Common Items to Include in Your Prenuptial Agreement

For those who do get married, the marriage relationship is almost always the most important financial relationship they will ever have. Every married couple will face financial challenges of some sort, and with a prenuptial agreement you and your future spouse can work together at the outset to create a strong financial partnership that will protect the interests of both parties both during the marriage and beyond, should the marriage end in a dissolution. Below are a few common items that couples often choose to include in their prenuptial agreement.

Defining What Is and Is Not Community Property

Without a prenuptial agreement in place, California law will treat all property that is earned or acquired with earnings during the marriage as community property, regardless of which spouse actually earned the property. And, should the marriage come to an end through a divorce, then that community property will be subject to a 50/50 split between the two spouses. This division can extend not just to cash, savings, retirement funds, and pension payments, but also to family businesses and real estate, which often makes for a deeply complicated and time-consuming divorce process. Businesses and real estate holdings might have to be sold off to account for the 50/50 split. But with a prenuptial agreement, the spouses can agree how they would like property to be treated in the marriage (as separate property or community property) and which spouse should get what property following a divorce, thus minimizing conflict and loss of value and control later on.

Who Will be Able to Make Financial Decisions During the Marriage

Both spouses have a right to spend community property individually as they see fit, which means one spouse can conceivably empty joint bank accounts on a shopping spree, paying down one spouse’s accumulated years of student loan or credit card debt, or an ill-advised transfer of wealth to a questionable third party, again regardless of who earned the money.

With a prenuptial agreement, you can specify exactly who has the decision to make financial decisions regarding what assets. For example, you can designate a specific account in control of one spouse, but limit its use to spending on needs that directly benefit the family as a whole. You can also require both spouses to agree beforehand to any purchases over a certain threshold, such as $1,000, or limit discretionary spending to a monthly or weekly amount.

What Spousal Support Will Be Paid Following a Divorce

California family court judges have wide discretion in how much, if any, spousal support must be paid by one spouse to another following a divorce. One judge might award $1500 a month for three years, while another judge might conceivably award twice that much indefinitely. For many couples, including many younger couples with fewer assets and higher debts, the financial impact of spousal support can far outweigh the financial impact of property division. With a prenuptial agreement, you can agree to spousal support payment amounts and duration before the marriage begins such that each spouse does not have to deal with the anxious uncertainty of what might happen after a divorce.

Each Party’s Expectations of the Other During the Marriage

Some prenuptial agreements include provisions saying that one or both spouses will pledge to pursue (or not pursue) a specific type of career during the marriage and perhaps for a specific duration. For example, one spouse might want a provision that the other spouse will not retire before the age of 55 or will not work in a dangerous career such as becoming a career military officer.

Prenuptial agreements can also include “behavioral clauses” which can affect the financial standing of the respective parties should one spouse engage in an unwanted kind of behavior such as drinking, using drugs, committing a crime, engaging in abuse, or cheating.

Whether such lifestyle or behavioral clauses are actually enforceable is another matter, and will depend on your state’s law. Such clauses are not enforceable under California law.

Retirement and Death

Because marriage is often for the long haul, prenuptial agreements can look all the way down to retirement and beyond. Provisions might include pledges to devote a certain amount of money or percentage of earnings to a retirement fund, a decision that the couple will live in a certain area when they hit a certain age, and so on. A prenuptial agreement can also affect the claims that each spouse might make on the other’s estate following the death of the other spouse.

Get Answers to Your Prenuptial Agreement Questions

The law affecting prenuptial agreements is based on your state law, and so you will need to further discuss any of the above issues with an experienced family law attorney in your state jurisdiction to determine whether they are enforceable.
To schedule a consultation regarding any questions about prenuptial agreements in California, contact one of the family law attorneys at Kearney Baker today.