Prenuptial agreements – much like their lesser-known cousins, postnuptial agreement – aren’t just for the rich and famous. These marital contracts have become more common in recent years as couples seek to document ownership of their assets and debts to help ensure a happy future.
Prenuptial agreements provide peace of mind
In California, a “community property” state, any assets acquired during a couple’s marriage are considered to be owned equally by both spouses. An engaged couple can use a prenuptial agreement or “prenup” to prescribe a different distribution of assets, which can provide peaceful distribution in the event of divorce or death.
Couples who get prenups may have an imbalance of wealth and want to dictate a fair division of assets to protect the spouse who has less money. Or one person may have a pre-existing business that needs to be kept separate from marital finances. In many cases, a spouse’s family may ask him or her to get a prenup to protect a family business or future inheritance from being affected by divorce. Prenups can also protect one spouse from the other’s pre-existing debt.
Prenups are also used to protect one spouse’s children from a previous marriage. For example, if a parent passes away, the surviving spouse could be in control of assets meant for the children unless a prenup is in place that says otherwise.
Careful consideration is necessary when signing prenuptial agreements
For a prenup to be valid and enforceable, a few conditions must be met. Firstly, each future spouse must have the chance to review all of the other’s financial information ahead of time. Each party will have seven days to review the contract or have it reviewed by their attorneys before signing. Additionally, each spouse must have his or her own attorney present.
All of these requirements are in place to protect the couple. If the couple gets divorced, it can be said that they entered into the prenuptial agreement with all of the information needed and sufficient representation. If proven otherwise, a family law judge may set the agreement aside.
Contrary to popular belief, the prenuptial process can actually bring a couple closer. Drawing up a prenuptial agreement creates an opportunity to have important conversations before they get married. Getting to know one another’s values, plans for the future, and beliefs about money and property are crucial to establishing a strong foundation for a good marriage.
Postnuptial agreements can help married couples
A postnuptial agreement works similarly to a prenup, except that a couple obtains one after they get married. People who obtain “postnups” fall into a few main categories:
• They meant to get a prenup but ran out of time
• One spouse inherits a significant amount of money or share in a business
• Something changes in the marriage
Changes in the marriage can be good or bad. When a couple has children, for example, the postnup might provide for the parent who stops working to be the primary caregiver.
Alternatively, postnups are often used as a response to infidelity or financial mismanagement. The postnup can impose a financial penalty on the spouse who cheats or gambles shared money away. While this isn’t a guarantee, it can make the betrayed spouse feel more reassured and contribute to repairing the marriage.
Postnuptial agreements are harder to enforce, however. Once married, spouses have a fiduciary duty to each other. This means that, by law, spouses are obligated to not take unfair advantage of each other. In this case, it’s more difficult to draw lines between what one spouse owns versus the other. Postnups must be created with much closer scrutiny than prenups to help ensure that they are enforceable.
We want to help you create a happy marriage that allows for a fair and peaceful future. Whether you want a prenuptial agreement or think you need a postnuptial agreement, contact Ricklin Family Law for guidance every step of the way.
Ricklin & Associates
2625 Townsgate Road
Westlake Village, CA 91361