Prenuptial agreements are among the more misunderstood tools that are area available to those who are planning to marry. The popular perception is that “prenups” are used by brides and grooms or same-sex couples who are unsure of each other, and therefore want to protect themselves if their worst fears about their future partners become a reality.
But prenuptial agreements, also known as premarital agreements, have a much more straightforward purpose: to address issues that are important to the couple, and where the application of general California law might not be in the couple’s best interests.
Thus, for example, if a house would normally be treated as the couple’s community property, a premarital agreement is the best way to ensure that the house remains one person’s separate property. Prenuptial agreements can also simplify matters where one of the partners owns or has a large financial interest in a private business. They can also be used to address issues such as spousal support (add hyperlink), or a whole host of other issues where a customized legal solution makes sense for the couple.
Prenuptial agreements can be an extremely useful way to save time and money when:
- There is a large disparity of income and assets between the bride and groom;
- There are children from a prior relationship; and
- Either the bride or groom is coming to the marriage with significant business interests.
For more than ten years, we have drafted prenuptial agreements that have greatly benefited our clients:
- Protecting you when the marriage doesn’t last. – Prior to his marriage, our client was a surgeon with an annual income exceeding $1 million. We drafted a prenuptial agreement, which was signed by his fiancée, who had just relocated to California. Unfortunately, the couple was married for less than one year before filing for divorce. Without the prenuptial agreement in place, our client would have likely paid more than $500,000, which is what his now ex-wife sought had been seeking. With our help, the husband instead paid approximately $30,000 with no future spousal support.
- Protecting children from a prior marriage. Our client was retired and had children from a prior marriage. He wanted to make sure that his children would be taken care of in the event something happened to him. The prenuptial agreement therefore provided that, in the event he died for his wife, she would get a certain amount, with the balance going to his kids. The couple also agreed to limit spousal support. Thus the prenuptial agreement was an estate planning tool that allowed the couple to determine in advance how their funds would be distributed in the event that our client did first. Without the agreement there would be uncertainty about what she his wife and children were entitled to. None of this has come to pass, as the couple is happily married.
- Protecting A Family-Owned Business. Our client owned a business with members of his family. He had never been married before and had no children. His bride had previously married and had children from that marriage. The prenuptial agreement helped ensure that each of them got was most important to them financially. The agreement provided that she gave up any interest in his family business. She did, however, receive a financial interest in his primary residence. Without the agreement, she would have been presumptively entitled to a share of the earning generated by the business during the marriage, but the residence would have remained his separate property. The agreement allowed them to find a customized solution.
- Protecting An Inheritance. Our client came from an affluent family. Her groom owned a business that was successful, but significantly less so than the business her family owned. The prenuptial agreements provided for the waiver of spousal support and permitted the bride and groom to keep their businesses separate.
- Getting A Second Opinion. Our client is a lawyer at a prominent law firm. Her groom is also a lawyer. Both were in their early to mid 30s and wanted to keep their finances separate after they got married. They agreed to waive spousal support and she retained us to make sure that the Prenuptial Agreement that was drafted by another lawyer accomplished her objectives. We reviewed the Agreement to make sure it was substantively and procedurally sound. Specifically, we helped ensure that they complied with the rue that requires the bride and groom to have at least seven days to review the Agreement.
If you have any questions about whether a prenuptial agreement is right for you, please contact us at 310.288.1990.