What is a prenuptial agreement?

A prenuptial agreement (or “prenup”) is a written agreement signed by two parties who intend to be married, which becomes effective once they are married. This agreement will usually address issues such as the couple’s current and future property rights (for example: cash, stocks, real property) and other marriage-related issues. 

Prenups in California are governed by the Uniform Premarital Agreement Act (UPAA). In addition, prenups are also subject to the rules of general contract law, which means that each party must have the legal ability to consent to the agreement and that the consent is not obtained by fraud, undue influence, or mistake.

If a couple does not sign a prenup before marriage, California law states that all “community property” (which is defined as any property acquired during the marriage, except gifts or inheritance) will be equally divided between the spouses upon divorce. It doesn’t matter if the property is acquired in one spouse’s name only – if it is acquired during the marriage, generally, it is considered community property.

Property owned by spouses before the marriage is considered “separate property” and doesn’t fall into the category of community property. However, it is very common for the separate property to be improved, enhanced or contributed to during the marriage and can therefore create a community property interest. A well-drafted prenup can keep separate property from being reclassified as community property.

What are the advantages of a prenuptial agreement?

One of the main benefits of a prenup is that it clearly set outs what will occur if a marriages ends in divorce. This can include allocation of property and arrangements regarding children. However, a prenup cannot limit a child’s right to receive child support or limit a court’s ability to set child custody and visitation rights.

Additionally, a prenup can serve to protect the rights of third persons who may be affected by the divorce. For example, if a wife co-owns a business with other partners, those partners’ concerns may be put to rest if the prenup states the husband will not gain any ownership rights in the business in the event of a divorce.

Even though there are advantages, don’t prenuptial agreements end up causing damage to a relationship?

While it is true that many people will view prenups as being unromantic and indicate a lack of trust in the relationship, there are several reasons executing a prenup can be a good idea:

1) Without a prenup, if you have to go through a divorce, it will be controlled by a complicated set of laws (the California Family Code and Probate Code) rather than an agreement you have already negotiated.

2) Similar to point #1, a prenup makes things more predictable and can therefore provide comfort and peace of mind to each spouse. This is valuable since a divorce can many times become emotionally charged and stressful.

3) Since a prenup requires full financial disclosure, each spouse will have a clear picture of the other spouse’s finances and, ultimately, have a better idea of where the couple will start financially. As a result, a prenup will oftentimes help the couple initiate an open honest discussion about finances.

What requirements must be satisfied to ensure a prenuptial agreement is valid in California?

For a prenup to be valid in California: 1) each spouse must have obtained complete information regarding the other spouse’s finances and property prior to signing the agreement, 2) each spouse has at least 7 days from the day he/she first receives the prenup before signing it (thus allowing sufficient time to retain counsel), and 3) each spouse has retained an attorney to represent him/her.

If a spouse is not represented by an attorney, the agreement can still be valid if: 1) he/she obtains all information in writing regarding the terms and basic effect of the prenup, including any rights/obligations the spouse would be giving up, and 2) the spouse signs a document acknowledging receipt of such information, stating the identity of the person providing the information, and expressly waiving his/her right to an attorney.

But, it should be noted that if a spouse is not represented by an attorney, if any part of the agreement affects/limits the spouse’s right to receive future spousal support (alimony), that portion of the agreement will not be valid. (Therefore, it’s generally advisable that both sides are represented by counsel).

What are some things that can’t be covered by a prenuptial agreement in California?

Although California law allows a spouse to give up or limit spousal support (alimony) in a prenup, a court can still refuse to enforce that part of the agreement if it is deemed “unconscionable,” which means that it’s unreasonably unfair, at the time the time it is enforced. For example, if a couple divorces and one would be left destitute after many years of being married, the judge may consider voiding the part of the prenup that would prevent that spouse from receiving spousal support.

Also, the prenup can’t include any terms that are illegal or that violate “public policy.” This is why the rights of the couple’s children will be under the supervision/control of the court instead of the prenup. Similarly, if a provision specifies that the children will be raised in a certain religion, those terms will not be enforceable.

Because California is a “no fault” state when it comes to divorce, any prenup that seeks to penalize one spouse for “fault” in the marriage cannot be enforced. For example, if one spouse is unfaithful during the marriage, a prenup provision penalizing that spouse would be invalid.