Four Reasons Everyone Should Consider a Prenup

Many couples benefit from drafting prenups because they can mitigate future conflict, lower divorce costs, and address issues such as debt and dependents.

Prenuptial agreements (aka Premarital Agreements, Fam. Code §1610(a)), which stipulate how various issues will be handled in the event of divorce, once were considered necessary only for wealthier individuals. However, today many couples in San Diego draft these agreements before tying the knot. According to The Huffington Post, 63 percent of divorce attorneys belonging to the American Academy of Matrimonial Lawyers report seeing more clients requesting prenups.

Prenups must be “in writing and signed by both parties” and they may be enforceable even without the payment of separate consideration. Fam. Code §1611

Although prenups have become more widely accepted, some engaged couples decline to sign them because they view them as unnecessary or unromantic. Unfortunately, this can leave couples exposed to significant financial losses and turmoil if they eventually separate.

Under California law, Premarital Agreements may contract between spouses for the following:

(1) The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located.

(2) The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property.

(3) The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event.

(4) The making of a will, trust, or other arrangement to carry out the provisions of the agreement.

(5) The ownership rights in and disposition of the death benefit from a life insurance policy.

(6) The choice of law governing the construction of the agreement.

(7) Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.

(b) The right of a child to support may not be adversely affected by a premarital agreement.

(c) Any provision in a premarital agreement regarding spousal support, including, but not limited to, a waiver of it, is not enforceable if the party against whom enforcement of the spousal support provision is sought was not represented by independent counsel at the time the agreement containing the provision was

signed, or if the provision regarding spousal support is unconscionable at the time of enforcement. An otherwise unenforceable provision in a premarital agreement regarding spousal support may not become enforceable solely because the party against whom enforcement is sought was represented by independent counsel.

To avoid exposure and to resolve financial issues prior to marriage, every couple should consider drafting a prenuptial agreement for the following reasons.

1. Avoiding financial conflicts

A detailed discussion about the handling of finances during marriage and divorce can help future spouses smooth out potential sources of strife. According to USA Today, research indicates that fights about money are typically more prolonged, emotional and likely to predict divorce than other fights. Drafting a prenuptial agreement can help a couple think about and come to terms with various issues, including:

  • How assets each spouse acquires during the marriage would be treated during divorce
  • Whether either spouse would be entitled to spousal support (alimony)
  • How complex assets, including businesses and retirement assets, would be divided
  • How family, trust and estate assets will be characterized

Discussing these issues before marriage can help a couple make sure that they hold compatible views and realistic expectations. This may also help reduce the risk of divorce. Even if a couple does ultimately separate, having a prenup can reduce unnecessary conflict during that process.

2. Protecting dependents

Signing a prenuptial agreement is also advisable for people who care for dependents, such as parents or children from a past relationship. A prenuptial agreement can ensure that a person maintains enough resources to continue to support his or her dependents. A court-ordered settlement, in contrast, might not afford the kind of support or lifestyle that a person is accustomed to providing to a dependent.

3. Assigning debt

As Business Insider notes, today the majority of people come into marriage with some form of financial liability. This could range from regular debt, such as credit card or student loan debt, to obligations from past relationships, such as spousal support or child support payments. A prenuptial agreement can stipulate a division of property that fairly and realistically reflects each spouse’s existing liabilities.

A prenup can also ensure that premarital debt or even marital debt is assigned to the spouse who incurred it. This is especially beneficial for spouses in California, given the state’s community property laws. Without a prenup in place, debt that one spouse accrued during the marriage could be divided equally in half between both spouses.

4. Reducing divorce costs

During divorce, conflict over property division, alimony and other crucial issues can result in prolonged litigation, which can increase costs for both spouses. The long-term costs of a disadvantageous settlement can be even greater. U.S. News states that creating a prenup typically costs less than purchasing an engagement ring, which makes it a highly rewarding investment.

Ensuring enforceability

It’s crucial that people who choose to create prenups also take steps to make sure the contract is legally enforceable at the time of divorce. The enforceability of a Premarital Agreement is critical to the creation of the agreement and is an evolving area of California Family Law. As a result, both prospective spouses should consult with separate family law attorneys. A prenup can be challenged if it is signed under duress, prejudiced to favor one spouse, based on inaccurate information or signed hastily. Moreover, the court can look at whether a provision within the prenup is “unconscionable” under a multitude of factors. To avoid potential issues, spouses in California should consider working with a divorce attorney to create and finalize a valid agreement.