12th Jul 2012
If you are considering a new marriage but are concerned about California Community Property Law or exposure to spousal support, the answer may be a premarital agreement. A prenuptial, or more correctly a premarital, agreement properly drawn and executed, can override the California presumption regarding division of marital property and debts, and also set the limits for spousal support (if not found to be unconscionable by the court). California will not recognize provisions in a prenuptial agreement that deal with child custody and child support.
Many clients who have been married before, who may have established familes, and/or have established careers, income and/or assets, make the choice to have premarital agreements. Sometimes there are concerns regarding tax exposure issues or health related cost concerns. California Family Code sections 1610 to 1617 provide the statutory framework for prenuptial agreements: A “Premarital agreement” means an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage. “Property” means an interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings.
California Family Code section 1611 provides that a premarital agreement shall be in writing and signed by both parties. It is enforceable without consideration.
Both parties should have independent legal counsel to advise them and sign the agreement.
Both parties should reveal to each other a complete and detailed list their assets and liabilities in writing.
The party who draws up the agreement must give the other party substantial advance time to review the proposed agreement before execution.
The key is to allow both parties adequate time to review the any such agreement, to allow time to have it reviewed in advance, so each party can be fully informed of the contents of the proposed agreement and legal implications thereof. Where a premarital agreement is grossly unfair, and the circumstances indicate that a party thereto may have been taken advantage of, a court is more likely to scrutinize and possibly find the premarital agreement unenforceable.
The value of a properly drafted premarital agreement entered with full knowledge of the parties cannot be underestimated. They can save thousands of dollars in litigation costs alone.
If you are already married, you may also enter into a “postnuptial” agreement with your spouse. However, there are limitations on what you can do to divide or otherwise characterize your assets, and there is no legal ability to limit spousal support after marriage. There are also important fiduciary duties between spouses to be concerned about. It is important that a qualified attorney should be consulted if you are considering any such agreement.