Learn How Prenuptial Agreements Can Make Sense for You and Your Partner
Good Reasons for a Prenuptial Agreement
Without a prenuptial agreement, divorce is complicated. With one it’s not easy peasy but it is less complicated.
Reason 1 – Under the statutory law in California, once married half of all earnings, property accumulated from those earnings during marriage including your retirement, as well as the increaese in value of assets, belong to your spouse upon divorce or death. A prenup lets the parties decide how they will divide their assets and decide what alimony if any is appropriate.
Reason 2 – Categorizing real property, money, brokerage accounts, and other valuable property as separate or community property during a divorce can be very complicated and can depend on many factors. This results in uncertainty as to how assets will be divided if divorce occurs. The amount of alimony (spousal support) and the length of time alimony must be paid is also dependent on many factors – generally, alimony would last for ½ the marriage period. If married for over 10 years support can last indefinitely, even until the death of a party. With a prenup all these issues can be decided by the parties. You and your fiance can determine what is fair for you.
Reason 3 – With a prenup you can designate your assets as separate or joint property, specifying ownership percentages, according to your intentions. You can also include alimony terms to specify or waive spousal support.
Misconception 1: I don’t need a Prenup. My spouse and I will put our income into separate accounts and pay for stuff together when we need to. My money will stay my separate property and their money will stay their separate property.
Fact Check: Without a Prenuptial Agreement, each person’s income, even if put into a separate checking/savings account is considered community property and shared evenly.
Misconception 2: Prenuptial agreements are expensive.
Fact Check: Maybe, but when compared to the financial and emotional cost of addressing the characterization of community property and division of community property and addressing the issue of spousal support in the divorce process, a prenuptial agreement is well worth the money.
Misconception 3: Prenuptial agreements are only for the super-rich.
Fact Check: Prenuptial agreements are helpful for lots of people. Given the cost of divorce, both financially and emotionally, it makes sense to come to an agreement on how your assets will be treated and what alimony, if any, will be paid prior to divorce.
For example, if you own a home prior to marriage, you might think that your spouse will not have a community interest in the residence, but you can be very wrong. The law on this topic is complicated. Read more about the community property interest your spouse has in a home you purchased before marriage here. A prenuptial agreement can ensure that a home owned by a spouse before marriage remains that spouse’s separate property without any complications.
Parties often desire a prenuptial agreement to address only one or two items to keep separate – retirement accounts, real property owned before marriage, small businesses – and leave the other issues, such as alimony, to be decided pursuant to the California Family Law Code.
Misconception 4: Prenuptial agreements will cause problems in our relationship.
Fact Check: Not true. Discussing with your partner your future financial plans and expectations for the relationship will lead to a more solid foundation of trust.
Misconception 5: Prenuptial agreements are not enforceable (i.e. will not be upheld by the courts).
Fact check: Not true. California law states that prenuptial agreements will be enforced if appropriate care is taken in the process.
Common reasons for a California Family Law Courts to invalidate are prenuptial agreement are:
- The agreement was prepared without the help of attorneys and contains unenforceable components.
- Only one party was represented by a lawyer and the other party did not consult with a lawyer.
- The party to whom the prenuptial agreement was presented was not given sufficient time to review it under the law.
- The parties did not provide each other with complete financial disclosures. Each party must be aware of the assets, debts and income of the other. The idea is that full financial disclosure ensures the party makes an informed decision to enter into a prenuptial agreement.
- There was coercion. If one party exercises undue influence and the other party can prove it, the Court is likely to invalidate the prenuptial agreement.
If you have a properly drafted prenuptial agreement, attorney representation on both sides, and there is no duress, your prenuptial agreement will be upheld in court.
Contact a respected California family law attorney for help with marital agreements
Galen Gentry assists clients in Los Angeles and Southern California with drafting, reviewing and enforcing prenuptial and postnuptial agreements to protect their interests. Call at (310) 282-7521 or contact us online by using the Orange form on the right of your screen to schedule a free consultation.