A Primer on Premarital Agreements
Dear Clients and Friends;
“Premarital agreement” means an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.
Premarital (or “prenuptial”) agreements (PMA’s) most always involve a waiver of legal and financial benefits by the lower net-worth partner and they are often criticized as an arrangement that encourages breakups. In view of these factors PMA’s are closely scrutinized by the Courts.
A premarital agreement becomes effective upon marriage and after marriage it can be amended or revoked only through a written agreement.
As with most all life decisions one quick answer (such as yes or no) does not work universally. Alternatively, a one-on-one proper evaluation of the parties concerns and objectives does work universally. If that is done the PMA will be optimum. In fact, an early and open premarital discussion of financial matters can be crucial to a successful marriage.
There are many reasons one may want a premarital agreement. One may wish to provide for children of a prior marriage in his or her estate planning. Such a premarital agreement can improve family relationships when a stepparent enters the picture by giving children the peace of mind of knowing that their inheritance expectations remain intact. When there is a family business, ones family members may feel a premarital agreement is necessary to protect the business in the event of a death or divorce. When one has been married and divorced he or she may be reluctant to marry again without a premarital agreement.
Even people of modest means may want an agreement to decide in advance how assets accumulated during the marriage will be handled in the event of divorce or when the first spouse dies. Other reasons might be to reassure one another that neither party will seek alimony or to agree that the parties will use mediation, arbitration, or a collaborative process in the event of marital dissolution. Deciding such matters in advance, before a breakdown in the relationship, can significantly reduce legal fees for divorce and can give both parties peace of mind.
In California PMA’s are dealt with by statute and by a goodly number of appellate case law precedents.
For a PMA to avoid being summarily invalidated, it must be in writing, voluntarily and knowingly signed by both parties – each of whom has their own attorney.
A PMA is enforceable without consideration (i.e. an exchange). This is the language of the law – many may argue that one’s agreement to marry another is without question “adequate consideration”.
As a practical matter it is critical that independent lawyers advise each of the parties to a PMA. California law allows a party to expressly waive their right to a lawyer but the statutory conditions to having a valid waiver are major and Judges routinely invalidate PMA’s that are entered into where both parties were not independently represented.
Lastly, it is important to know if other state laws may already be accomplishing what you want from your PMA: California is a community property state. Assets owned before marriage are separate property and those accumulated during marriage are community property which is owned equally by the parties. This may be all that one is seeking in a PMA and therefore the PMA is not needed.
Do contact us for a free phone evaluation to see if we can be of help in with a PMA or any other aspect of a family law matter that may be in need of our help for yourself or for one to whom you are also attempting to help.