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A large number of marriages today involve couples in which one or both were previously married. Because such marriages can involve parties with significant wealth, and/or children from a prior marriage, many couples today enter their formal married life subject to the provisions of a prenuptial agreement. These agreements can be used to assure children of an inheritance free from the claim of a new stepparent, or could provide for survivor's benefits to a spouse who gives up other benefits upon the marriage. While the requirements for a binding and enforceable agreement vary from state to state, and each couple's goals are different, there are some common elements to such agreements.
In most agreements, the couple has agreed to define and limit, in advance, the property rights of each spouse upon divorce and death. Although a widow's or widower's rights in the deceased spouse's property may be fairly clear, the rights of a divorcing spouse are often determined under a state's laws, based on many factors which can produce a range of possible results. Generally, the parties to a prenuptial agreement specify that each party's rights are other than what the law would provide (absent a prenuptial agreement), or at least limit the range of rights. This predefinition of such rights is often the most compelling reason for such agreements, because the parties have some level of certainty of the results they can expect upon death or divorce.
In many such agreements, the parties provide for a death benefit, whether the death occurs during the marriage or following a divorce. Often the parties realize that life insurance is an excellent vehicle to fund a party's obligation to provide such a benefit. In such a setting, life insurance is playing its traditional role of either protecting or...