Pre-nuptial Agreements

Pre-nuptial agreements are a good way for “opting out” of the whole community property system. People can opt out of spousal support, as well.

Once upon a time, pre-nups were disfavored by the law. In fact, in the early 1980’s, I bragged that I could bust any pre-nup. Today, however, after the Supreme Court decisions of Barry Bonds and Pendleton and Fireman, pre-nuptial agreements are actually favored by the law.

Why not define your rights and responsibilities up front and avoid a battleground in a divorce?

Before you get married, if you have a career, property, a pension or retirement, or children of any age, you should have a pre-nup.

We write Pre-nups, negotiate the terms, and advise people on prenups written by other firms from across the country. We’re Scott Family Law. Let us come along side and help you.[/vc_column_text]

Why Husbands And Wives Should Have Prenuptial Agreements

By James D. Scott, CFLS

Commonly Heard Phrases Indicating Agreement and Compromise Between Spouses:

  • Prenuptial Agreement
  • Antenuptial Agreement
  • Marital Agreement
  • Post-Marital Agreement
  • Marital Settlement Agreement
  • Stipulation to Judgment

The terms “Prenuptial Agreement,” “Antenuptial Agreement,” and “Pre-marital Agreement,” suggest the same thing: An agreement made by husband and wife before marriage, which would affect their property rights. It may affect their income during the marriage as separate or community. A pre-marital agreement may protect a spouse from paying spousal support or alimony after the marriage. Before getting married, people may waive, or give up their right to be supported by their spouse.

Very often people who have substantial property or income will want to protect that from the high rate of divorce. They may receive large gifts or an inheritance before or during the marriage that they wish to protect as their separate property. Our California Supreme Court stated the policy that these agreements are to be enforced as promoting marriage in a world of marital uncertainty.

Pre-Marital Agreements, are also known as “Pre-Nups” or “Antenuptial” agreements. One of my colleagues remarked that the words “antenuptial” are like “ante-up” before playing a hand of poker. This is a contract made in anticipation of marriage. These contain promises, representations, and disclosures. The subjects of the agreement may include the following:

  1. Limitations on spousal support (SS) in the event the marriage is eventually dissolved;
  2. Property Rights including limitations on the creation of community property (CP) during the marriage and preserving income during the marriage as separate property;
  3. The preservation of separate property (SP) during the marriage which the person owned before the marriage;
  4. The values of specific items of separate property;
  5. Whether or not the income of each spouse would be community property or separate property during the marriage;
  6. In the event one of the spouses contests the agreement, then who will pay the attorney fees; and
  7. The choice of law from which state will apply if the premarital agreement is challenged.

The Uniform Premarital Agreement Act in California begins at California Family Code Section 1600. As recently as the turn of the year ’06 to ’07 the appellate court noted the reliability of a premarital agreement in the cased of Ackerman where a value was fixed on the separate property nature of the husbands medial practice.

Recent California Supreme Court cases of Bonds v. Bonds and Pendleton v. Fireman made clear the intent of the court to uphold these agreements and thereby promote marriage.

Marital agreements form a little bit later in the relationship. Marital agreements occur during the marriage and usually apply to one issue, such as, one piece of property or one business. A common marital agreement might provide that the home owned by the husband or wife before marriage would remain the separate property of that person during the marriage and that no community interference would apply to the home at all. In another case, a marital agreement might provide that an expensive piece of jewelry worn exclusively by the husband or by the wife would remain community property in the event that the parties needed to sell the jewelry, or in the event that they got a divorce.

A Post-Marital Agreement, sometimes known as a Marital Settlement Agreement, is a comprehensive document recognizing the statistical aspects of the date of the marriage, the names, birthdates of the children, and the property of the parties. The Marital Settlement Agreement typically states all of the rights and interests of the parties that were developed during the marriage, or that they would have separately. It will state the custodial arrangement for the children and the arrangements for child support and spousal support among many other possible things.

Some lawyers will use the technical term “Stipulation to Judgment” for an agreement that ends a divorce and becomes the judgment of dissolution of marriage. This becomes a private law between the parties.

Why Not Have An Agreement?

If a person has a business or a professional practice before the marriage it will have a value for the stock in trade, the equipment, the customer list, the ideas, and the lease or location among many other things. In this case, if the person is married for few years or ten or twenty years, and there is not a premarital agreement, then the parties will have to appraise that business or practice for two dates, the date of marriage and the date of the separation. You can expect a business appraiser to demand about $25,000 for each appraisal.

What if the person who started that business above did not keep the records from the years surrounding the date of marriage and then ten, twelve, or fifteen years later the marriage falls apart? How will they ever prove that they had a separate credit of thousands and thousands, if not millions of dollars for property owned before the marriage?

Why Not Give a Premarital Agreement to Your Kids?

Very few young people have the $100K for a down payment to buy a house today. Loving parents frequently give these large sums to their kids to help them buy a home. What happens to the money after the kids put the deed into joint tenancy or community property and they break up? Is it fair in a short marriage of less than ten years for half the money to be lost?

Sure there are provisions in the Family Code for reimbursement. But why not make it clear and very simple that the money comes back to the family that contributed the money? That kind of a provision itself promotes marriage. There is less incentive to leave the marriage.

Are There Special Premarital Agreements?

There are special provisions to our premarital agreements that we have written to take into account the changes in the law we see with regular experience in litigation. We use language that specifically addresses how property is preserved in character as separate or how it “transmutes” from separate to community. There can be no question about the status if the marriage ends.

What Is the Cost of a Premarital Agreement?

Anyone can buy a form online and gamble with their future. All of our agreements begin with an office consultation that shows you how to make an effective disclosure and how to execute a bullet-proof agreement. The cost of that consultation with a Certified Family Law Specialist is just $295.00. Call 858-974-4900 now to make your appointment.