1. Prenups in California
The period before getting married is a joyous time in a couple’s life, and a prenuptial agreement may not be the first thing on their mind. However, depending on one’s situation, it might not be a bad idea to consider it. In California, a prenuptial agreement arranges what will happen to an individual’s property and money if the couple get divorced in the future.
Let’s return to our opening example. Perhaps Robert has a vacation house in Fiji that he loves. He worries that if he and Alessandra one day get divorced, she might lay claim to it as part of the division of assets. In a prenup, he can declare that the house will stay with him in the event of a divorce.
2. Prenup Legal Requirements in California
Since 1986, the Uniform Premarital Agreement Act (UPAA) has applied to prenuptial agreements in California. Essentially, this law states that when a couple signs a written prenuptial agreement before a marriage, it will become effective once the couple becomes married. When it comes to the content of the agreement, a prenup may address a couple’s current and future property and asset rights. It cannot, however, negatively impact a child’s right to child support or affect child custody and visitation.
Prenuptial agreements are also subject to the principles of regular contract law. Both members of the couple must consent to the prenup. This means that both must have the mental ability to consent, and the consent cannot be coerced or be the result of fraud or trickery.
According to the UPAA, in California, prenuptial agreements can only be enforced against a spouse if the spouse:
- Was wholly informed of the other spouse’s property and finances before signing the prenup
- Had at least 7 days between receiving the agreement and signing it
- Was represented by a separate attorney when signing it, UNLESS…
- Upon receipt of written information concerning the agreement, he or she waived the right to an attorney by signing a separate document
In general, however, if the spouse did not employ a separate attorney, any part of the prenup affecting alimony (rights to spousal support) will not be enforceable.
3. Prenup Terms
If the prenup meets the above guidelines, then a couple can agree to change, or forfeit completely, rights to alimony (spousal support) in the event of divorce. That said, the result must not be “unconscionable,” or very unfair, when the agreement is enforced.
What does this mean? If, at the time of divorce, one member of a couple is financially very well off but the other would be forced to go on welfare, then the results would be unconscionable, or very unfair. In this case, a court would likely not enforce the agreement. In general, courts only accept a waiver of alimony when both spouses are of relatively equal intelligence and education, as well as being self-sufficient in property and earning ability at the time the agreement is signed.
While crafting a prenup agreement, a couple can also agree to alter the nature of property owned. For instance, if one spouse bought a car before the marriage, that car would normally be that spouse’s separate property in the event of a divorce. However, the couple can agree to make the car community property instead. This means the car could be part of a division of assets in the event of a divorce.
Spouses may also agree that what is traditionally “community property,” such as income during the marriage, remains separate property. Normally, earnings would be divided equally in the event of a divorce. But if the couple make the aforementioned agreement, then each couple would be entitled to keep their own earnings.
Spouses can also agree to waive inheritance rights so long as the agreement does not negatively impact the rights of any underage children. Often, parents who have children from a previous marriage want their new spouse to waive inheritance rights, in order that assets pass onto the children.
4. Terms That Cannot Be Included
There are some terms that a prenuptial agreement may not include. Certain rights cannot be bargained over because of legal requirements. A future spouse cannot, for example, give up his or her right to share an ERISA employee benefit plan. This is because federal law mandates that only current spouses can do that. If the couple still would like to do this, it must be done after they are married
Similarly, in California a prenuptial agreement cannot include any terms that may be considered illegal or that go against “public policy.” An example of this is ensuring that a child’s rights remain under the control of the courts that will act in the child’s best interests. Basically, it is not permissible to take away any current or future child’s rights. A child, after all, cannot be bargained. The courts will retain the authority to make decisions on the child’s welfare in the event of a divorce.
Example: Alessandra agrees to Robert’s suggestion of signing a prenup, but she insists that if the couple every have any children, they should automatically “belong” to Alessandra. She essentially tells Robert that if they get divorced, she wants the right to have the children stay with her. However, Alessandra legally cannot do this. Children’s rights are not assets to be divided up in a prenuptial agreement. Should there ever be children in the relationship, and the couple then divorces, the courts will decide what situation best suits the children.
Regarding children, a couple creating a prenup is allowed to provide a child more support than legally necessary. One such example is agreeing how to pay for the child’s future college expenses or whether to provide financial support to an adult child. Also, parents are free to agree how to raise a child. For instance, parents might agree to raise a child Catholic, and even in the event of a divorce, the child will still be raised in that religion. California courts generally do not have a problem enforcing these types of agreements.
In California, there are no “at-fault” divorces, meaning that the courts do not consider fault or misconduct when it comes to the division of property or spousal support. A prenuptial agreement that attempts to punish one spouse for misconduct during a marriage will therefore not be enforceable in California.
In California, public policy also prevents agreements that would change the relationship responsibilities of marriage. Marriage involves the following duties, among others: respect, loyalty, and support. If an agreement demands compensation for “companionship,” for example, then the agreement is not enforceable. This is because companionship is already a duty of marriage.
California courts have in the past stated that any agreement that encourages the dissolution of a marriage may not be enforced. That said, any significant change in property or assets might make divorce an attractive prospect to one spouse. A court will therefore be likely to scrutinize any agreement in which one spouse would receive a huge amount of money in a divorce.
Example: Alessandra convinces her fiancé Robert to fashion a prenuptial agreement that heavily favors her. In the event of a divorce, she would get generous alimony, a house in Aspen, the Range Rover, Robert’s beloved Porsche, access to a vacation house in Fiji for six months of every year, and various stocks. A court would look at this agreement skeptically. By divorcing Robert, Alessandra would receive a significant amount of money in the form of financial support and assets. Therefore, the prenup makes divorce a very attractive prospect for Alessandra.