Protect Your Financial Future with a Prenuptial or Postnuptial Agreement
San Francisco attorney Lisa J. Auer can draft a prenuptial or postnuptial agreement that meets your goals or review a proposed agreement and help you negotiate changes. Prenuptial and postnuptial agreements (also known as premarital and postmarital agreements) are contracts that specify how you and your spouse will treat your assets and income during marriage, in the event of divorce and upon one spouse’s death. Without a premarital or postmarital agreement, questions such as how your assets and liabilities will be divided upon divorce and whether one party will receive spousal support will be decided under California law. You may want to decide things differently.
How California Treats Marital Property
California is a community property state, which means that all money and assets acquired during marriage are presumed to belong equally to both spouses, including both spouses’ earnings. Money or assets owned prior to marriage, gifts and inheritances, and post-separation earnings are separate property, as are all earnings, rents, appreciation, and accumulations on separate property. During marriage, the community may acquire an interest in one spouse’s separate property under certain circumstances-for example, if community property income is used to pay a mortgage on a separate property residence or if the owner spouse devotes personal effort to the management or improvement of his or her separate property.
Under California law, upon dissolution of marriage, community property and debts are divided equally between the spouses (in the absence of an agreement providing otherwise). Separate property is confirmed to the owner spouse; however, the party making a separate property claim has the burden of proving the separate character of the asset. Either spouse may owe spousal support (alimony) to the other spouse, based on need, ability to pay, marital standard of living, the length of the marriage, and a variety of other factors. On the death of a spouse, the surviving spouse owns one-half of all community property and has other statutory rights to inherit a portion of the deceased spouse’s separate property and share of the community property (if there is no will or trust providing otherwise). Some people prefer to decide these things differently from what California law provides.
Reasons for a Premarital or Postmarital Agreement
Couples choose to enter into prenuptial or postnuptial agreements for many reasons. Some couples want to opt out of community property law entirely. Others may want to preserve assets as separate property or preserve assets for children from a prior marriage or relationship. Some people want to eliminate or limit the obligation to pay spousal support. Couples may decide to enter into a postmarital agreement if they reconcile after a period of separation or marital discord.
A prenuptial or postnuptial agreement can strengthen a marriage by promoting clear communication and expectations and eliminating potential sources of conflict and mistrust. When properly drafted, premarital and postmarital agreements can provide certainty and avoid prolonged litigation in the event of divorce.
Requirements for a Prenuptial or Postnuptial Agreement
A premarital agreement should be prepared and signed several weeks or months before the wedding. Both parties must complete thorough financial disclosures as part of preparing a premarital agreement. Once married, both parties owe each other fiduciary duties that must be considered when entering into a postmarital agreement. For both types of agreements, it is essential that both parties have separate, independent attorneys to ensure that the agreements are enforceable.
In addition to handling premarital and postmarital agreements, Ms. Auer advises clients on and drafts cohabitation agreements which detail the arrangements between two people living together, but who are not married.