Legal Update: Should I Get a Prenup?December 2020
-by Gina Cortese
One of the most frequent questions my non-lawyer friends ask me is, “What do you think of prenups?” The short answer: I am a proponent of prenups. But the conversation is never quite that simple, as it inevitably evolves into a discussion wherein I debunk common myths of what a prenup is and what a prenup isn’t, and whether they’re even enforceable in California.
What is a prenup?
A prenup (which is simply an abbreviation of “prenuptial agreement”, also referred to as a “premarital agreement”, or a “PMA”), is a written contract between two people entered into prior to, and in anticipation of, their marriage wherein they make certain agreements as to what happens to their financial interests during marriage and in the event of a divorce. In California, a prenup allows a couple anticipating marriage to dictate, for example, whether certain property or income will remain separate property (one person’s sole property) during the marriage, instead of becoming community property (split 50/50 at divorce), or to make determinations about spousal support (also known as “alimony”) such as whether to waive spousal support altogether or whether to set criteria for it like the amount and duration, or to make determinations as to what constitutes a gift by one spouse to the other during marriage. (California Family Code section 1612.) The prenup becomes effective as of the date of marriage. (California Family Code section 1613.)
One positive of a prenup is that it provides couples an opportunity to discuss all of this before they say “I do”. The reality is that most couples aren’t thinking about—or even aware of—what happens to their finances on the date they become legally married. And most often, it’s not until years later when one person wants a divorce and attorneys are involved that either person fully understands what legally happened to their finances on the date they became legally married. The process of negotiating a prenup forces a dialogue between the couple about what the law says will happen to their assets and liabilities upon marriage and divorce and what the couple actually wants to have happen to their assets and liabilities upon marriage and divorce, which can be an involved conversation, revealing what their respective financial situations are, their personal values around finances and spending, and how to value their respective contributions to their family life.
My partner says he/she wants a prenup, is he/she trying to keep all of their money from me?
One of the common misconceptions about prenups is that they are inherently one-sided. They’re not. As stated above, a prenup is a mutually entered into contract, and both sides are free to negotiate for what terms they believe to be reasonable. And the purpose should be to create guidelines with an agreed upon understanding of what is to happen should a divorce occur, hopefully making the divorce process—if the marriage comes to that—less of a surprise and more streamlined. Even where the prospect of a prenup might feel one-sided, quite frankly, unless a couple has a crystal ball into the future, they cannot predict how their careers and/or finances will evolve over time during their marriage. One partner might enter the marriage with substantially more wealth; 10 years down the road the other partner might have developed the idea for, and then IPO’d, the next big start-up, flip-flopping the disparity of wealth. The prenup can account for this by including contingency provisions. Even where a firm understanding exists between the couple that one spouse will not work while the other will, the parties can draft a prenup that considers the homemaker spouse’s non-economical contributions.
Are prenups even enforceable in California? How soon in advance of my wedding should I start the process for getting a prenup?
I am also often asked whether prenups are enforceable in California. I haven’t figured out from where this myth originates, but it’s just that—a myth. In California, the law sets forth requirements for a prenup to be valid and enforceable. To ensure that their prenup is valid and enforceable, couples should speak with a mediator (yes, a prenup can be mediated) and/or attorneys to understand the requirements and an appropriate timeline for completing their prenup in advance of their wedding date—and they should do this as soon in advance of their wedding as possible. While even the most well drafted prenups are not foolproof (see Family Code section 1615), generally speaking, if the legal requirements are met and best practices followed, a prenup will be binding and enforceable at the time of divorce and will govern how a couple’s dissolution is resolved as to those terms covered in the agreement.