What To Include In A Prenuptial Agreement

Hossein Berenji, Feb 25, 2017

Most often, couples enter into prenuptial agreements to designate and divide assets in the event the marriage ends. Overall, prenuptial agreements address financial issues going into marriage. When properly prepared, they prove useful in sorting out conflicts before they arise and potentially saving time and money bypassing court property division decisions in divorce or probate actions.

Prenuptial agreements commonly set out the pre-marital financial agreements of the couple contemplating marriage. They describe the assignment of property rights, debts, inheritances, businesses, and retirement distributions, among other subjects. Personal wishes, such as who does what chores around the house, generally fall outside the parameters of a prenuptial agreement.

What should be included in prenuptial agreements

Property: In California, a prenuptial agreement most likely lists property of the parties and characterizes each item as

  • separate,
  • community, or
  • quasi-community (community property held in other states).

In the event of a divorce, a valid prenuptial agreement usually takes precedence over later community or separate property determinations by a court.

For example, as a spouse who owned a house before marriage, you potentially lose the right to claim that property as your own in a California divorce. In community property states like California, family law statutes require divorcing parties to evenly split all property acquired by either spouse between the date of marriage and date of separation. Exceptions and apportionment rules exist, however. As such, community property in this example includes

  • all mortgage payments,
  • property value accretions, and
  • improvements made during the marriage.

The community (you and your spouse) therefore own a proportional (separate to community) interest in the house.

Thus, unless a written agreement and title to the house unequivocally declare your separate ownership, a court could apportion the separate and community property values of the house on the assumption that you gifted the house to the marriage. You then lose the unfettered right to keep the house after the divorce. A prenuptial agreement, in this instance, protects your separate property interest.

Likewise, a prenuptial agreement lists marital property, so that community property laws do govern at death or divorce. However, a prenuptial agreement lists more than separate or community property. You can determine what happens with your

  • investments,
  • retirement,
  • stock portfolios,
  • savings,
  • bank accounts,
  • income,
  • taxes,
  • household expenses,
  • schooling,
  • credit cards,
  • judgments,

and any other property that you would like handled in a specified (and lawful) way.

Business and career: You can protect your business interests by agreement and specify what you get in return for giving up your career or putting your potential spouse through school for his or her career.

Debts: Prenuptial agreements frequently assign debts to one party for the protection of the other. Without such protection, creditors can attach liens, freeze accounts, or take other measures to collect on marital property in order to satisfy debts.

Children of previous relationships: Prenuptial agreements can safeguard the inheritance of children from a previous relationship. Without a written agreement, children or grandchildren from a prior marriage potentially lose their inheritance upon a parent’s or grandparent’s death. Probate and community property laws determine how property passes to the heirs of a deceased spouse. Under California law, a surviving spouse inherits all of the deceased spouse’s assets if no children of the marriage exist. A prenuptial agreement protects children of the deceased spouse from losing inheritance rights.

One piece of an estate plan: Along with wills, living trusts, or other estate planning documents, a prenuptial agreement confirms that your property goes where you want it to go: family heirlooms, cars, jewelry, real estate, pensions, stocks, businesses, and any other assets.

What shouldn’t be included in prenuptial agreements

Anything illegal. If your prenup includes acts in violation of state or federal law, a court will strike such unlawful provisions, or possibly the entire agreement as unenforceable.

Support: The courts ultimately decide child support terms as a matter of public policy, and parties cannot waive child support in a prenuptial agreement. The best interests of the child and other factors contribute to a child support decree. Likewise, the agreement cannot waive spousal support or alimony (though possibly limit alimony in some circumstances). The law existing at the time of entering the agreement determines the validity and extent of a spousal support waiver.

Child custody: This too gets finally determined by the courts.

Get advice

Although few couples contemplating marriage think about their rights and responsibilities at death or divorce, many should. Who can blame them? Most couples prefer romantic to pragmatic concerns in planning a life together. Few recall marriage’s contractual and business side that, if properly planned, can provide comfort and security. If you and your betrothed have property and children from prior marriages, you and your loved ones especially benefit from some advanced planning.

With the help of experienced family law attorneys at Berenji & Associates, you and your prospective spouse can map out how you want to handle your property and other important issues–and then rest assured you’re covered when you need it most.