Before you and your significant other get married, you may consider entering into a prenuptial agreement. Commonly referred to as a “prenup,” this written contract typically states each piece of property owned by the parties — and specifies the rights to that property in the event of divorce. It’s important to understand that prenups are not just for wealthy and high net worth individuals. There are many different reasons people turn to prenups, including protecting children from prior marriages, safeguarding yourself from debt, and avoiding protracted litigation during divorce.
Reasons to Have a Prenup
No matter what your income level is, there are many reasons to have a well-drafted prenup in place before you get married. A prenuptial agreement can resolve disputes about financial matters in a marriage before they arise. Prenuptial agreements can also allow you to manage and control your marital property — and settle issues concerning property division in advance, should divorce occur.
A prenuptial agreement can help to accomplish the following:
- Pass property from a prior marriage — While prenups are commonly drafted to handle property matters in the event of divorce, they can also be used as part of a comprehensive estate plan. If either party is marrying for a second or subsequent time, a well-drafted prenup can help protect the interests of children of a previous marriage. In a prenup, you can specify exactly each asset you own that you wish to pass down to your children. Failure to have a prenup in place can give full control of the assets to the surviving spouse.
- Specify financial rights — Regardless of your net worth, creating a prenup can determine the financial rights and duties of each spouse. Specifically, the right to alimony can be waived in a prenup unless the court deems the provision unconscionable.
- Avoid disputes in the event of divorce — Significantly, a prenuptial agreement can help to avoid any arguments that arise during divorce proceedings concerning the division of property. With a prenup, you can decide how marital property will be distributed in advance to save time and money on what could otherwise be lengthy and costly litigation.
- Protect you from your spouse’s outstanding debt — A prenup can help protect you if your spouse incurs a substantial amount of debt. Absent a prenup, marital debt is divided per California’s community property laws. Importantly, a prenup can delegate the spouse who is responsible for each specific debt.
- Safeguard your business — If you or your spouse owns a small business, a prenup can help protect your business interests, income, assets, and resources. Notably, you can establish the value of the business as of the marriage date, recognize how contributions by your spouse will be handled, and address the issues of appreciation and depreciation.
Critically, prenuptial agreements are meant to protect both spouses — not just the wealthier spouse. In order for the prenup to be enforceable, full financial disclosure is required and the document must be voluntarily signed by each party. In addition, the spouse who is presented with the agreement must have seven days to sign it. If the couple does not adhere to the waiting period, the agreement will be rendered unenforceable in court.
What Happens if There is No Prenuptial Agreement?
California is a community property state. This means that all property acquired and assets earned during the course of the marriage by either spouse is considered community property. During the divorce process, this type of property will be split 50/50, regardless of which spouse acquired it. Separate property is characterized as that was acquired by either spouse before the date of the marriage and typically belongs to the original owner pursuant to divorce. However, complexities can arise when separate property is commingled with marital property.
If you choose not to create a prenuptial agreement, California law will determine how community property will be divided in the event of divorce. Otherwise, spouses can decide how they will divide their property among themselves, or with the help of a mediator. However, if your case is contested, a prenuptial agreement is the only way you can ensure your property will be divided fairly upon divorce.
Contact an Experienced Fresno Prenuptial Agreement Attorney
If you’re considering a prenuptial agreement, it’s important to have a knowledgeable prenuptial agreement attorney by your side who understands the nuances of drafting an effective and enforceable prenuptial agreement. The Law Offices of Rick D. Banks has been dedicated to helping clients in Fresno and the surrounding areas draft solid prenups that withstand litigation for more than two decades. To schedule a no obligation consultation, call (559) 272-8359.