Most people these days hear the word Prenuptial Agreement and automatically think it foreshadows doom. In this day and age, prenups are very useful tools that many individuals should take advantage of, prior to walking down the aisle. Society has changed from fifty, sixty years ago and many individuals are getting married a little later in life, meaning that most individuals have already established businesses or own real estate, prior to their marriage.
I am going to help break down the idea of prenuptial agreement for you, so that you realize its not as scary and negative as you think.
A prenuptial agreement is basically just a contract. The same way when two individuals decide to become partners and open a business together, they write a contract and agreement between themselves, a prenuptial agreement is a contract between two people about to get married, and it outlines what will happen if this partnership does not work out in the future.
A prenuptial agreement can for the most part do almost anything you want it to do, aside from certain limitations the California Family Code imposes on a prenuptial agreement. For most individuals, a prenup spells out how assets will be distributed in the event of a divorce.
A prenup is smart financial planning for individuals who fall into any of the following categories:
- One of you owns real estate
- One of you owns all or part of a business
- You may be receiving an inheritance
- One of you has earned more than one year’s worth of retirement benefits or other valuable employment benefits, such as profit sharing or stock options
- One of you has children and/or grandchildren from a previous marriage
- One of you plan to pursue an advanced degree while the other works
No one wants to think about something negative happening in the future especially when they are preparing to spend the rest of their life with the love of their life, but a prenuptial agreement is basically like purchasing insurance. No body ever wants to think about something bad happening such as getting robbed, or getting into a car accident, but you purchase insurance just in case it does. A prenup is the same thing, it is insurance just in case something negative does happen in the future.
A prenuptial agreement can also save you a lot of headache and money if you were to go down the road of divorce. If most of the terms are already laid out in a prenuptial agreement, both sides will save a lot of money and time by not having to go through an entire family law litigation process, which can cost tens of thousands of dollars and can take years. There are a few items that would still need to be discussed in the case of a divorce, such as child support, child visitation and custody. These are items that cannot be included in the prenuptial agreement.
There are many more details and restrictions that are required for the preparation of a valid prenuptial agreement in California, so make sure you contact a competent family law attorney.
This article is meant to only be a quick explanation as to the advantages of a prenuptial agreement and is in no way to be construed as legal advice as every individual’s situation is different. If you would like to speak to us about your specific situation, give our offices a call at (714) 546 4600.