Prenuptial Agreements in California - How do prenups work in California?
In many cases, marriage is one of the most significant financial decisions you'll ever make. If you’re about to get married and you reside in California, the state with the largest population of ultra-high net individuals in the country, you need to understand how prenuptial agreements work in California.
A prenuptial agreement is a legal document that lays out the division of a couple's assets in the case of divorce, death, or illness. Spouses must each have independent legal counsel; otherwise, the prenup might not be valid. Additionally, each spouse must make full disclosure of their assets.
Some might see prenups as devaluing the relationship, but in reality, it’s often the best way to protect your assets and financial health should the marriage end.
Each state has different laws around prenups, and courts will not enforce prenups that don’t meet state guidelines.
In this article, we’ll run through California’s prenuptial laws, what you should include in a prenup, what constitutes marital property, and everything else you need to know about prenups.
How do Prenups Work in California
California’s Uniform Premarital Agreement Act (UPPA) lays out the requirements for legally valid prenups in California.
What is necessary for a legally valid prenup in California?
For the prenuptial agreement to be valid in California, it must meet these requirements:
- Must be a written contract signed by both spouses
- Signatures must be voluntary, not coerced
- Prospective spouses must make full disclosure of their assets, debts, and income before signing
- A notary must sign the legal document
Additionally, some inclusions could make it invalid in California. According to the California Uniform Premarital Agreement Act (UPPA), your prenuptial agreement isn’t valid if it includes the following:
- Information about child support or child custody
- Inclusion of any illegal acts by a spouse
- Unfair or deceptive terms
- Non-financial inclusions, like changing one’s appearance
Another disqualifier of a prenup’s validity is if it violates public policy. For example, California courts will not enforce a prenup valid if it includes provisions about religion or domestic services.
How to Prepare for a Prenup in California
A prenup can be a tedious legal process. But simple steps in preparation will reduce the burden. Besides, it’s all for a good cause — you and your spouse’s financial health matter and it’s worth this extra effort to protect it. Follow these steps to prepare for your California prenup:
Consult with a Family Law Attorney
Seek legal advice from an attorney specializing in premarital prenuptial agreements, and ensure your spouse chooses one for themselves. The attorney you use must be separate from your partner's for the prenup to be valid.
Consult with the attorney to determine what you want out of this prenup. They can also offer legal advice that will help you understand the final legal document (prenup) before signing.
Review the Prenup Before Signing
Read every section and ask for clarification if any part is unclear. If you disagree with any provisions, say so and amend the document.
Think About It
Even after you finish reviewing, sit on the prenup for a few days before you sign. In California, you have a week to sign the premarital prenuptial agreement and it’ll still be valid.
California Premarital Agreement Law: The Family Code
The California Family Code is a legislature that hosts the Rights and Obligations During Marriage division. Within that division, you’ll find Part 5, Marital Agreements, and Chapter 2 of Part 5 is the Uniform Premarital Agreement Act (UPAA).
This chapter goes into great detail about what you can or can’t include in a California prenuptial agreement.
What to include in a prenup?
According to the Uniform Premarital Agreement Act (UPPA), these are the items that you can include in a prenup:
- Rights and obligations of prospective spouses regarding any property between the two of them
- Rights to manage properties, including to buy, sell, lease, assign, mortgage, etc.
- Disposition of property upon the end of the marriage
- Wills or trusts
- Ownership rights as they relate to death benefits in a life insurance policy
- Other matters as long as they do not violate public policy or criminal law
What not to include in a prenup?
According to Uniform Premarital Agreement Act (UPPA), these are the items that you cannot include in a prenup:
- Matters that violate public policy or constitute criminal activity
- Agreements that impede on the right of child support
- Any agreements about spousal support if one of the prospective spouses didn’t have independent legal counsel at the time of signing the agreement
Can you ever change or amend a prenup after marriage?
Things change sometimes — circumstances, viewpoints, finances — it’s common for people to amend their prenups.
Marital Property vs. Separate Property
You might hear the terms marital property and separate property when researching prenups. Marital property includes all assets, including real and personal property, obtained while married. If you bought a house two weeks after you got married, it’s marital property or community property between you and your spouse, even if it’s under only one spouse’s name.
If you had a business, inheritance, gifts, trust, or piece of real estate before getting married, this is considered premarital or separate property. These remain yours as long as your prenup didn’t have a provision that commingled these assets.
How to Keep Assets Separate Without a Prenup
Prenups are your safest bet to protect your post-marital assets if your marriage ends, but some people don’t want one. Here are some tips to protect yourself and keep things separate without a prenup:
Don’t Merge Existing Bank Accounts
Create new accounts and merge those instead. Use your new merged accounts for shared expenses throughout your marriage. Don’t use your premarital individual bank account to pay for any shared expenses like rent.
Create a Trust
A trust is a legal entity and the only way (apart from a prenup) to keep certain assets guarded in the event of divorce. Hire an accountant or financial advisor to help you manage the trust. If your trust assets appreciate throughout the course of your marriage, it doesn’t count as marital property because you did not cause the appreciation while married. You can even put a property in a trust to keep it separate.
Keep in mind that trusts are a lot of additional paperwork. Keep meticulous records and enlist the professional services of an accountant to help you keep things organized.
What is a Postnuptial Agreement?
If you’re already married and don’t have a prenuptial agreement, don’t worry - you can arrange a postnuptial agreement instead. The only difference between postnuptial and prenuptial agreements is the date of completion. The latter is valid upon your wedding date while the former is valid anytime after your wedding, specifically when you decide to draft it.
Premarital Counseling to Guide You Through the Process
We know that getting a prenuptial agreement in California could be tedious, uncomfortable to carry out, and may cause friction with your partner.
OURS can help with their 100% virtual premarital counseling program, including two sessions with a professional therapist and four weeks of engaging weekly content for you and your partner to complete. To strengthen your relationship as you navigate your wedding plans and prenuptial agreement in California, check out OURS.