Divorce Law Family Law Legal Topics

Love and Marriage…and Prenups

prenup_153168603It may not seem very romantic to discuss prenups right before Valentine’s Day, but some people consider them to be an important bridge to cross on the way to happily married life. 

When we think about premarital agreements, i.e., prenups, we often assume there must be major assets involved. For example, Playboy’s Hugh Hefner didn’t say “I do” until he got a prenup protecting his assets and the famous Playboy mansion.

But actually there are several reasons why those about to take a trip down the aisle may want to have a prenup in place first. In fact, some experts say “everyone should consider a prenup.”

Here are some of the various purposes of a premarital agreement:

  • Preclude creation of community property. A premarital agreement may be used to preclude the creation of community property interests, either entirely or with specified exceptions. Under such an agreement, each party’s earnings during marriage and before separation, and any items acquired by the party with those earnings, will be his or her separate property.
  • Maintain character of separate property. A premarital agreement may be used to ensure that a spouse’s separate property owned before marriage remains separate after marriage, regardless of any developments (e.g., any increase in value attributable to community payments or effort) that might otherwise result in a community interest in the property. One major benefit of such an agreement may be to itemize each party’s separate property.
  • Waive or limit spousal support. A premarital agreement may include a waiver or limit on any spousal support on divorce. Major caveat here: Any provision in a premarital agreement on spousal support isn’t enforceable if the party against whom enforcement of the spousal support provision is sought wasn’t represented by independent counsel when the agreement was signed, or if the provision on spousal support is unconscionable at the time of enforcement. Fam C §1612(c).
  • Estate planning. A premarital agreement allows parties to plan for death as well as dissolution. Fam C §1612(a)(3). Usually parties feel differently about economic provisions for the other spouse in the event of a death than they do about such provisions in the event of dissolution. Keep in mind that prenup provisions on waivers of inheritance rights may be subject to interpretation under the Probate Code, as well as under Family Code provisions on premarital agreements. Couples with children from previous marriages, i.e., blended families, are usually concerned with estate planning and ensuring that, while each spouse is provided for in the event of the other’s death, certain property is set aside for the children from the prior relationship.
  • Protection from creditors. A premarital agreement may protect the property of one spouse from the creditors of the other on debts incurred by the other during marriage (think risky startup). See Fam C §1612(a)(2). The California Supreme Court has suggested that, as long as creditors are given proper notice, a premarital agreement that provides that each spouse’s earnings and acquisitions during marriage will be his or her separate property may preclude creditors of one spouse from taking the earnings and acquisitions of the other, because those earnings and acquisitions would not be community property. See Marriage of Dawley (1976) 17 C3d 342, 357, 131 CR 3.
  • Transmuting character of property. Through a premarital agreement parties may contract to transmute the character of property from community to separate property, separate to community property, or separate property of one party to the separate property of the other party. See Fam C §§850, 1612(a)(1).

For everything you need to know about premarital agreements, including sample forms and practical tips on drafting them, turn to CEB’s California Marital Settlement and Other Family Law Agreements, chap 17.

Related CEB blog posts:

© The Regents of the University of California, 2013. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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