Post-nuptial agreement protects mom’s gifts

QMy wife and I are happily married. The same cannot be said for my brother and his wife. My mom recently approached me with her elder planning documents. She is afraid she will someday need nursing home care so her plan is to max out 529 plans for my two kids and my three nieces and start gifting money to my brother and me at the maximum levels. She also plans to put both of her homes into a trust with my brother and me as equal beneficiaries.

She wants to protect these gifts from my brother’s wife but she doesn’t anyone to think she is judging their relationship.

What do you suggest? A

Your mother can condition the gifts to both of you upon the execution of post-nuptial agreements to protect these gifts. You and your wife could do so first to set the example for your brother and his wife.

There are a few things to know about a post-nuptial agreement. While people often think of them in the same category as a pre-marital agreement, the stakes are higher because the parties are already married. They already owe each other certain obligations. Make sure to hire a lawyer who has experience in drafting post-nuptial agreements. Have your wife do the same. You can create an agreement whereby any gifts received from your mother would be considered your “separate property” in the event of a divorce. There needs to be some benefit to your wife in entering such a bargain. The obvious benefit seems to be that you will have access to the use of the gifts for the benefit of the family during the marriage.

To sweeten the deal, if you believe your mother will fully fund college for all of your children through the 529 gifts, you can offer to relieve your wife of any obligation to contribute to the cost of your children’s college educations.

The goal of a post-nuptial agreement is to be fair and reasonable at the time of execution and again at the time of enforcement. The leading case suggests if there is a material change between the time of execution and divorce, such a material change may impact the enforceability of the post-nuptial agreement. So, if you can think of any foreseeable changes, you should note them in your agreement to be clear you considered them and entered the agreement anyway.

Be prepared to exchange detailed financial disclosure with your wife. Full and accurate financial disclosure is paramount to the enforceability of any post-nuptial agreement.

Once you and your wife have a solid draft, approach your brother with an “I’ll show you mine if you show me yours.” Then hope he can convince his wife to take a similar approach.