Premarital Agreements In California

Are your client's getting married? Time to talk to them about considering a Premarital Agreement. Having a conversation about finances and assumptions about money is part of every relationship - even if talking about that feels taboo. The failure to communicate about money issues is a classic reason for divorce and a properly drafted collaborative Premarital Agreement is one way to avoid those communication breakdowns.

Here are some reasons why you would consider a Premarital Agreement in California:

1) Premarital Agreements are not always about protecting the wealthier spouse and their pre-marriage or inherited assets. When a spouse has significant inherited assets are assets acquired before marriage, there may be very little community property or shared assets created during marriage. Premarital Agreements often protect the spouse with less money and can ensure that choices like relocation, raising a family, and supporting your spouse during grad school are recognized the event of divorce. Planning for what happens to shared and separate resources if the marriage dissolves give clients the opportunity to agree on how they are going to spend and save money during marriage – and we as family lawyers like to think this reduces the likelihood of money being the main reason for divorce.  

2) There are some complicated rules in California about property that may not seem fair to everyone regarding employment equity (stock), business interests, and real property. For example, did you know that if you are employed before marriage, that your stock that is unvested as of the date of marriage has a partial community property component when it vests during marriage? If you want to maintain all of your pre-marriage employment equity as your separate property that needs to be agreed upon before you get married. For example, a Premarital Agreement can ensure that property acquired before marriage stays with that person, even if the default law says otherwise.  

3) California already has a default Premarital Agreement called the Family Code. If you like the laws of California, you can sign a document that provides for what will happen with your premarital property (separate property) and community property in a divorce, even if you move to another state.

Talking about money to your clients is hard - family lawyers can help with these conversations. If your client is getting married this year, consider recommending that they schedule a conversation with a family lawyer to learn more about Premarital Agreements.