Prenuptial Agreements Are Not Just For Hollywood Celebrities
Prenuptial agreements are often associated with the rich and famous (Barry Bonds, anyone?)... but, the reality is that many couples in California can benefit from a carefully constructed premarital agreement to identify separate assets and define the rules of their marriage. For example, prenuptial agreements are frequently considered by parties who have been previously married and divorced (or widowed), or by older, established individuals with significant property and/or children whom they want to protect. A recent article published on Bankrate.com discusses this very topic.
Prenuptial agreements, as unromantic as they may sound, can eliminate disputes at the time of divorce if the marriage ultimately fails. The agreement can serve as a snapshot inventory of assets and debts owned or incurred by each spouse prior to marriage. It can convey interest in property between the parties, or dictate that neither spouse will acquire interest in each other's property.
In community property states like California, the prenuptial agreement can even permit parties to opt out of the community property system, allowing each spouse to earn income and obtain assets independently of the other during marriage and requiring express and definitive steps for the parties to obtain property jointly. The agreement can also limit or eliminate spousal support (alimony) for one or both spouses.
Of course, prenuptial agreements can potentially be unfair to one spouse or the other, which is why states like California have overhauled their domestic relations statutes in recent years. In California, for example, the party receiving a proposed premarital agreement must be given at least seven days to read, review and contemplate the agreement prior to signature. The law also requires that each party have their own, independent counsel (with only a very strict, limited exception), and that the parties provide each other with "full and fair" disclosure of their financial circumstances.
Despite all of the things a couple can do with a prenuptial agreement, there are limits. For example, the agreement cannot limit or restrict a parent's rights to custody, visitation or child support. Additionally, although an agreement can limit or eliminate a party's right to spousal support, the agreement itself is subject to scrutiny by the Courts and examined to ensure it is not "unconscionable," or unreasonably unfair to one party. If a Court decides that the agreement rises to the level of being unconscionable, it may redline the provision(s) it finds excessively unfair. In other words, depending on the circumstances of the couple, the Court may nevertheless award some property interest or spousal support to a party who waived his/her rights to that property or support in the prenuptial agreement.
A couple contemplating a premarital agreement should have a frank discussion about such an agreement at least six months in advance of the anticipated wedding. Not only will this allow plenty of time for the agreement itself to be drafted, reviewed and revised (in and of itself a process that will take several months), but it will allow the parties to put the business of the agreement behind them and then focus on what should presumably be one of the happiest days of their lives.