It is a common misconception that a Prenuptial Agreement is only for the rich and famous. This is not always the case. A Prenuptial Agreement or Premarital Agreement is a contract between an unwed couple in contemplation of marriage, where they can specifically include their expectations as to property rights financial responsibilities once they marry. Since the agreement is a contract, it has to be in writing and signed by both parties. The purpose of the agreement is not to encourage or promote divorce like many people think, but instead it is a way of entering the marriage with full disclosure and understanding of each other’s rights during and after marriage.
Neither of the couple needs to be rich, famous, or own several assets. Anyone can enter into an agreement, as long as the couple is unmarried, plan to marry, and have at least 7 days prior to their marriage to review the Prenuptial Agreement and sign before marriage. The parties entering into the agreement have the flexibility to include almost any terms or conditions they wish, as long as the terms or conditions do not promote divorce and do not include child support, child custody, or other terms regarding children. Prior to entering into a Prenuptial Agreement, It is important to have a basic understanding property law and rights in California given that California is a community property state. In basic terms, community property means that all assets and debts acquired during the marriage belong to the community (to both of you equally). Property you own prior to marriage or receive through inheritance, is separate property. However, it is important to understand that these laws are complex and even if you own property prior to marriage that is separate property, once you marry your spouse could have some interest in it. This is why it is important to consult with an attorney prior to your marriage in order to fully understand where you stand as to your assets and debts prior to marrying.
Many people enter into Prenuptial Agreements to preserve preexisting property rights and interests, however, even if you don’t own anything prior to the marriage, it does not mean you won’t acquire any property during marriage or that your financial situation won’t change during marriage. For example, if you buy a property during marriage and you are the one who puts the down payment and makes all mortgage payments, do you intend for it to be equally split with your spouse if you ever get divorced? What agreement will you have? Does your spouse need to contribute anything towards the property? These are some examples of some of the issues a Prenuptial Agreement can resolve even if you do not have assets prior to the marriage. A Prenuptial Agreement can always modified so long as both of you agree in writing, even after the parties marry.
A Prenuptial Agreement does not have to be complex, but it is important to protect both parties’ rights. One should plan ahead by taking the following steps: (1) begin discussing the idea of a Premarital Agreement with your partner; (2) discuss what you would like to achieve with this agreement (i.e. will income be joint, assets, spousal support in the event of a divorce, new property, etc.); (3) make a list of each of your assets and debts; and (4) each of you consult with your own attorney (the same attorney cannot represent both of you).
Preparing the Prenuptial Agreement and negotiating the terms can take time, and the law requires that each of the parties need at least 7 days prior to their marriage to review their Agreement and the Agreement must be signed before the parties marry. Negotiating terms in a Prenuptial Agreement the week of the wedding or signing the Agreement the day before the wedding is the last thing you want to be dealing with as it can cause more stress.
Unfortunately, due to the current COVID-19 pandemic and the closure of several businesses, many weddings have been postponed to a future date. If you did not enter into a Prenuptial Agreement and were thinking about it, but never got around to it, now is the best time to begin discussing this with your partner. A Prenuptial Agreement does not get filed with the Court, so the courts current closure has no effect on getting a Prenuptial Agreement.
The terms of a Prenuptial Agreement are crucial, so it is important to speak to an experienced attorney to ensure your agreement is valid and protects your interests.
By: Anna Encinias, Esq., Attorney at Contreras Law Firm