When two people marry, the subject of a prenuptial agreement is often broached. Many people have mixed feelings and misconceptions about what a prenuptial agreement is intended to do. This is an overview of the reasons why a prenuptial agreement can be beneficial as well as the rules governing them. A prenuptial agreement is intended to set forth some of the parties’ rights in the event of a divorce. These are some of the misconceptions that many people have about prenuptial agreements.
- It will take the romance out of our marriage. This is not necessarily the case. A prenuptial agreement is intended to be a preventative financial tool. It only comes into play when the parties actually divorce. It is not a plan for your marriage to fail. If you have a successful long lasting marriage, it really is a non-issue. It can actually strengthen a marriage since a party may figure that, if their spouse is willing to sign a prenuptial agreement, they really are committed to making their marriage work.
- If we divorce, I will not have child custody or support rights. California law does not allow either party to limit custody or support rights in a prenuptial agreement. Child support is for the benefit of the minor children of a marriage and custody is granted on the basis of the best interests of the child. Legally, this is not an issue that can be contracted away.
- If I sign a prenuptial agreement, I will be signing away all of my legal rights. Prenuptial agreements can be prepared according to the wishes of the parties and do not necessarily have to encompass the entire community estate. For example, if one spouse comes into the marriage with a substantial amount of separate property or is expecting a sizeable inheritance, that spouse may want to limit the amount or duration of spousal support. In this case, the parties can simply agree as to that issue and leave the rest of the property issues as to California community property laws. There are several ways in which a prenuptial agreement can be prepared. It is not an all or nothing proposition.
- My prenuptial agreement is air tight. While it is true that most well drafted prenuptial agreements are valid, the reality is that there is no such thing as an air tight prenuptial agreement. This is true regardless of the skill of the lawyers who prepare the agreement or how well drafted the agreement is. The reason is that the law does change. What was once a valid law may change and that could affect the prenuptial agreement. As an example, you sign a prenuptial agreement which includes a provision as to determining community and separate property interests in a piece of real property. The law changes at a future date after the parties marry which invalidates that law which was in effect at the time the prenuptial agreement was drafted. That change in the law could result in a provision in your prenuptial agreement being invalidated through no fault of the attorneys or the parties.
These are some of the rules to abide by and tips for when preparing and signing a prenuptial agreement.
- Independent legal representation. It is highly recommended that both parties have independent legal representation when reviewing and signing a prenuptial agreement. It is permissible to have one party represented by an attorney and one party representing themselves but the better practice is for both parties to have attorneys.
- No duress. The law requires that both parties enter into their agreement voluntarily. If one party is under so much financial stress or legal pressure that they feel that they have no choice but to sign the agreement, the less chance you will have of the prenuptial agreement being enforceable.
- Observe the seven day waiting period. There are no shotgun prenuptial agreements in California. The law requires that the parties sign a prenuptial agreement at least seven days before the wedding date. It is usually best to have the prenuptial agreement prepared well ahead of the wedding date.
- The duty of full disclosure. Prenuptial agreements are usually only valid as to the assets actually disclosed when entering into a prenuptial agreement. That is not to say that, if you come into a substantial inheritance that you were not expecting, you will be penalized if you do not disclose it. However, to the extent that you know about the assets that you have or expect to have, tell your future spouse and make that fact clear in the agreement.
- Be clear about the terms of the agreement. Talk to your future spouse before entering into the prenuptial agreement and explain the reasons why it is important. If you can come to an understanding before the agreement is drafted, it usually results in a well prepared, less expensive agreement.
- Think about options and possibilities, including your estate plan. Thoroughly review your financial and legal options before you enter into a prenuptial agreement. For example, it may be beneficial to consult with an estate planning attorney before entering into a prenuptial agreement as to how to hold title to real property or other assets during the marriage.
- Have the entire agreement in writing. If you have a side oral agreement with your spouse which is not in the prenuptial agreement, it could result in either the prenuptial agreement being invalidated (in the case of fraud) or the oral agreement being unenforceable.
- The agreement should be reasonable and fair. If an agreement is so unfair that it shocks the conscience, it could be invalidated. Be sure to have provisions in your Fresno prenuptial agreement which are reasonably fair to both parties. It will benefit both of you in the long run.
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