Marriage is a significant milestone that comes with legal and financial implications. In California, entering into a premarital agreement (often referred to as a prenuptial agreement or a PMA) is a prudent step for couples looking to safeguard their individual interests and ensure a transparent financial future.
If you’re considering getting married in California, taking the right steps early can help ensure a smoother process and protect your interests. Come speak to an attorney at Happ Law Group P.C. to see how we may assist you in planning and preparing for your marriage by entering into a premarital agreement.
Below we will explore the importance of premarital agreements in California, some requirements for premarital agreements in California, and provide an overview of what can and cannot be included in these contracts.
Premarital agreements are an important tool that can help you protect individual assets, clarify financial responsibilities, protect one spouse from assuming liability for another spouse’s debt, simplify divorce proceedings and protect business interests. Each will be explored below in turn.
California is a community property state, meaning that, by default, any assets acquired during the marriage that are not acquired by gift, inheritance, devise, bequest or descent, are considered community property or joint property.
In California, generally, each spouse is entitled to one-half of the community property estate. A premarital agreement allows individuals to protect assets they acquired before marriage or even during marriage, ensuring that personal property remains their sole and separate property.
A premarital agreement can delineate financial responsibilities during the marriage such as who is responsible for payment of what debts and which debts are a party’s sole and separate debt.
This clarity helps prevent conflicts over money matters, as the agreement may specify how expenses will be managed and who will be responsible for what.
If one partner enters the marriage with significant debt, a premarital agreement can protect the other spouse from assuming liability for that debt.
Generally, creditors may come after one spouse for the other spouse’s debt, unless there is a premarital agreement which the creditor has knowledge of. This is crucial for individuals looking to protect their financial stability and credit rating.
In the unfortunate event of a divorce, a premarital agreement can simplify the proceedings by having predetermined arrangements for asset division, debt division and spousal support. This can save time, reduce legal fees, and minimize emotional stress.
For entrepreneurs and business owners, a premarital agreement can protect the business from becoming a divisible asset in a divorce.
A premarital agreement can ensure that the business remains operational and under the control of its rightful owner and can prevent the other spouse from having any interest in the business.
Under California law there are certain provisions that will be valid in a Premarital Agreement such as property division, spousal support, debt allocation, setting forth financial responsibilities, and estate planning.
A premarital agreement can outline how property and assets will be divided in the event of a divorce.
This includes both assets acquired before the marriage and sometimes those accumulated during the marriage.
The agreement can specify whether spousal support (alimony) will be paid and, if so, the amount and duration. This helps manage expectations and avoid contentious negotiations during a divorce.
It is important to note that while spousal support provisions may be included in a premarital agreement, any provision regarding spousal support will be evaluated to determine whether the provision is unconscionable at the time of enforcement. The time of enforcement would be when the parties are ending their marriage and file for divorce.
Moreover, California has strict requirements for provisions regarding spousal support.
Any provision in a premarital agreement regarding spousal support, including, but not limited to, a waiver of it, is not enforceable if the party against whom enforcement of the spousal support provision is sought was not represented by independent counsel at the time the agreement containing the provision was signed
Premarital agreements can determine how debts will be handled, protecting one spouse from the other’s financial liabilities.
Couples can use the agreement to set terms for financial responsibilities during the marriage, such as how household expenses will be shared and how joint accounts will be managed.
Premarital agreements can include provisions related to estate planning, ensuring that each spouse’s wishes regarding inheritance and the distribution of assets are respected.
Premarital agreements can also include a provision regarding the choice of law governing the construction of the agreement in the event of a divorce.
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There are items that cannot be included in premarital agreements or will not be enforced at the time of divorce which are provisions pertaining to child support, child custody and visitation, provisions related to personal matters and provisions that violate public policy.
California law does not allow premarital agreements to include terms related to child support. These matters are decided by the Court based on the guideline calculation at the time of the divorce.
California law likely will not enforce provisions in premarital agreements that include terms related to child custody because these matters are decided by the Court based on the best interests of the child at the time of the divorce.
Moreover, most people entering into premarital agreements do not have children together at the time they are entering into the agreement so it would be difficult to agree on child custody and child visitation provisions.
Premarital agreements cannot include personal matters that do not pertain to financial or property interests. For example, agreements regarding household chores, religious upbringing of children, or personal habits are likely not enforceable.
Any terms that are illegal or against public policy will not be upheld by the Court. This includes agreements that encourage divorce or contain unfair terms that would cause undue hardship on one spouse.
If there is a provision in your premarital agreement that is void or not enforceable, it is wise to include a severability clause in the Premarital Agreement so other valid provisions can remain in effect.
If you are getting married and are planning on obtaining a premarital agreement, come talk to the attorneys at Happ Law Group P.C. as soon as possible.
There are certain requirements in California for premarital agreements to be valid. One is that a premarital agreement must be executed voluntarily. Another is that each party entering into the premarital agreement made a fair, reasonable and full disclosure of their assets and financial obligations to the other party. Moreover, for premarital agreements executed on or after January 1, 2020, the party against whom enforcement is sought must have had no less than 7 calendar days between the time the party was first presented with the final premarital agreement and the time it was signed, regardless of whether they had legal representation.
These requirements are the reason why it is better to speak to an attorney as soon as possible if you are contemplating a premarital agreement.
Entering into a premarital agreement in California is a proactive way to protect individual assets, clarify financial responsibilities, and ensure a smoother process in the event of a divorce. While these agreements can cover a wide range of financial matters, they must adhere to state laws and cannot include provisions related to child custody, support, or personal matters.
By understanding what can and cannot be included, couples can create a fair and comprehensive premarital agreement that serves both parties’ best interests.
Come talk to the attorneys at Happ Law Group P.C. to see how we can assist you with a Premarital Agreement.
What Can be Included in a Premarital Agreement?
Under California law there are certain provisions that will be valid in a Premarital Agreement such as property division, spousal support, debt allocation, setting forth financial responsibilities, and estate planning.
What Cannot be Included in a Premarital Agreement?
There are items that cannot be included in premarital agreements or will not be enforced at the time of divorce which are provisions pertaining to child support, child custody and visitation, provisions related to personal matters and provisions that violate public policy.
What Happens if a Provision in the Premarital Agreement is Void or Not Enforceable?
If there is a provision in your premarital agreement that is void or not enforceable, it is wise to include a severability clause in the Premarital Agreement so other valid provisions can remain in effect.
Why are Premarital Agreements Important in California?
Premarital agreements are an important tool that can help you protect individual assets, clarify financial responsibilities, protect one spouse from assuming liability for another spouse’s debt, simplifying divorce proceedings and protecting business interests.
DISCLAIMER: This information is made available by Happ Law Group P.C. for educational purposes only as well as to provide general information and a general understanding of California law, not to provide specific legal advice. If you are in need of advice about your specific situation, you should consult with a California family law attorney.
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