Do you need a premarital agreement?

A premarital agreement, also known as a prenuptial agreement or "prenup," is a legally binding contract that is entered into by two people prior to getting married. It outlines how certain financial and property matters will be handled in the event of a divorce or the death of one spouse.

There are several factors to consider when deciding whether or not you need a premarital agreement. Some common reasons that people choose to have a prenup include:

1. To protect pre-existing assets: If you or your future spouse have significant assets, such as a business or real estate, a premarital agreement can help to protect these assets in the event of a divorce.

2. To define financial responsibilities: A premarital agreement can specify how financial matters, such as bills and debts, will be handled during the marriage.

3. To address potential inheritance issues: If you or your future spouse has children from a previous relationship, a premarital agreement can clarify how inheritance will be handled in the event of your death.

4. To address future financial goals: If you and your future spouse have different financial goals or expectations, a premarital agreement can help to clarify these expectations and ensure that both parties are on the same page.

Ultimately, the decision to have a premarital agreement is a personal one that depends on your individual circumstances. It is a good idea to discuss the idea with your future spouse and consider seeking legal advice to determine if a prenup is right for you.

Estate Planning during Divorce

Once you file for divorce, there are Automatic Temporary Restraining Orders that go into effect. These ATROS limit your ability to change beneficiary designations without the consent of your spouse and to fund a trust without consent of your spouse.

During your divorce, you remain married and have all of the benefits provided under the law in the event of death.      

In practicality, what that means is that if you die during the dissolution process, without a written agreement or an estate plan, the assets in your dissolution that were going to be awarded to you, may, through probate, be inherited by your spouse. 

If you would like to change that potential outcome now, here are your options:

No Restrictions

1.     Create, modify, revoke a will – A will distributes your property

2.     Create *but not fund* a trust

 What you can do with notice (do not need consent)?

1.     Revoke a revocable trust

2.     Sever a joint tenancy

 What you can do with written consent?  

1.     Change beneficiary designations on insurance, retirement, etc

2.     Fund a new trust

Payments to the family residence post separation

Clients often ask if they can receive reimbursement for post-separation payments to the family residence. Maybe.

Reimbursement for post-separation payments by a spouse on a community mortgage is NOT governed by Family Code §2640.

Family Code 2640 provides reimbursement only for payments made with separate property during marriage.

Post-separation payments with separate property on community debts is governed by Epstein and those credits are NOT automatic.

Can the Court Enter Judgment After a Party Dies?

What happens if you are in the middle of your divorce process and your spouse dies?

If your proposed marital settlement agreement was signed by the everyone, and the judgment was submitted, and then your spouse dies before it is signed by the court- the court has the power to sign the proposed judgment, which, after all, the parties had intended that the agreement would be the judgment of the court, CCP §669.

However, if the judgment was not submitted, the Court will not enter your divorce as final.

Do you own rental property? Are you getting married?

It is important to get a premarital agreement in California if you own a real estate development business before marriage.

If you manage your properties during marriage, the profits may become in part community property entitling your spouse to some of the rental income or alternatively you could be imputed with a reasonable wage that the community should be entitled to based on the use of your time energy and effort towards the rental properties. If you previously worked in a business and now are only a passive investor, then your assets are protected but if you actively manage any properties then under Van Camp v Van Camp (1921) 53 CA 17 the court allocates to the community reasonable compensation for the efforts of providing spouse or RDP (if they had not already received such compensation). The balance of profits or increased values attributable to normal earnings on separate property investment will go towards separate property.

A prenuptial agreement can protect both parties from any potential disputes regarding division of assets after divorce and also help both parties understand their rights regarding ownership before entering into marriage. This helps avoid costly litigation down the road by providing clarity about who owns what prior to getting married. It also sets out how financial decisions should be made when it comes to investments done together during marriage which can save considerable time and money later down the line.

Getting an enforceable prenuptial agreement in California is essential for couples who intend on starting businesses together or have existing ones prior to entering into marital union since it provides legal protection for all involved parties regardless what happens afterwards!