What Is a Prenup?

A prenuptial agreement is a legal document that a couple signs before marriage. Most often, couples use a prenup to customize how their assets, debts, and income will be divided in the event of a divorce or separation.

What Does a Prenup Do?

A prenup gives folks the opportunity to opt out of California’s community property laws, which typically divide assets and debts equally between spouses.

With a prenup, couples can decide how they want to divide property and assets, which can help avoid lengthy and expensive court battles. A prenuptial agreement helps couples ensure that their wishes are respected and that their marriage and potential divorce are governed by their own rules, rather than by California’s default laws.

Prenups Set Marital Expectations

A prenup can outline each spouse’s financial roles and responsibilities during the marriage. For example, it may specify who will be responsible for paying bills, managing the household budget, and making financial decisions. It may also describe any financial goals or objectives the couple has agreed upon. 

Plus, a prenuptial agreement can outline expectations for financial transparency and communication during the marriage. For example, it may require disclosure of all financial assets and liabilities. It’s more effortless to accomplish your financial goals when you and your partner create clear roles and expectations in a prenup.

Prenups Create Marital Rules 

A couple can agree upon their own terms for dividing their property and assets in a prenup, which can differ from California’s laws. California is a community property state. This means that, by default, all property acquired during the marriage is equally owned by both spouses.  

A couple may set their own rules for property division in a prenup. For example, they can decide to keep certain assets separate rather than treating them as community property, or they may agree to divide their assets in another way. Thus, a couple has greater control over their financial future.

Prenups Protect Both Spouses

A prenup protects both spouses when it’s tailored to your marriage. For example, a prenup may define the division of assets and property upon divorce, which prevents future disputes and provides clarity on financial matters. You can also draft it to protect the financial assets of one spouse from being used to pay off the debts of the other spouse. 

What Does a Prenup Cover?

Prenuptial agreements may cover a wide range of issues, depending on the couple’s specific needs. Some of the issues that a prenup may cover include the following:

  • The division of property and assets. A prenup can state how to divide property and assets if there’s a divorce.
  • Spousal support. A prenup can set an amount or time period for spousal support payments or waive spousal support entirely.
  • The responsibility for paying debt. A prenup can specify which spouse is responsible for paying the marital debt.
  • Other financial responsibilities. A prenuptial agreement can outline the financial obligations of each spouse during the marriage, including the payment of bills, management of the household budget, and making financial decisions.
  • Business ownership designation. If one spouse owns a business, a prenup may describe how the business will be treated in the event of a divorce (e.g., the business will be treated as the owner’s separate property).
  • Designate separate property. A prenup can itemize the assets that should be considered separate property and not be subject to division in case of a divorce.

These are just some of the potential issues a prenup may cover. An attorney skilled in drafting California prenuptial agreements can advise you on the right provisions for your marriage.

In-Depth: What Clauses Are Most Important to Include in My Prenup?

Do Prenups Work (Are they Enforceable)?

Prenuptial agreements can be effective in achieving their intended purpose. However, for a prenup to work, it must be legally enforceable. Generally, for it to be valid, the prenup must be:

  • In writing—it must be written to be enforceable;
  • Entered willingly—both spouses must enter into the agreement willingly, without coercion;
  • Fair and reasonable—it must be fair and reasonable when signed rather than overly one-sided or oppressive;
  • Fully disclosed—both spouses must fully disclose their financial assets and liabilities at the time they sign the agreement; and
  • Properly executed—it must be signed and witnessed in accordance with California law.

Plus, a prenup must comply with California law and the Uniform Premarital Agreement Act to be valid. Thus, it’s critical that you hire a competent and knowledgeable attorney to draft your prenuptial agreement.   

In-Depth: Are prenuptial agreements enforceable in California?

Who Needs a Prenup?

Contrary to popular belief, prenuptial agreements benefit couples from all walks of life. They may be particularly useful where:

  • The spouses have significant financial assets;
  • One or both spouses have children from a previous relationship;
  • One spouse is wealthier than the other;
  • One or both spouses own a business; or
  • One or both spouses have significant debts.

Ultimately, the decision to get a prenuptial agreement is a personal one and should be based on the unique circumstances of the couple. It is important for both spouses to fully understand the terms of the agreement and to enter into it willingly.

Contact Our Office for Help with Your Prenup

A prenuptial agreement can help you achieve your marital financial goals. It can also provide clarity in your relationship. However, you need a prenup tailored to your needs while complying with complex laws. Cyrus Pacific Law can help. We’ll draft a prenup to help you avoid financial pitfalls, all while treating your future spouse with fairness and respect. Contact us today.

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