Premarital Agreements

1. Premarital Agreements: In general, an agreement that confirms or alters the law that will be applied in the event of a legal separation, divorce or death.
2. Timing: A Premarital Agreement must be signed prior to getting married. It is important to have sufficient time to discuss the objectives, draft an agreement, meet and confer regarding a final version, and sign the agreement well before the planned wedding date. Generally, I will want to start the process at least two months before the wedding date. The law requires that a final version of the agreement be confirmed at least seven days before it is signed.
3. Property: A Premarital Agreement can confirm that California community property law will be followed and just confirm what property existed at the date of marriage, or it can alter the law. So long as there is sufficient advance planning, the agreement language is clear, and each party is represented by separate counsel, property agreements are generally enforced.
4. Labor: California law says that a party’s labor during marriage is a community asset. Therefore, anything earned with that labor is also community, such as wages/salary and retirement contributions. Therefore, when contemplating a Premarital Agreement, you should consider whether you want your labor and anything it earns to remain community or you want to alter the law and agree that labor is separate property. This could also factor into managing assets that you had prior to marriage. For example, if you own a business at date of marriage, it would be your separate property. However, if your labor is a significant factor in increasing the value of the business during marriage, a community interest could accrue in that separate property business.
5. Spousal Support: A Premarital Agreement can defer to the law on spousal support or limit or completely waive spousal support. Provisions limiting or waiving spousal support have some risk of not being enforced, based on the law providing that it may not be “unconscionable” at the time it is signed or at the time it is enforced. Such provisions are often enforced, but the greater the disparity between the parties financial means and sophistication, the more risk there is with enforcement.
6. Children: If you have children or plan to have children and one party may be a stay-at-home parent, you will need to consider how the non-working parent has a way to share in wealth during marriage, if you are altering the law with regard to community property. Any agreements that purport to limit or define child support will not be enforceable.
7. Disclosure: The parties must provide adequate disclosure regarding assets, debts and income prior to signing a Premarital Agreement. The complexity of this disclosure may depend on how much the law is being altered and the disparity between the parties financially. At a minimum, a complete list of assets and debts with clear descriptive and value information should be included as Exhibits and income tax returns exchanged.
8. Fault: California is a no-fault state, which means that who caused the divorce or the circumstances leading to the divorce are not relevant and do not impact how the property will be divided or support determinations (with some exceptions for spousal support where there is domestic violence). A provision that attempts to penalize infidelity is not likely to be enforced and any such provisions that lean toward “promotive of divorce” will fail.