Premarital Agreements in California: What You Need to Know

Getting married is an exciting time, but it is also important to consider the legal ramifications of your marriage. It is a common misconception that premarital agreements are only for the rich and famous. A premarital agreement, also known as a prenup, is a contract created before marriage that can help define property rights, financial interests, and spousal support if a marriage ends in divorce. A prenup can help protect your income and assets, and plan for any potential outcome of your marriage – providing financial security and greater peace of mind, as you enter this exciting new chapter of your life.

California is a community property state, and the California Family Code governs during your marriage and your divorce. In the absence of a prenup, the presumption is that all income earned, and property acquired, during marriage is community property and will be divided equally in the event of a divorce. A prenup allows partners the flexibility to make agreements that otherwise would not be provided for under California law, including defining and protecting premarital assets, avoiding debt allocation, addressing spousal support, protecting your and/or your children’s inheritance rights, and simplifying a divorce or legal separation in the future. While it might not be the most romantic topic to discuss before your wedding, a prenup can be an invaluable tool to protect both partners.

What Can Be Included in a California Prenup?

California prenups can be customized to meet each partner’s needs and concerns and address a wide variety of issues, including but not limited to:

  • The rights and obligations of each partner regarding property owned before marriage or acquired during marriage
  • The right and obligations of each partner to buy, sell, or dispose of any property during marriage
  • The ownership interests and obligations of each partner in the future purchase of real property, such as a family home or vacation home, acquired during marriage
  • Rental properties and rental income
  • Business and business/partnership income (owned before and acquired during marriage)
  • Bonuses, deferred compensation, and equity compensation (stock options, restricted stock units, incentive stock options, performance shares)
  • Contribution to children’s college savings and education funds
  • Spousal support
  • Financial assistance for elderly or infirm parents or family relatives
  • Debt responsibility
  • Inheritance rights
  • Family pets

A California prenup can cover “any other matter, including personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.” Except for child custody and child support, partners can agree to almost any other terms they wish to address in their premarital agreement

Should You Get a Prenup?

There’s no one-size-fits-all answer. Here are some reasons why a prenup might be a good idea:

  • You Have or Expect to Inherit Separate Assets: If you or your partner currently own or have a beneficial interest in assets prior to your marriage, such as a home or business, or you have received or expect to receive an inheritance, a family heirloom, a prenup can safeguard these assets in case of divorce. If you have chosen to marry later in life, have amassed significant wealth, are entering into a second marriage, or have children from a prior relationship, you can benefit from a thoughtfully drafted premarital agreement.
  • Blended Families: If either you or your partner has children from a previous relationship, a prenup can ensure their inheritance rights are protected.
  • Spousal Support: If you wish to provide for, waive, or restrict rights to spousal support in the event of a divorce or legal separation, a prenup can set forth agreed-upon terms defining spousal support.
  • Debt Concerns: If one partner has debt brought into the marriage, whether credit card debt, student loans, tax liabilities, or business debt, a prenup can clarify how debts will be handled during the marriage.
  • Open Communication Prior to Marriage. If you believe in open lines of communication and you want to speak to your partner about your finances (income, assets, and debts) prior to marriage, a prenup opens the door to these conversations through the mandatory exchange of financial disclosures. You’ll have the clarity and peace of mind before your marriage.
  • Save Time and Money in the Event of a Divorce. Your parents, a loved one, or a friend had an expensive, protracted, nightmare divorce and you would rather not do the same. Save time and attorney’s fees by negotiating a prenup before your marriage.
  • Preserve Confidentiality. You’re a private person who would prefer to keep your private financial matters confidential, in the event of a divorce or separation.

Benefits of a Prenup

  • Clarity and Fairness: A prenup can prevent misunderstandings and emotional turmoil during a divorce by establishing a roadmap and clear expectations about financial rights and obligations during marriage and dividing your assets in the event of a divorce.
  • Stability, Predictability and Financial Protection: It can shield separate assets and income, including for entrepreneurs, or those inheriting assets. Rest a little easier knowing your finances and assets are addressed in a prenup.
  • Peace of Mind: Having a prenup can provide peace of mind knowing your financial future is somewhat secure.

Prenups are Not Just for the Wealthy

Anyone getting married can benefit from a prenup, not just high-net-worth couples. It is an invaluable investment in open communication, transparency, and financial security. Consider a prenup to discuss important financial issues before your marriage, particularly if you have unequal income and unequal assets prior to marriage. A prenup creates a roadmap to save you time and money and protect against a contentious and protracted divorce or legal separation proceeding in court.

Consulting an Attorney

Premarital agreements can be complex. Consulting with an experienced California family law attorney is essential to ensure your prenup is enforceable and reflects your wishes.

Getting a prenup doesn’t mean you expect your marriage to fail. It’s simply a way to be prepared for any eventuality. By having this conversation and creating a prenup, you can enter your marriage with more confidence and focus on building a happy future together.