A 2022 study conducted by the Harris Poll indicated that 15% of all married couples get prenuptial agreements. This is considerably more than in 2010, when only 3% of couples did so. Indeed, the stigma surrounding prenuptial agreements has dissipated with time, and more and more couples are electing to sign them for practical reasons. The Sacramento divorce lawyers at Wagner Family Law discuss some practical reasons that every couple should consider getting a prenup.

Gaining Control Over Your Financial Situation

Couples who do not sign prenuptial agreements will have their marriage dissolved by a complex set of California laws known as the California Family Code and the Probate Code. This creates a choice. You could either negotiate a set of rules between you and your fiancé or you can be governed by those imposed by the state over which you have no control. More and more couples are choosing to create their own set of rules and recognize that prenuptial agreements can be drafted to protect both spouses, not just very wealthy ones.

Learning How to Communicate With Your Partner About Money Issues

Many people believe that signing a prenuptial agreement undermines trust in the marriage. But on the opposite end of that belief, the process of drafting and negotiating a prenuptial agreement can strengthen your relationship. This is because the process requires a full disclosure of your financial situation and generally involves an open and honest discussion about how you will handle your money and plan your future. Rules that the couple openly agrees upon are likely to be superior to those handed down by the state of California.

Sooner or later you and your spouse will end up talking about money. You can do it now and save potential headaches later on, or respond to each headache as it emerges. Once your honeymoon is over, you will soon find that earning and spending money is an important part of your marriage.

Providing Peace of Mind

You can think of your prenuptial agreement as an insurance policy against divorce. No one plans on getting into a car crash, but you still carry insurance. Prenuptial agreements ensure that you are not using California's rules to divide the marital estate, decide on alimony, or other eventualities that could come with divorce.

What Can You Include in Your Prenuptial Agreement?

In California, prenuptial agreements can contain a variety of provisions related to community property, dividing the marital estate, and alimony. However, a prenuptial agreement can never contain provisions related to child custody or child support. It is the sole purview of the courts to determine what is fair and just when it comes to custody and child support.

Can I Make a Prenuptial Agreement Concerning Spousal Support?

Prenuptial agreements can contain provisions concerning spousal support or alimony. California law allows you to limit or waive spousal support so long as the provision is not deemed unconscionable or unreasonably unfair. While it can be hard to predict what a court will consider unconscionable, imagine a prenup contains a complete prohibition on spousal support, and one spouse has substantially more assets and income than the other. If that spouse were to try to enforce the spousal support waiver after a long marriage, and the provision would leave the other spouse destitute, a judge may be unwilling to uphold that agreement.

In addition, if the two parties have significantly different wealth, a prenuptial agreement may contain a provision limiting the amount and duration of spousal support instead of completely waiving it. Generally speaking, the amount of spousal support the lower-earning spouse receives can be based on a formula that takes into account the income of both parties and the duration of the marriage.

How Do Prenuptial Agreements Affect Community Property?

Spouses who do not have a prenuptial agreement will be subject to California's rules of community property. These rules provide that any property acquired during the marriage that is not a gift or inheritance is divided equally upon divorce. It does not matter if the property is held in one party's name; if it is acquired during the marriage, with some exceptions, it is considered community property.

Property that is owned before the marriage or property that is acquired by gift or inheritance is considered separate property. This means that it belongs exclusively to the spouse who acquired it and will not fall under the 50/50 Community property rule. Raising the complexity, efforts to improve or contribute to separate property can create a Community property interest in that separate property. This is precisely where a prenup can be vital. A prenuptial agreement can dictate that your spouse never acquires an interest in your separate property. This is particularly useful for business owners who are bringing a business into the marriage.

Determining what is and is not community property can get very expensive. Often, divorcing couples will need the help of forensic accountants to determine what property belongs to whom. Forensic accountants can trace the dates of purchase, the purchase prices, contributions, and increases or decreases in the value of the property over time. In high asset cases, fees related to forensic accountants can run into the hundreds of thousands of dollars, if not more. A prenuptial agreement can save you a considerable amount of money when assessing property.

In addition to assets, earnings are also considered community property. If you married without a prenuptial agreement and earned $1 million during your marriage, that entire sum would be considered community property. That means your spouse would own half of that property as well as anything that was purchased with that property.

A prenuptial agreement can also regulate how debts are treated. If you have a credit card that you want to keep in your name, you can establish that in a prenuptial agreement. Under California's normal rules, both spouses would be on the hook for that. But a prenuptial agreement can establish that the credit card is only in one spouse's name.

Talk to a Sacramento, CA, Family Attorney Today

Wagner Family Law represents the interests of couples who want to draft a prenuptial agreement. Call our office today to schedule an appointment, and we can discuss your goals and concerns immediately.