What Goes into a Prenuptial Agreement?
Sometimes in life, things don't work out the way we expect them to. As hard as we try to make it work, sometimes a marriage falls apart. In addition to the emotional trauma this process can cause, it can also be devastating financially. The results can seem very unfair. However, it doesn't have to be like this. Planning ahead can put you in a much better position if you get into the unfortunate position of getting divorced.
The community property laws of California largely dictate what happens to property upon dissolution of a marriage. A prenuptial or premarital agreement, properly executed, allows you to contract around those laws, and dictate how property acquired during marriage will be treated.
Community property in California
California is a community property state. This means that most property and debts acquired during marriage belong “to the community” of the 2 spouses (they own it together). Upon divorce, community property and community debt is generally split 50/50 between spouses.
Quasi-community property is property acquired while living in another state that would have been community property if acquired in California. At divorce, this property is treated as community property.
Separate property is that which was owned by each spouse prior to marriage, as well as income, rent, and profits from such property. Gifts or inherited property are separate property regardless of when it was acquired. Separate property generally goes to its respective owner at divorce.
To determine the character of property, the courts will trace it back to its source. For instance, if a wife buys a car with separate property money, the car is her separate property.
Requirements for a valid prenuptial agreement
Among the important requirements for a prenuptial agreement to be considered valid are:
- Formalities: It must be in writing and signed by both spouses.
- Fairness: The agreement should not be unconscionable at the time it is executed.
- Voluntary: Both parties must enter the agreement voluntarily, free of duress, fraud, or undue influence, and have the legal capacity to agree to the terms.
- Financial disclosures: A “fair, reasonable, and full” disclosure of assets and debts should be provided by each party. Generally, the rule of thumb is the more disclosure the better.
- Legal representation: Each party must be represented by independent legal counsel or, after being advised of this, waives such representation in a separate writing.
- If no legal representation: The unrepresented party must be fully informed of the terms and effect of the agreement and what they are giving up. This explanation must be in a language the party is proficient in and be provided in writing. The unrepresented party must declare in writing that this information was provided to them and by whom.
- Review period: Each party must have at least 7 days from being presented with the agreement and being advised to get a lawyer to the date the agreement is signed.
After the parties are married, they may decide to amend or revoke the agreement. This must be done in writing and signed by both spouses.
What can and can't be part of the agreement
California law allows parties to a prenuptial agreement to contract regarding all of the following:
- Property ownership rights, whether acquired before or during marriage
- Rights of management and control of property
- Where property will go upon separation, divorce, death, or some other event
- Drafting a will or trust to carry out the terms of the prenuptial agreement
- Rights to life insurance proceeds
- Which state's law will control the interpretation of the agreement
- Other matters that do not violate public policy or criminal law
One obligation you cannot contract away in a prenuptial agreement is child support. California law places a high value on the support of children, and consequently, a child's right to support cannot be adversely affected by the agreement.
Spousal support, on the other hand, can be waived in a prenuptial agreement. However, strict requirements must be met for the waiver to be valid. Such a provision will be held unenforceable if the spouse otherwise entitled to support was not represented by independent counsel when the agreement was signed. Even if the other party is represented by counsel, it might still be invalid if the court finds it unconscionable at the time of enforcement. One example of this would be if the spouse is disabled, or otherwise unable to provide for himself or herself at the time of divorce. If this is the case, the court may decide to ignore the waiver of spousal support clause.
For a valid prenuptial agreement, every effort should be made to deal fairly by both spouses and comply with the above rules. Ideally, both sides should be represented by independent counsel, even if not technically required.
Helix Law Firm can draft a prenuptial agreement for your needs
We can discuss your options and help you come up with the right solution for your needs. If you're interested in signing a prenuptial agreement, please call us at (619) 567-4447 to schedule a free consultation.