Ed: Welcome to FreeDivorce.com
Christina: This is Christina.
Ed: This is Ed. Today, we are going to talk about Pre-Marital Agreements, which also go by other names including Pre-Nuptial agreement and Ante-nuptial Agreement. Christina, if I’m about to get married, should I get a pre-marital agreement?
Christina: In order to answer that question, you first need to understand what you can and can’t accomplish with a pre-marital agreement under California law.
Ed: What sorts of binding agreements can a couple enter into with a pre-marital agreement in California?
Christina: Pre-marital agreements can be used to alter property rights that would normally apply. For example, without a pre-marital agreement, each party’s earnings after the date of marriage would normally be community property and any assets purchased during the marriage with those earnings would be community property. However, with a pre-marital agreement, you can agree that each party’s earnings after the date of marriage will remain the separate property of the spouse that earned the money and any assets purchased with those separate property earnings would be that spouse’s separate property.
Earnings are not just the money a person gets from a paycheck or from self-employment. Earnings can include accumulations of retirement assets such as pensions and 401(k) accounts. Without a pre-marital agreement, if a couple gets divorced, the community property assets acquired during the marriage, including retirement assets, would normally be equally divided. However, if your pre-marital agreement includes a separate property earnings provision, then upon a divorce, there may not be any community property assets to divide. Each party would keep whatever assets were purchased with their earnings and each party would keep the retirement assets they earned.
Ed: Wait a minute, if the parties have a pre-marital agreement provision that says their respective earnings after the date of marriage will be the separate property of whichever party earned the money, how do joint bills get paid during the marriage.
Christina: A pre-marital agreement can spell out a procedure for paying joint bills. For example, the pre-marital agreement may provide that each month, each party will deposit a certain amount or a certain percentage of their earnings into a joint account and the money in the joint account will be used to pay common expenses such as rent, food, utilities, etc. Any earnings not deposited into the joint account will remain separate property.
Ed: What other types of property agreements can you include in a pre-marital agreement?
Christina: You can make all kinds of agreements about property with a pre-marital agreement. You can agree that property each party owns before marriage will remain their separate property.
Ed: I thought property a person owns before marriage is automatically that person’s separate property under California law. So why would I need a pre-marital agreement to protect assets I own at the time I get married?
Christina: There are various ways the community can acquire an ownership interest in property one spouse owned before marriage. For example, if I own a house before marriage, and after the marriage, my spouse and I live in that house and we use community earnings to pay the monthly mortgage payments, then the community will gain a small ownership interest in the house with each mortgage payment that is made. If, during the marriage, community money is used to make improvements to the house, then that can also create a community property interest in the house. If my spouse and I later get divorced, part of my house would be community property. However, a pre-marital agreement can include a provision that states that any assets owned by either party before marriage will remain entirely that party’s separate property regardless of whether or not community funds are used in any way to pay for the asset or to pay for any improvements made to the asset.
One of the most common things a pre-marital agreement is used for, is to identify the various assets each party owns going into the marriage and to provide that the community will never acquire any ownership interest in those assets or in any income those assets may generate. Typically, a pre-marital agreement will have two exhibits attached to it. One exhibit will list all of the assets owned by one party that are to remain that party’s separate property and the other exhibit will list the other party’s assets. The exhibits will typically also list all of the debts owed by each party.
Ed: What are some other property agreements I can make with a pre-marital agreement?
Christina: You can use pre-marital agreements to change (also referred to as “transmute”) property from separate property to community property. For example, you may have an older man that is wealthy with lots of assets marring a younger woman with little in the way of property or income. The woman may be worried about her financial security in the event the man divorces her years later or dies and leaves his estate to children from a previous marriage. The woman may want the pre-marital agreement to include a provision whereby the man transmutes or changes the character of some of his separate property assets to community property. A pre-marital agreement could provide that a house owned by one spouse prior to marriage would be transmuted or changed into community property upon the date of marriage. A pre-marital agreement could require one spouse to obtain and maintain a certain amount of life insurance for the benefit of the other spouse. A pre-marital agreement could require one spouse to make provisions in their Will or Trust for the benefit of the other spouse.
Ed: What about agreements regarding debts?
Christina: A pre-marital agreement can also be used to make agreements about debts. Typically, debts incurred during the marriage are community debts. A pre-marital agreement can provide that debts incurred during the marriage will be the separate debt of the party incurring the debt. A pre-marital agreement can be used to transmute or change debt. Let’s say a man has a lot of debt that he incurred before marriage, which would be his separate debt. A pre-marital agreement could provide that the debt would be transmuted or changed into community debt upon the date of marriage. A pre-marital agreement can be used to make all kinds of agreements about debts, whether those debts existed at the time of marriage or were incurred during the marriage.
Ed: What about child custody agreements for children born during the marriage? Can I use a pre-marital agreement to control how we will share custody of any future children in the event my spouse and I get divorced?
Christina: Although parents have a right to contract with each other as to the care, custody, control and education of their minor children, the State of California has an overriding interest in the welfare of minor children and thus courts will always retain jurisdiction to award or modify any custody agreement between the parents in order to protect the best interests of the child. So, if a pre-marital agreement spells out custody or visitation rights regarding children that may be born during the marriage, upon a divorce, a court will still have the authority to make a different custody and/or visitation order that is in the best interests of the children.
Ed: Can I use a pre-marital agreement to limit or eliminate any obligation I may have to pay child support for children born during the marriage?
Christina: You can’t. Courts always want to insure that children are properly supported. Any pre-marital agreement that purports to limit or eliminate a parent’s statutory duty to support their children is void.
Ed: What about alimony? Can I use a pre-marital agreement to limit or eliminate my obligation to pay alimony, also known as spousal support, in the event my spouse and I get divorced?
Christina: You can, to a certain extent. First, if you want your pre-marital agreement to include a spousal support limitation or waiver, the other party must have independent counsel at the time the agreement is signed. If they are not represented by an independent lawyer when they sign the agreement, the spousal support waiver will be unenforceable. Even if they do have independent counsel when the agreement is signed, the spousal support limitation or waiver will still be unenforceable if, at the time of the divorce, enforcement would be unconscionable. If you want to include a provision in your pre-marital agreement that limits or eliminates your obligation to pay spousal support in the event of a divorce, the pre-marital agreement should include a full disclosure of each party’s income, assets, and debts at the time of the marriage. Although there are procedural requirements and possible limitations, a provision in a pre-marital agreement that limits a spousal support obligation or even waives a party’s rights to receive spousal support in the event of a divorce, can be a valid provision.
Ed: What are some additional provisions that would be unenforceable if included in a pre-marital agreement?
Christina: There are various kinds of agreements that are unenforceable if included in a pre-marital agreement because they are against public policy. Some examples are as follows: Pre-marital agreements that provide for payments by one spouse to the other for domestic services, care or companionship are void. Premarital agreements purporting to alter the obligations between spouses of mutual respect, fidelity and support during the marriage are void. Agreements attempting to control the religious upbringing of minor children are void. Agreements that attempt to impose a penalty on one spouse for “fault” during the marriage are contrary to California’s “no-fault” divorce laws and are unenforceable. Provisions that tend to promote divorce are void.
Ed: Are there certain procedures that should be followed in order for a pre-marital agreement, or certain provisions in a pre-nuptial agreement, to be enforceable?
Christina: Yes. The procedures required for enforceable pre-marital agreement provisions have varied over the years. The following are some of the more important rules that apply to pre-marital agreements that are executed today.
- Pre-marital agreements must be in writing and signed by both parties.
- Each party should be represented by an independent lawyer when the agreement is signed, unless independent legal representation is waived in a separate document. If the pre-marital agreement contains any provision limiting or waiving spousal support, the party or parties that agree to limit or waive their spousal support rights must be represented by an independent lawyer at the time the agreement is signed.
- Both parties need to make a fair, reasonable, and full disclosure of their property and financial information. This includes, but is not limited to, the disclosure of full information about each party’s assets, debts, and income.
- There must be at least seven days between the time a pre-marital agreement is first presented to a party and the time it is signed. If you are negotiating with your partner and the terms of the proposed pre-marital agreement change, make sure each side has at least 7 days to review the final draft before the agreement is signed.
- If one party is not represented by an independent lawyer, that party must be fully informed of the terms and basic effect of the pre-marital agreement as well as the rights and obligations he or she is relinquishing by signing the agreement, with such advice memorialized in writing.
Ed: Is there additional important information that you want to share about pre-marital agreements?
Christina: The laws regarding pre-marital agreements are complex and we can’t go over all of them in a short video. We have discussed some of the main issues in this video. There are all kinds of provisions you can include in a pre-marital agreement that we did not cover. There are various provisions that are not enforceable if contained in a pre-marital agreement that we did not discuss. Our video applies to pre-marital agreements executed at this time. The laws have changed over the years. Different rules apply to pre-marital agreements that were executed years ago.
Ed: If I want to draft a pre-marital agreement, but I can’t afford an attorney, what can I do?
Christina: There are a number of pre-marital agreement templates available on the internet. Some are good, some are not so good, and others are garbage. If you pull a template off the internet, make sure it was drafted for use in California. A better option is to go to your local law library and look through the family law text books, some of which contain a pre-marital agreement template. Remember, law libraries are different from regular libraries. A law library can usually be found in or near the main courthouse in your county. If you go to the law library, The Rutter Group, California Practice Guide on Family Law, which is a three volume set, has a good example of a Pre-marital Agreement at the end of the chapter dealing with Pre-marital agreements.
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