As you prepare for marriage, you’re probably thinking about everything but a prenuptial agreement, otherwise known as a prenup. However, even people in rock-solid relationships sometimes choose to sign a prenup. Every state, including California, has laws that pertain to prenups and how they should be structured. For hands-on help managing your pre-marital financial moves, consider enlisting the services of a financial advisor.
California’s Prenuptial Agreement Law
In California, individuals can draft their prenups. However, without a legal background, it’s easy for the prenuptial agreement to be invalidated. Therefore, it’s a good idea to hire a lawyer to write a prenup, as well as make sure you understand the state’s Prenuptial Agreement Law and what your options are.
The Golden State’s Uniform Premarital Agreement Act (UPAA) dictates the requirements for prenups in California. The UPAA states that a premarital agreement is a contract that two prospective spouses sign before entering a marriage. It isn’t effective until the date of marriage. Other requirements include a written contract, legal terms within the prenup and the voluntary signatures of both parties. Each party must also have received complete information regarding the other’s properties, debts and income.
Additionally, once the prenup is complete, each party has at least one week to seek independent legal counsel before signing. When both parties sign the prenup, a notary must also sign it to make it fully valid.
The Limitations of Prenups in California
Just as there are several requirements for what a prenup must include, there are several things that a prenup cannot include. One of the primary limitations of prenuptial agreements in California is their inability to dictate terms related to child custody or child support. The state prioritizes the best interests of the child, and any agreement attempting to predetermine custody arrangements or waive child support obligations is likely to be deemed unenforceable by the court.
This means that, regardless of what a prenup might stipulate, decisions regarding children will ultimately be made based on current circumstances and the child’s welfare at the time of divorce. For a prenuptial agreement to be valid in California, it must be entered into voluntarily by both parties, with full disclosure of each party’s financial situation. If one party can prove that they were coerced into signing the agreement or that the other party failed to disclose significant assets or debts, the prenup may be invalidated.
Additionally, the agreement must be considered fair and not unconscionable at the time of enforcement. This means that if the terms are excessively one-sided or unjust, a court may refuse to uphold them.
Another limitation of prenuptial agreements in California is their potential for amendment or revocation. Couples can choose to modify or cancel their prenup at any time during their marriage, provided both parties agree to the changes in writing. This flexibility means that a prenup is not necessarily a permanent arrangement and can be adjusted to reflect changes in the couple’s financial situation or personal circumstances. However, any amendments must still comply with the legal requirements for enforceability.
What Could Invalidate a California Prenup
As with any legal document, violating the agreement can invalidate a prenup. As mentioned above, if a prenup is not appropriately executed when drawn up and signed, it will be invalid. For example, if the prenup is only a verbal agreement, it will not hold up in a court of law. If the couple does not marry after signing a prenup, the prenup will not go into effect.
If a couple’s circumstances change after marriage, it is possible to change a premarital agreement in California. To do so, both spouses must agree to any changes and take the legal steps necessary to change the original prenup. Alternatively, the couple could consider a post-nuptial agreement.
A prenup may also be invalidated if it contains terms that are deemed unconscionable or grossly unfair at the time of enforcement. Courts will scrutinize agreements that heavily favor one party over the other, especially if the disadvantaged party does not have adequate legal representation. To avoid this, both parties should have their attorneys review the prenup to ensure that the terms are fair and equitable.
Steps to Take Before Signing a Prenup
If you would like to sign a prenuptial agreement, there are several steps you should take. First, be sure to read the entire contents of your prenup to ensure that you understand what’s in it. Regardless of who prepares the document, it’s essential to know what it says and ask for clarification if there is something you disagree with.
Then, be sure to consult with a family attorney or other attorney who specializes in prenuptial agreements. This person can help you navigate the document and understand if it’s all in your best interests.
Finally, take the time to think about it before you sign. Even after consulting an attorney, you might have your doubts. Entering a marriage, with or without a prenup, is an important decision. Ensure that you are doing the best thing for yourself long-term and don’t sign anything that can negatively impact you in the future.
How to Keep Assets Separate Without a Prenup
Some people choose to get a prenup because each potential spouse has property or other assets they’d like to protect. These assets may include physical property, retirement or other accounts, and more. Even if a couple decides to share some of the assets that they bring into the marriage or accumulate during the marriage, it can be wise to have a prenup.
It might be wise to create a trust before marriage. This way, it will be clear which assets fall under the trust and are separate. If you own property such as a home and want to keep it separate, ensure that you continue to only pay for it with money earned outside the marriage and not from a joint fund. This will help prove later that it is not shared property.
Finally, if you have an individual account, be sure to keep it separate throughout the marriage. Do not deposit any paychecks into the individual account and do not use it to pay for community expenses such as rent, a mortgage or otherwise.
Do You Need a Prenuptial Agreement?
Just because you choose to get a prenup does not mean that you think the relationship will end. It simply means you understand things can happen, and you want to prepare for those possibilities.
Even if your relationship is stable now, you may want to consider getting a prenuptial agreement. Each couple will have different reasons that they want to sign a prenup. People who should consider a prenup are those with assets before marriage, single parents, business owners, grandparents and business professionals. Additionally, if one or both have debt, they may want to sign a prenup to protect the other in case of their early demise.
If the couple were to divorce in the future, it could be helpful to agree that the two would want to protect each other financially. A prenup can help to prevent extensive court proceedings and promote early and open communication between the couple.
Bottom Line
Nobody enters a marriage expecting that it will end. However, many people still choose to get prenups to ensure that their assets have protection. They can also help you stay on a clear financial path no matter what happens. Each state has unique prenuptial agreement laws, and California’s are relatively easy to understand. Ensure that if you do choose to get a prenup you have an attorney write it for you and that you follow all the necessary legal guidelines to ensure that your prenup is valid.
Tips on Personal Finance
- A financial advisor can offer valuable advice about how to modify your financial plans and adjust your investment portfolio in preparation for marriage. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- While the cost of hiring a lawyer to prepare a prenup may seem prohibitive, it could end up saving you a significant sum – and stress – later on. But there are several ways to save on nuptial expenses, and there are several tax breaks you can claim for your wedding expenses.
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