California, by default, is a community property state. “Community” refers to the spousal entity consisting of you and your spouse. After marriage, each spouse is deemed by law to be working for the benefit of the community and as such, absent an agreement opting out of the default law, each spouse’s wages or salaries become community property.
Property acquired during marriage, absent an agreement to the contrary, is presumed to be community property. Property acquired by inheritance, bequest, gift, or owned as separately property prior to marriage remains separate property.
Caveat: Without a prenup, you must keep careful records and individual separate accounts for separate property. If, for example, you pay for improvements with community property wages, the community gains an interest in the property, even though you hold title to it as separate property. Keeping careful records and individual accounts is critical without a prenuptial agreement, and is still good practice even if you have a prenup.
There are times when a couple planning to get married have individually earned a substantial amount of assets. Each partner may also have debts and liabilities. Each person may wish to continue to separately own his or her assets, and may also wish to continue to be solely liable for his or her debts and obligations. Under these circumstances, it may be advisable to opt out of the community property system with a prenuptial agreement.
With a prenuptial agreement, you can choose how to hold property by default; that is to say, you can select a different default system than community property. You can decide that your assets and earnings will remain your own, that you will continue to be responsible for your own debts, and also that you waive any claim to any of your spouse’s property and earnings, and that the spouse will remain liable for his or her own debts.
A lawyer should prepare your prenuptial agreement, and if you wish to waive spousal support in the event of a divorce, separate lawyers for each you and your prospective spouse are required. There are other requirements which must be followed in order for a prenuptial agreement to be valid and enforceable.
Discussion and consideration of whether a prenuptial agreement is the right choice can cause disharmony on occasion. It is important to consider that it is in your best interest to understand how it works and why it may be helpful to you. Too often, people get their feelings hurt by the subject. They don’t realize that their soon-to-be spouse could undertake a risky business venture and they would also be on the hook if it failed, and that the spouse’s creditors might come after their property which they have worked so hard to own.
Marriage is primarily about love and compatibility. Respect and trust your partner enough to discuss whether a prenuptial agreement is the best choice.
Contact the Law Offices of Jennifer Hughes for a quote on a prenuptial agreement.