For most couples, divorce is not on the agenda when they get married. However, with the knowledge that divorce happens, prospective spouses can protect themselves and each other with a prenuptial agreement, or prenup. This is especially useful if there are high-value assets involved. If you think a prenup could be a smart step for you, read on to learn about prenuptial agreements in California high-asset divorces.
What Is a Prenuptial Agreement?
As of 2023, which is the most recent year for which there is complete data, the national divorce rate in the United States was 2.4 per 1,000 people. A prenuptial agreement is a legal document that spouses sign before they get married that dictates how their property and assets would be divided if they were to divorce. Prenuptial agreements do not go into effect until a couple is actually married.
There is a misconception that signing a prenuptial agreement is tantamount to planning for divorce. This is simply untrue. Choosing to protect yourself, your spouse, and your assets is a smart move that can save you both time, money, and stress down the road. While signing a prenuptial agreement does mean acknowledging the possibility of divorce, that possibility is there regardless of whether you acknowledge it or not.
What Can Be Included in a Prenuptial Agreement in California?
In California, prenuptial agreements are governed by Sections 1610 through 1617 of Division 4, Chapter 5 of the California Family Code. This part of the legal code outlines the requirements for enacting an enforceable prenuptial agreement, as well as general provisions regarding what can be included in a prenup.
Prenuptial agreements are only enforceable if they are drafted and executed correctly. For a prenup to be considered legally valid, the following conditions must be met:
- Both parties must be of legal age and of sound mind when signing the agreement and preferably, should be represented by independent counsel.
- Both parties must sign the agreement voluntarily, without coercion or duress, so they should be prepared well in advance of a wedding, preferably before setting a wedding date.
- Each party must acknowledge understanding of the terms in the agreement.
- Both parties must be given full disclosure regarding the other party’s financial assets and property, unless either party has waived the right to disclosure.
- After one party presents the final version of the agreement to the other, the receiving party must be allowed seven days to consider the agreement.
- The agreement must not be considered unconscionable, which means it must not unreasonably favor one party over the other.
Regarding what can be included in a prenuptial agreement, the law provides some basic guidance. The following items are expressly listed:
- The rights and responsibilities of each party regarding their individual and marital property
- Who can buy, sell, and manage individual and joint property, and how
- How property will be divided in the event of separation, divorce, or the death of one spouse
- Establishment of a will or trust to execute the premarital agreement
- Ownership and distribution of life insurance death benefits
- Which state law governs the premarital agreement
- Any other provision the parties want, so long as no laws are violated
In short, a prenuptial agreement can outline the management and distribution of all of a couple’s assets, including those individually owned before marriage and those jointly acquired during marriage.
Why Are Prenuptial Agreements Helpful in High-Asset Divorces?
Of high-net-worth married couples, 40% have prenuptial agreements. When people enter a marriage with significant assets, whether in the form of businesses and business assets, real estate, investment accounts, or otherwise, it makes sense that they would want to safeguard their personal interests in case of divorce down the road.
Aside from preserving individual assets and wealth, prenuptial agreements can function effectively as a shortcut during the divorce process. For high-asset couples, divorce proceedings can be long, contentious, and messy. When there is a signed, valid premarital agreement with provisions for individual and joint property, the divorce process can be accelerated significantly, and many couples avoid litigation entirely.
FAQs
How Much Does It Cost to Draft a Prenuptial Agreement in California?
The cost to draft a prenuptial agreement in California varies widely depending on the complexity of your needs and individual lawyers’ rates and fee structures. For high-asset couples, the process can be lengthy and involved, as there may be many properties, accounts, and other assets to address in the agreement. When you contact an attorney about drafting your agreement, they can provide you with a cost estimate.
Can a Prenuptial Agreement Be Modified After a Couple Is Married?
Yes, a prenuptial agreement can be modified after a couple is married. Life happens, and financial situations change. If a couple wishes to modify their prenuptial agreement, they should make the changes with the assistance of an attorney, sign the new agreement, and have it notarized. The new agreement can then supersede the old one.
Can a Prenuptial Agreement Be Voided if One Party Was Unfaithful?
Generally, no. Prenuptial agreements are usually considered enforceable even if part of the reason for the divorce is infidelity. Some couples include an infidelity clause in their prenuptial agreement. These clauses usually impose some kind of financial penalty for cheating. Infidelity clauses can be considered enforceable, but sometimes courts deem them unenforceable when they render the premarital agreement unconscionable or unduly punitive to one party.
Can Child Custody Agreements Be Included in a Prenuptial Agreement?
No, child custody agreements cannot be included in a prenuptial agreement. Child custody orders are an entirely separate issue from a divorce, and decisions are made based on the reality of the family situation at the time of divorce. Courts consider each parent’s financial situation and parental fitness, neither of which can be predicted or dictated by a prenuptial agreement.
Need Representation? Hire a Prenuptial Agreement Lawyer
If you are part of a high-asset couple and need to draft a prenuptial agreement, or if you are going through a divorce and need to check on the enforceability of an existing agreement, you could benefit from experienced legal counsel. Contact Neumann Family Law to discuss your needs.
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