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Experienced Guidance For Prenuptial Agreements

A Prenuptial Agreement (Premarital Agreement or “Prenup”), is not only for movie stars – it may help you and your fiancé have a better understanding of your anticipated marital finances, inform you both of your financial situations, and can ensure that you and your fiancé enter into your marriage based on open and honest communication, even if the topic may be uncomfortable at first.

A prenup doesn’t have to be dramatic like in the movie or the tabloids (and in many cases, the movies have the laws wrong). Your agreement can be as simple or as complex as you and your fiancé decide. It can be a straightforward verification of the assets and debts that you are each bringing into the marriage without changing any future property or support rights, or it can (almost) completely contract out of the California community property rules. The idea is to have a conversation and make informed and intentional decisions in advance. A prenup is simply an agreement between people who intend to get married. It is written in advance of getting married and is only effective after meeting certain legal requirements and after the marriage occurs.

Understanding Prenuptial Agreements In California

Prenuptial agreements in California are a contract that is governed by the Uniform Premarital Agreement Act (UPAA) which was created in 1986 with significant changes that apply to prenups created after 2002. As a type of contract, laws that apply to all contracts are applied to prenups. For instance, the agreement requires valid consent – meaning that each person must be capable of knowingly entering into the agreement, the must have the legal and intellectual ability to consent, and consent cannot be the result of force, fraud, undue influence, or some forms of mistake.

Prenups are generally intended to be enforceable against a spouse upon divorce. However, a prenup can also contain agreements that change property rights and therefore potentially affect inheritance rights depending on how they are drafted. This can be intentional as part of an overarching estate planning structure – for example, to provide for separate children’s inheritances – or could be creating unintended consequences if not drafted property – for example, increasing your separate estate upon death and triggering probate or not protecting your surviving spouse as you had intended.

Criteria Necessary To Enforce Prenuptial Agreements

Under current laws, for a prenup to be enforceable against your spouse, certain basic criteria must be met.

  • The other person had at least 7 days between first receiving the proposed agreement and signing it (to allow for time to review and seek legal assistance);
  • The other person received complete information about your property and finances prior to signing the agreement; and
  • Was represented by their own attorney unless they received written information about the terms and potential impact on their rights and obligations and signed a separate document acknowledging receiving the information, stating who provided the information, acknowledging that they were informed they had the right to an attorney and chose to waive that right.

Additional requirements must be met in order to make specific categories of agreements valid (such as a waiver of spousal support). There are considerations regarding language barriers and fairness that can be used to void (not allow) a prenup later on if the bargaining power is not equal when you draft and sign the initial agreement. In general, the larger the difference in education, language fluency, and the farther away from California’s “default” laws you are trying to contract away from – the more formalities and protections you will want to have built into your agreement to ensure that it will not be successfully challenged and thrown out at some time in the future. The most effective way of ensuring that your agreement will be upheld is for each party to have their own attorney.

Other terms that encourage divorce (such as one spouse benefiting by receiving a significant financial settlement in the event of a divorce) will not be upheld by the Courts. Parties also cannot agree in advance to binding agreements regarding custody and child support terms (to the extent that it stops the courts from being able to make determinations under the law to provide for and protect the children).

Is A Prenup Right For You?

A prenup isn’t for everyone. Depending on the type of assets you are trying to protect (inheritances, separate property assets being brought into the marriage, or future property rights), there can be multiple options available to you. In many situations, using a revokable trust as part of an estate plan can be a better option either by itself or along with a prenup. In some cases, good record keeping may protect the intended assets without a prenup. The best strategy is to put every protection in place that you have available. From there, you can control what happens to your own property including gifting it to the community if you later decide to do so.

So, do you need a prenup? Perhaps. Do you have significant assets that you are bringing into the marriage? Do you own your own business? Do you intend to keep your finances separate and want to protect the marriage but also yourself (or both of you) in the event of divorce? Do you want to simplify any potential separation to preserve your ability to coparent? Do you want to ensure that you are both protected in the event that you move to a different state that may not have the same laws and rights that you intend each of you to have? Prenups can be agreements to almost anything – you can’t agree to something illegal or deemed against the public interest – but there is a full spectrum of options between allowing the state to define your rights under the default laws and fully leaving the community property system. For most people, the right balance is closer to the standard rules with specific agreements to protect designated assets and rights.

Regardless of what you decide, it’s worth having a discussion with your fiancé and deciding what is right for each of you individually and as a couple. If you cannot have this sort of conversation and trust your spouse to participate in an open and honest manner (or you aren’t willing to do so), then you are starting off your marriage without the benefit of knowing if you are both capable of handling difficult conversations.

Discuss Your Options Today

If you’re considering a prenuptial agreement or just want to discuss your options, contact Cal Family Solutions to learn how I can help. Call 916-287-3237 or email me today.