Despite getting some bad press, a pre-marital agreement should be viewed the same way as a life insurance policy. No one wants to ever have to use it, but people are glad they have the agreement if the need to use it arises.
Why Should You Have a Prenuptial Agreement?
A prenup can be viewed as a doorway to opening important financial discussions. In the collaborative process, financial experts help guide the couple as they make financial decisions for their future that are acceptable to both parties. Some of the main reasons a couple may want a prenup include:
- Defining separate property, which is property owned by one of the parties prior to the marriage.
- Making sure that both parties have a realistic budget established in the case of a divorce.
- Protecting the rights of children from a previous marriage or relationship.
California Prenup Law
California’s Family Code specifically relates to pre-marital agreements and what must be included for one to be enforceable. That law requires:
- The agreement to be in writing
- The agreement must be voluntarily signed by each party.
- The agreement must not be “unconscionable.” This means it must be fair and the finances of each party must have been fully disclosed at the time of the signing.
- The party who challenges the validity of the agreement must have been represented by counsel or have waived that right by signing a separate document at least seven calendar days prior to the signing of the agreement confirming knowledge of the right to separate counsel and the knowing waiver of that right.
- The agreement may include how property will be divided in the event of the death of one party, the dissolution of the marriage, or the “occurrence or nonoccurence of any other event.”
- The agreement cannot violate public policy or violate any statute that imposes a criminal penalty.
- The right to child support cannot be adversely affected by the terms of the agreement.
Important Aspects of a Pre-marital Agreement
A pre-marital agreement needs to be consistent with other documents a spouse has executed. For example, a will or trust must be consistent with the terms of the pre-nuptial agreement.
A pre-marital agreement may be revoked or modified at any time either before or during the marriage.
For assistance in forming your premarital agreement, contact our financial consultants at Heberger & Company, an Accountancy Corporation. We use the collaborative process to assist couples in forming a pre-marital agreement that will meet their needs and become a roadmap for their financial future.