Prenuptial Agreements in California
Prenuptial and postnuptial agreements serve as a form of a marriage contract to safeguard the rights of individuals before, during, and after marriage. The protections in these agreements can cover property, assets, and contact with children in the relationship. The Los Angeles divorce and family lawyers at S.L. Pitts PC have built a decades-long reputation for positive results in family law cases when representing parties in matters related to prenuptial agreements in California.
California Courts Disfavor Prenuptial Agreements
The California Legislature has declined to enact any laws allowing people to affirmatively alter their marital rights and duties through a contract. In that void, the courts have, through a series of cases, outlined a framework for analyzing prenuptial agreements in California. That analysis is detailed below, but the long and the short of it is that California Courts disfavor prenuptial agreements – commonly known as “prenups” – and will often refuse to enforce them.
The court’s primary concerns with prenups are that they are often entered into hastily, that the financially disadvantaged spouse doesn’t really know what they’re signing, and that the financially disadvantaged spouse only signs it because they are forced to do so. Inequities resulting from the stereotypical (and increasingly anachronistic and patronizing) image of a sophisticated, wealthy man taking advantage of a naïve, penniless woman are what courts are keen to prevent.
Two-Prong Test for Evaluating Prenups
Courts have put forth a two-prong test for evaluating prenups in California. First, the court looks at whether the prenup is “fair,” meaning “what a court would do had no prenup been executed.” Bear in mind that the whole point of most prenups is to deviate from what a court would do, so most prenuptial agreements fail the first prong of this test. Nonetheless, some prenups are deemed fair and, if so, then the court’s analysis stops and the prenup will be upheld.
However, even if the prenup is deemed unfair, it may still be upheld if it was entered into “knowingly and voluntarily” – the second prong of the test. As long as both spouses understand the legal rights they are altering or giving up – and as long as they aren’t put under any undue pressure to sign – then the court will uphold the prenup. Practically speaking, entering into a prenup knowingly and voluntarily means the following:
- Each party must have their own attorney;
- The parties must conduct (and document) active negotiations to show that the agreement is truly bargained for and not simply forced onto a powerless spouse;
- Both parties must offer full disclosure of all assets and income; and
- They must execute the prenup well in advance of the marriage itself to ensure that neither party feels pressured to sign out of fear that the impending marriage will be cancelled.
If you follow all four steps, then the court may uphold the prenup. But then again, maybe the court won’t.
If this all sounds a little squishy and nebulous, that’s because it is. Basically, if your assigned judge doesn’t like your prenup for whatever reason, they can very easily find a way to throw it out. There are things you can do to make that outcome less likely (avoid an overtly one-sided prenup and reaffirm the agreement after the wedding, for example), but at the end of the day, the judge will have relatively unfettered discretion when it comes to upholding your prenup.
Why Creating a Prenup is Still a Worthwhile Exercise
Despite the problems with enforcing prenups in California, creating one is actually still a good idea. Negotiating a prenuptial agreement forces couples to have conversations about money before they get married and before they are presented with the very real, very difficult financial issues that married couples invariably face. Having a common understanding about money issues before problems arise greatly increases a couple’s ability to address financial issues in a healthy way that reduces marital conflict.
The unfortunate reality is that the vast majority of couples never talk about what their finances will look like after they get married. Couples often fail to address even the most basic financial questions prior to marriage. The result is that shortly after getting married, couples start bumping into the fact that they don’t automatically agree on money issues – and that causes a lot of stress on the marriage.
For instance, will both spouses work? Will their incomes be shared or will each have a separate account? How will housing expenses be allocated? 50/50 sounds fair – but if one spouse makes a lot more money than the other, is it really fair to split all the bills 50/50? How is that 50/50 split going to work when one spouse wants to go to an expensive restaurant and the other can’t afford “their half” of the bill? The person with more money may feel annoyed that their spouse can’t “keep up” with the lifestyle they want to lead; they’ll increasingly “cover the bill” and start to feel resentful and taken advantage of. The person with less money will feel increasingly embarrassed and uncomfortable that they can’t “keep up” with their partner’s lifestyle. They’ll spend a much larger portion of their disposable income and so won’t be able to save for retirement. They’ll begin to feel like they have far less control in the relationship (which is an accurate feeling). Increasingly, they will resent the fact that despite being equals in a marriage, there is an ever-growing financial inequality between them and their partner.
And those are the easy money questions – they get harder when you add children into the equation. I’ve had numerous cases where the parties had similar incomes, kept their finances separate, and – without ever really talking about it – ended up in a scenario where all the children’s expenses were somehow assigned to the mom (probably because she did all the shopping for the children). Invariably, the moms got very resentful that their partners failed to contribute more to the children’s expenses. Dads, for their part, may feel resentful at being asked to contribute to costs over which they have little input or control. And voila! This growing frustration and the ensuing argument is one the couple then gets to revisit on a monthly or quarterly basis for years until they either resign themselves to being unhappy (an all too common definition of a “successful marriage”) or one of them decides to leave.
Executing a Prenup Will Force You to Have Uncomfortable – but Crucial – Financial Discussions
If you get married, difficult financial questions and challenges will arise. Granted, you don’t need a prenup in order to address them. But the process of executing a prenup will ensure that a lot of these questions will be discussed – and that’s why we still recommend them. Most people are uncomfortable talking about financial issues with their partner, so having your attorneys force you to talk about them can be helpful. Frankly, it’s a lot easier to talk about these issues before everyone starts feeling resentful. And talking about these in advance can go a long way toward avoiding the resentment altogether. Not only will you enter the marriage with a more aligned view of your shared financial future, you will also have established a framework for how to communicate in a healthy way about the financial issues that will inevitably arise.
People often criticize prenups as being for couples who aren’t committed to marriage or who already have one foot out the door. But the reality is that prenuptial agreements – and the conversations they engender – actually increase the likelihood that a marriage will be better and last longer. Therein lies their value.
S.L. Pitts Can Help You Create – or Evaluate – a Prenuptial Agreement
Our Los Angeles family lawyers have decades of experience crafting and evaluating premarital agreements. The firm can provide expertise and knowledge to assist with developing a premarital agreement that protects your interests. The firm is also skilled at evaluating the interpretation and enforceability of prior agreements during the separation process in a way that preserves the best interests of our clients. If you have questions about creating or evaluating prenuptial agreements in Califoria, contact the family law attorneys at S.L. Pitts today.