According to a recent poll, prenuptial agreements are becoming increasingly popular in the United States. Younger couples seem especially willing to sign prenuptial agreements, suggesting that this popularity will continue to rise in California for the foreseeable future.
You may be only vaguely familiar with prenuptial agreements. But, a more complete understanding will allow you to approach marriage in a financially responsible manner while protecting your property.
Contact the Cherish Om Law Office to discuss the potential benefits of a prenuptial agreement, the possibility of a postnuptial agreement, and more.
Understanding Prenuptial Agreements
What Is the Definition of a Prenuptial Agreement in California?
A prenuptial agreement is a legal contract between two partners approaching marriage. Both parties sign this agreement before they exchange their vows and become a married couple.
The word “prenuptial” comes from Latin, and it means “before a marriage.” Family law attorneys and spouses may refer to these agreements simply as “prenups.” Some also use the term “pre-marital agreements.”
Like all U.S. states, California recognizes the validity of prenuptial agreements. These contracts can cover various financial issues, including property division, spousal support (alimony), and estate planning.
The Uniform Premarital Agreement Act
The most relevant state law in California is the Uniform Premarital Agreement Act (UPMAA). Twenty-five states, including California, follow this universal set of rules when regulating premarital agreements.
Even if a couple eventually moves to one of these 25 states after creating their prenup in California, the same basic rules apply. The UPMAA goes into detail in several key areas, including:
- Life insurance policy matters
Benefits of Signing a Prenuptial Agreement
A spouse who signs a prenuptial agreement may experience various advantages:
Prenups Facilitate Greater Understanding Between Spouses
At its core, a prenuptial agreement helps spouses protect their separate assets and marital property if the marriage ends. However, prenups may also provide certain emotional benefits for couples approaching marriage.
When spouses draft a prenup, they have a chance to communicate their concerns and clarify their feelings. Without this process, important conversations regarding divorce may never occur. A prenup can facilitate greater understanding between spouses and certainty about the future.
Prenuptial agreements can also serve the interests of spouses with higher levels of financial vulnerability. If an individual is approaching marriage with a high-net-worth individual, a prenuptial agreement can guarantee a certain degree of financial support – whatever happens. By encouraging greater communication between partners, prenups can strengthen relationships.
Prenups Often Ease the Burden of Divorce
Prenups have the potential to make divorces easier, cheaper, and less time-consuming. When both spouses know how their divorces will occur, they do not need to resolve complex disputes in court. Every eventuality and possibility can be covered in the prenup. With this predetermined dispute resolution process, divorces may be resolved faster than litigation.
Prenups Help Spouses Protect their Businesses
An entrepreneur can use a prenuptial agreement to protect their business from the potential impact of a divorce. A prenup can prevent an ex-spouse from taking ownership of the business (partially or wholly) via the property division process. Entrepreneurs may lose control of their business’ trajectory after losing voting shares to their former spouses, and this may affect profit-earning potential in the future. A prenuptial agreement can provide greater security for not only business owners, but also shareholders.
Prenups Help Resolve Debt Issues
Prenuptial agreements can simplify and clarify the division of debts between spouses, preventing one spouse from being held responsible for debts accumulated by the other during marriage. These might include highly burdensome liabilities, such as mortgages or student loans.
Prenups Provide Heightened Flexibility
Prenups provide a degree of flexibility that can be difficult to replicate through litigation, mediation, or any other dispute resolution strategy. With a prenuptial agreement, spouses can protect specific assets from division. These might include lucrative assets such as businesses or real estate. Prenups can also target and protect assets with sentimental value, such as family heirlooms or collectibles.
How to Create a Valid Prenup in California
Do I Need a Lawyer to Get a Prenup?
Under California law, both spouses must get legal advice from their own lawyers (each from a different law firm) before entering into a prenuptial agreement. That being said, a prenup attorney is not necessarily required to draft the prenup agreement itself.
What Might Invalidate a Prenuptial Agreement?
Generally speaking, a wealthy spouse is not allowed to leave their ex destitute after a divorce. Even if a spouse agrees in writing to walk away from their marriage without a single cent, the courts may find that this prenup is unenforceable.
This is a common example of an “unconscionable” arrangement – an agreement that is invalid because it is excessively unfair. Some degree of inequality is allowed, but a prenuptial agreement should not leave a spouse penniless.
It is important to remember that California has a strong incentive to avoid this outcome, as any spouse who is forced to go on welfare represents a burden for California taxpayers.
And, you should know that you can’t include any child support terms in your prenup. Courts decide appropriate child support, not the parents.
Agreements Signed Under Duress
A prenuptial agreement signed “under duress,” is not valid. In other words, these contracts lose their enforceability if the spouse feels pressured to sign them. For example, a partner might threaten to break up with a future spouse unless they sign a prenuptial agreement.
Not Having Sound Mind
Prenups are also invalid if signed by an individual who lacks a “sound mind.” Anything that impedes a person’s cognitive abilities may trigger this invalidation; including intoxication, brain injury, sleep deprivation, and so on.
What to Include in a Prenuptial Agreement
A typical prenup contains plenty of provisions regarding property division, covering any separate property that the spouses currently own and assets they may accumulate during the marriage (community property).
The subject of property division also includes liabilities that the spouses currently have or may accumulate in the future.
What Cannot Be Included in a Prenuptial Agreement?
While a prenuptial agreement can cover a range of different issues, it cannot cover every possible outcome related to divorce:
Matters Related to Children
A prenup can’t include terms related to child support. The court decides what is in the best interest of the child. You can’t decide in advance what child support you will pay in the future.
Many couples try to include clauses that penalize infidelity. For example, one spouse might want to include that her husband won’t get half of their business if he cheats. However, this type of clause is not enforceable in court. So, it’s better left out.
Obligations of Third Parties
Legal contracts can only create obligations for those who actually sign them. Spouses cannot agree that someone else should be forced to do something – whether that third party is a child, a banker, a prenuptial agreement attorney, or anyone else.
A prenuptial agreement becomes invalid if it requires either spouse to engage in illegal conduct. Simply mentioning an illegal act can be enough to invalidate a prenup in the State of California.
It may be easier to create an agreement with unlawful terms than many future spouses realize. Certain financial transactions outlined in the agreement, for example, may be classified as fraudulent.
Why You Should Consider a Prenuptial Agreement
A prenuptial agreement may provide cost-saving benefits that outweigh the associated legal fees, primarily due to the potential elimination of litigation costs associated with a contested divorce. If spouses cannot agree on how to divide their assets without a prenup, they may incur excessive legal fees as they resolve their disputes in court. This is one of the main reasons prenuptial agreements are popular today among spouses of all income levels, and statistics show that they are becoming more popular with each passing year.
Contact The Cherish Om Law Office Today
To explore the possibility of a prenuptial agreement in more detail, contact the Cherish Om Law Office today. During a consultation with a prenup lawyer, spouses can discuss their unique needs and lay the foundation for a personalized, effective prenuptial agreement.