Have you built a successful California business or significant financial portfolio? If so, you may wonder if you can protect particular assets when you get married. Many people use a prenuptial agreement. It can remove certain items from the community property that gets divided in a divorce.
According to the Judicial Council of California, community property involves virtually everything that spouses obtained during their marriage. It includes anything that has value, such as the following:
- Bank accounts and cash
- House, vehicles and furniture
- Pension plans, 401(k)s and life insurance
- Patents and businesses
A well-developed prenuptial agreement can help you protect assets in a divorce, by keeping them separate from community property, by deciding in advance how you’ll handle particular property.
Protect your business
If you have a business that gained significant value during your marriage, it may be subject to community property statutes. However, a prenuptial agreement can ensure your business remains separate from marital property. It can protect the entity from liquidation or sale, depending on the unique circumstances of your divorce. Getting a professional valuation of a company takes significant time and money. By excluding it from the settlement, you may shorten the time it takes to reach a settlement and save money.
Preserve family assets
If you plan to leave the family business or other assets to children from a previous relationship, they can benefit from your prenup, which specifies excluded property. You may ask your adult children to sign a prenup before they get married so that any assets they receive as your heirs remain untouched by their exes. You can rest assured that if your future daughter or son-in-law divorces your child, he or she cannot acquire the business or other property in a settlement.
The court follows state regulations and statutes regarding the division of community property. Without a prenuptial agreement, the court determines the equitable distribution of property. Discussing the document with your fiancé and signing it several weeks before the wedding can ensure the court views it as valid and that you both signed it voluntarily.