Just about the last thing that you want to think about when you’re planning your wedding is the possibility that you might one day get divorced, but planning ahead can spare each of you the significant emotional and financial stress that will otherwise come with a long and drawn out divorce case. By having financial arrangements made in advance (and at a time when both of you are feeling very friendly and reasonable), you can limit some of the added costs that usually arise just from the animosity that occurs when a relationship – especially a marriage – doesn’t work out.
Pre-marital agreements have gotten a bad reputation over the years, because most people only hear about the ones that people complain about. Just like with online reviews for restaurants, most people only make noise about their negative experiences, but for every negative review there are hundreds of happy customers who just didn’t post about it.
Pre-marital agreements are just that, “agreements,” and their sole purpose is to allow couples to decide for themselves how they want certain issues in their lives to be decided in the unfortunate event that their marriage doesn’t last forever. For that reason, pre-marital agreements (also called “prenuptial agreements”) are not beneficial only to the very wealthy, or to people who own their own properties or businesses. They can also be extremely valuable to a wide range of people, including young people just starting out in their careers. For example, let’s assume that you and your soon-to-be-spouse met after each of you graduated college and were already started in your careers. However, your career path is a very lucrative one, whereas your significant other chose a degree that is not very marketable, and they are likely never going to have the same earning potential that you will have. In that instance, you may want to consider limiting the amount (and/or duration) of spousal support that you may have to pay in the future. You weren’t responsible for their college/career choices. They chose their career path before they even met you. Should you be a lottery ticket for them in the event that you get a divorce, paying out more in spousal support each month than they would have ever earned if you had never met? There are likely many different possible factors that could influence your opinion on this issue, but pre-marital agreements can usually be drafted so that different factors will result in different orders. For example, you can set different spousal support limits depending on the length of your marriage, your respective incomes, etc.
That being said, there are some things that the law does not allow to be included in pre-marital agreements. For example, the State of California has mandated that courts shall always have jurisdiction to make orders that are in the best interests of children. Therefore, child custody and child support cannot be limited or pre-determined in any way through pre-marital agreements. You can also not include terms in a pre-marital agreement that would supersede the “no fault” divorce provisions of California law. That means that you cannot include penalties to a party who is unfaithful. The court will also not enforce any term in a pre-marital agreement that is determined to be an incentive to divorce.
Most common reasons to have a pre-marital agreement:
Perhaps the most common use for a prenuptial agreement is to protect property that is already owned by a party (such as a house or a business) should the couple divorce. For example, a pre-marital agreement may provide that Mary’s house shall always remain with her, even if the parties live at the house during the marriage, and even if community funds are used to make improvements to the house or to pay down the mortgage during the marriage. Without such an agreement, the community would otherwise obtain an interest in the house by virtue of the mortgage payments, and if Mary does not have enough liquid cash to buy out her spouse’s interest in the house, she will be forced to sell her home, even if she doesn’t want to. This can become an even more emotional issue if the house is a person’s family home that was inherited after her/his parents passed away.
Probably the next most common use for pre-marital agreements is to pre-determine what spousal support (aka “alimony”) will be paid and for how long. As discussed previously, a pre-marital agreement can be crafted in many different ways, from a complete waiver of spousal support, to a nuanced agreement that provides for different amounts and durations depending on the length of the marriage, or even the incomes of the parties.
Post-marital agreements are available too:
If you are already married, and wish that you had a pre-marital agreement, it may not be too late. Married couples can still enter into agreements between themselves regarding their property and spousal support rights. Such agreements are called post-marital or post-nuptial agreements.
Feel free to contact us if you are interested in a pre-marital or post-marital agreement. An experienced family law attorney will be able to draft an agreement that will protect your financial interests.