Prenuptial Agreements in California
Despite the popular, tabloid view of a prenuptial agreement, or “prenup,” as a necessary protection for a wealthy spouse against one who is not, these contracts can provide valuable clarity for any married couple. Specifically, they can provide clarity around property that either spouse brings into a marriage. It is vitally important to remember that “property” in this context means debt as well as assets.
At Kaspar & Lugay, LLP, our lawyers help clients establish peace of mind and thoughtful planning through both prenuptial or premarital agreements and post-marital agreements. Contact us online or call 415-843-6195 to schedule a consultation about your case.
How Do Prenuptial Agreements Work?
Prenuptial agreements can help to separate business and personal assets as well as debts from the marital property pot. For example, if you and your spouse bring separate student loan debt into a marriage, you can create a prenup that will exclude those debts from marital property, meaning that each party would be responsible for the debt they brought into the marriage should the marriage end.
Learn more about prenuptial agreements by reading below
- How can a prenuptial agreement help me?
- When should I contact a lawyer about drafting a premarital agreement?
- What are some reasons prenuptial agreements can be invalidated?
- How can a prenuptial agreement help me protect my business?
- Can I write my own prenuptial agreement?
- How do I defend the validity of my prenuptial agreement?
- What other tools are available to help me financially plan for marriage?
How can a prenuptial agreement help me?
Prenuptial agreements are a great way to help a couple define boundaries between marital property and separate, personal property or debt. Prenuptial agreements are only effective if the court accepts them as valid, so it is important to have an experienced family law attorney help you with yours.
Some reasons to consider premarital agreements:
- Disagreements and misunderstandings regarding money are a leading cause of divorce. If you identify and work through basic issues of financial responsibility before you marry, you and your fiancé will then be able to focus on the other aspects of your relationship.
- A prenup can preserve your estate for your children, grandchildren, or loved ones.
- If you and your spouse bring significantly different personal estates or incomes to your marriage, you may want to keep your personal and community property separate.
- One of you may be a student, a homemaker, or contributing to the other’s business and may want a clear statement of the value of your contribution.
- A prenup can protect children from a previous marriage.
- A prenup can provide partners, members, or shareholders in a closely-held business with the control necessary to manage the business in the event of death or disability.
- A prenup can define limits to the amount and duration of alimony, otherwise known as spousal support.
- A prenup can establish the terms of a domestic partnership agreement for those who do not enter into marriage.
When should I contact a lawyer about drafting a premarital agreement?
In general, it is best to start the process of agreeing and drafting a premarital agreement as soon as possible after an engagement. Not only does this allow more time to thoughtfully work out the terms of the agreement, but also an agreement signed six months before the wedding is seen by the court as a stronger contract than one signed right before marriage. For that reason, it is critically important that, if you are negotiating a prenuptial agreement shortly before your wedding, you work with experienced legal counsel. Click here to request your consultation.
What are some reasons prenuptial agreements can be invalidated?
The validity and enforceability of prenuptial agreements will come under scrutiny any time one party legally contests the contract. Experienced divorce attorneys can analyze all aspects of any premarital agreement and advise you on your likelihood of success in disputing either the validity of the entire contract or specific clauses and stipulations.
A few of the more common grounds for challenging such documents are:
- Allegations of coercion, forgery or lack of proper witnessing
- Basic unfairness of the original agreement to either party
- Fraud or misrepresentation of either party’s financial condition
- Coverage of matters that cannot be legally determined in a prenup or other such contract
How can a prenuptial agreement help me protect my business?
If you are preparing for marriage and either you or your spouse has a business interest, it may be wise to enter into a premarital contract that includes terms regarding management and business ownership. At Kaspar & Lugay, LLP, we have extensive experience in preparing prenuptial agreements to protect the interests of corporate shareholders, business partners, limited liability company (LLC) members, and sole entities during marriage. If you have a business interest, your premarital agreement will cover complex issues, including business valuation.
Some of the ways a premarital agreement can protect your business include:
- If you own a business in part or in whole before you are married, a premarital contract can specify how that interest will be kept separate from community property.
- If you are involved in a family business before marriage, a prenuptial agreement can ensure the interest remains in the family in the event of your death or divorce.
- If you have business partners, a premarital agreement can provide them with control over management of the business in the event of your death, disability or divorce.
- If your business grows during the course of your marriage, an antenuptial agreement can protect the increased value from being considered community property.
- If you contribute to the growth of your spouse’s business during your marriage, a premarital contract can ensure that you receive credit for a share of that growth.
Can I write my own prenuptial agreement?
It seems like a simple concept: get a pre-packaged or online form for a premarital contract, sit down with your fiancé(e) to work out the details, fill it out, and sign it. This allows you and your partner to move on to important wedding details. Why slow down the process? If you have a reason to sign a prenup, you should understand what protections it does or doesn’t offer.
Consider the following when it comes to a prenup:
- California community property law is complex and your circumstances unique.
- Even state-specific forms often fail to comply with current legal requirements.
- You may have a false sense of security concerning the protection your agreement offers, meaning the agreement may not do what you expect it to do.
- The court has discretion on whether to accept a prenup, and it will base its decision on a number of factors not dealt with in package forms.
- When each signer has a lawyer, it is much more likely the court will accept a prenup.
How do I defend the validity of my prenuptial agreement?
If you are facing divorce and counting on a prenuptial agreement to protect your interests, you need a highly qualified attorney on your side. Changes in California law and numerous high-profile case precedents in recent years have made it increasingly common for divorce attorneys to challenge the enforceability of prenups and other marital contracts.
The divorce attorneys at Kaspar & Lugay, LLP, will mount the strongest possible case in the defense of your prenup. Seeking our counsel may be especially critical if you have high-net-worth, a “do-it-yourself” prenup, or an agreement that has not been updated in a long time.
We can help defend the validity of your prenup by establishing:
- Whether the overall agreement or specific aspects of it appear vulnerable to legal challenge
- Viable approaches to enforcing the agreement—or finding an alternative path to fair resolution—in the face of false allegations of fraud, coercion, or unfairness
- Striking the right balance for you when considering compromised solutions in negotiation vs. full-blown litigation in a Southern California court
What other tools are available to help me financially plan for marriage?
When considering marriage, you have as a couple no doubt discussed financial issues such as income, savings, debt, and the responsibilities involved in having children. Have you come to agreement on how to handle differences when they arise? At Kaspar & Lugay, LLP, our North Bay family law attorneys encourage couples to build the framework for a strong marriage by employing our financial planning skills. We have especially deep experience in managing the financial interests of startup founders, key employees, and other equity holders.
In general, it is better to take the time now to work out a financial plan detailing the responsibilities and expectations you and your partner are bringing to your relationship. The process of developing a premarital agreement can be as important as the resulting document, providing you with practice in problem-solving.
You may be surprised at how property you bring to your marriage will be distributed in the event of your death if you do not provide guidance for the court through a prenuptial agreement, which are best accompanied by a carefully drafted will.
We will discuss these and other questions when helping you determine how to proceed:
- Are there children from a previous marriage involved?
- Do either of you have a business interest or family trust you bring to the marriage?
At Kaspar & Lugay, LLP, we are committed to helping clients build strong families through appropriate financial planning instruments. If you would like to speak with our lawyers about financial planning in preparation for marriage, or are ready to draft a premarital contract, we can provide you with the resources and guidance you need to make well-informed decisions.
Still not sure about whether you need a prenup?
Not every couple needs a prenuptial agreement, and in situations where they are needed, the issues that should be covered can vary widely. Whether you are considering entering marriage or a domestic partnership agreement, you are engaged, or you are married but considering a post-marital agreement, it is time to begin discussing how you will handle the issues involved.
You can trust that the attorneys at Kaspar & Lugay, LLP, will provide you with the counsel you need to make these and other important family law decisions. Contact us online or call 415-843-6195 today to schedule a consultation.