11 Feb Everyone Has A Prenup
Every couple who gets married in California has a prenup. What? That’s right, every couple who gets married in California has a prenup. That prenup is known as California law, and includes the laws provided in the California Family Code, the California Probate Code, the Uniform Premarital Agreement Act, and related case law. California law will govern a married couple’s financial rights and responsibilities during marriage, and in the event of death or divorce.
People don’t generally think of the law as a prenup, but in essence it is. And most people don’t really know what their default “prenup” provides. They may have heard that California is a community property state, but they don’t really know the details of what would, or would not, be considered community property in their situation. Or they may have misinformation – a misconception I hear is that people think that if you are married for more than 10 years in California, then spousal support automatically goes on forever.
Approached in the right way, a prenup – one that is a legally binding contract signed by the couple before they get married – can help to clarify and answer important questions such as:
• What does California law provide?
• What are our respective expectations about our future financial life together?
• What financial goals do we each have?
• Does California law provide a framework that works for our situation?
• If one spouse is being asked to waive certain financial rights, what arrangement can be put in place that provides financial security and fair consideration for the waiver?
Here are some examples of situations that might motivate someone to have a prenup:
• One spouse has significant family wealth or expected future inheritance and he or she (or his or her parents) want to ensure that the family wealth remains separate property;
• One or both spouses had a contentious, expensive divorce from a prior marriage and wants to avoid having a similar experience;
• One spouse is relocating for the marriage and sacrificing career opportunity to do so, and wants to make sure that he or she is provided for in the event of death or divorce;
• One spouse has built a business and wants to clarify how the business will be treated in the event of divorce;
• One or both spouses have children from a previous marriage and wishes to clarify the rights of the new spouse and the children in the event of death or divorce;
• One spouse comes into the marriage with significant debt and the other spouse wants to be protected from becoming responsible for that debt.
Prenups can be a useful financial and estate planning tool that affords couples an opportunity to talk about money with a clean slate. Before you hire an attorney, ask about their process and make sure their approach aligns with your goals. With the help of the right professional, prenups be crafted in a way that is fair for both parties.
Next week we will post a detailed list of the issues you will consider if you seek a prenup.