For many engaged couples, a prenuptial agreement is likely low on the list when preparing for their big day. A search for a wedding caterer will probably supersede the search for a family law attorney. A prenup seems more the business of billionaires or celebrity marriages. However, even couples with modest assets can benefit from the use of a prenuptial agreement, especially ones with children from prior relationships. Read on to learn more about what a prenuptial agreement is, and what it can do for you.
What Is a Prenuptial Agreement?
In California the Uniform Premarital Agreement Act (UPAA) dictates the requirements for prenuptial agreements. The UPAA states a premarital/prenuptial agreement is a contract two prospective spouses sign before entering a marriage. The agreement covers the division of marital assets and debts in the case of a divorce, or what ought to be done with a party’s assets upon death. A prenuptial agreement is not considered effective until the date of marriage.
For a prenup to be valid it must have a written (not verbal) contract, legal terms within it, and voluntary signatures of both parties. Each party must receive complete information regarding the other’s properties, debts, and income. Once the agreement is made, each party has, at least, a week to consult independent legal counsel before signing the agreement. In California, each party must have independent legal counsel or waive their right to it for the agreement to be valid.
What Does It Cover?
As stated above, a prenup deals primarily with property and assets. They can cover such things as rights to property owned separately or jointly, the ability to manage a property, wills, and trusts to carry out provisions, life insurance policy benefits, and which jurisdiction will cover the agreement. Not only assets are covered in a prenuptial agreement. The couple can also decide how debts ought to be treated. For example, one spouse may contract to keep their student loan debt separate from the other spouse’s debts.
What It Cannot Cover
There are limitations as to what is permitted in a valid prenuptial agreement under California law. If a prenuptial agreement includes the following, a court will not enforce the contract:
- Anything regarding child custody or child support. (Unless the agreement provides more child support than what is obligated, such as paying for a child’s college funds.)
- Any spousal maintenance requirements, if the signing spouse opted out of receiving independent legal counsel.
- Any language requiring illegal acts of a spouse.
- Unfair, unjust, exploitative, or deceptive terms.
- Non-financial requirements include clauses such as demanding that one spouse loses weight or changes appearance.
- Any terms regarding the relationship.
Despite what is often portrayed in popular culture, a California prenuptial agreement cannot contain provisions that penalize one partner for fault. An example of this unenforceable provision is having one spouse agree they will get nothing in the event of infidelity.
Like any contract, violation of the agreements or improper execution in its creation and signing will render the contract invalid.
Why Have A Prenuptial Agreement?
Decisions made about the division of assets outside the heat of the moment or the complexities of divorce tend to be fairer to both parties. A prenup helps couples avoid expensive, emotionally exhausting, and drawn-out legal battles in the case of a divorce. However, a prenuptial agreement can serve many functions apart from the division of assets in the case of a divorce. While their primary function of protecting assets is an important one, they can also:
- Protect a party from assuming the debts of the other party
- Determine how property will be passed upon death
- Clarify financial rights and responsibilities during a marriage
An important reason to have a prenuptial agreement is to protect the inheritance of children from another relationship. You may want to have your property pass to your previous children upon your death, instead of it transferring to a spouse under state law. Prenuptial agreements allow you to make these arrangements from the very beginning.
If you’re considering a prenuptial agreement, or are seeking advice on one presented to you, contact us at 714.456.9118 or send us an email at email@example.com. While we’ve given a basic outline of what a prenuptial agreement entails, each one has unique details and nuances due to the parties and assets involved. We can help guide you through the process, so you can feel confident in the terms of your agreement.