceable.

• The Agreement Must Be in Writing. Oral promises or agreements made before marriage are not enforceable.
• It Must Be Signed by Both Parties. Both individuals must sign the document, acknowledging they accept its terms.
• There Must Be Full and Fair Financial Disclosure. Both parties must provide each other with a complete and accurate list of their assets, debts, and income. Hiding assets or misrepresenting value can invalidate the agreement.
• The Agreement Must Be Voluntary. Each party must sign the agreement of their own free will, without being subjected to duress, coercion, or undue influence. A common red flag for courts is an agreement presented just days before the wedding with a “sign it or the wedding is off” ultimatum.
• The Agreement Cannot Be Unconscionable. Unconscionability is tested at the time the agreement is signed. An agreement is unconscionable if it is so one-sided and oppressive that no reasonable person would agree to it.
• Independent Legal Counsel. While not strictly required by Kentucky statute, it is highly advisable for both parties to be represented by their own independent attorneys. This demonstrates that both individuals had the opportunity to receive knowledgeable advice about their rights and the implications of the agreement, which greatly strengthens its enforceability.

Who Should Consider a Prenuptial Agreement for Estate Planning?

While any couple can benefit from the clarity a prenuptial agreement provides, it is particularly valuable for individuals in certain situations. You should strongly consider a prenup as an estate planning tool if you:

• Are entering into a second or subsequent marriage.
• Have children from a prior relationship.
• Own a business or have a professional practice.
• Possess significant personal assets, such as real estate, investments, or retirement funds.
• Expect to receive a substantial inheritance in the future.
• Have significantly more assets or income than your future spouse.
• Are concerned about protecting your assets from your future spouse’s debts.

When is the Best Time to Create a Prenup and Estate Plan?

The process of drafting a prenuptial agreement should begin well in advance of the wedding date—ideally, three to six months before. This allows ample time for calm and thorough discussions, full financial disclosure, negotiation of terms, and review by independent attorneys without the pressure of an imminent wedding.

Once the prenuptial agreement is signed, you should immediately review and update your estate plan. If you do not have one, it is the perfect time to create one. Your will, trusts, and powers of attorney should be drafted or revised to align perfectly with the property classifications and waivers established in your prenup. Waiting until after the marriage to handle your estate plan can lead to oversights that undermine the protections you sought to create.

The Process of Creating a Cohesive Prenup and Estate Plan

Creating an integrated plan involves a series of deliberate steps. Approaching it methodically ensures all your goals are met and your documents are legally sound.

• Open Communication: Have an honest conversation with your future spouse about your financial goals, concerns, and intentions for your respective assets and heirs.
• Gather Financial Information: Each of you should compile a complete list of your assets, debts, and sources of income.
• Consult with an Attorney: Each of you should retain your own knowledgeable attorney to receive independent advice.
• Draft the Agreement: One attorney will draft the initial prenuptial agreement based on the couple’s discussions.
• Review and Negotiate: The other attorney will review the draft with their client, and the lawyers will negotiate any changes.
• Finalize and Sign: Once both parties and their attorneys are satisfied, the final agreement is signed.
• Update Estate Plan: Immediately following the execution of the prenup, work with your estate planning attorney to draft or amend your will, trust, and other documents to be in full alignment with the agreement.

Build a Secure Foundation for Your Future

A prenuptial agreement is not an expression of doubt in your relationship; it is a mark of respect and financial foresight. By using it as an estate planning tool, you are taking control of your legacy, protecting your loved ones, and providing a clear path for the future. It allows you to enter a marriage with transparency and the assurance that your lifelong work and assets will be handled according to your precise wishes. 

If you are considering marriage and want to explore how a prenuptial agreement can be integrated into a comprehensive estate plan, the legal team at John H. Ruby & Associates is here to provide the guidance you need. We are committed to helping you build a secure legal and financial foundation for your new life together.

To discuss your situation and learn more about your options, schedule a consultation by calling us at 502-373-8044 or reaching out online.