Legal Blog

California Premarital Agreements

A person might want a premarital agreement for a number of reasons. For one, premarital agreements, often referred to as prenups, are commonly desired by a party set to enter a marriage with a business or with substantially more assets than his or her fiancé. However, premarital agreements can benefit all parties who simply wish to outline financial expectations for their marriage and add some degree of certainty in the event of dissolution.

In any case, first raising the issue of a premarital agreement can make for an awkward conversation. That said, taking the time to find counsel and negotiate a premarital agreement can save extended pain and suffering in the case of a future divorce.

In California, certain requirements must be met for such an agreement to be enforceable. For one, premarital agreement must be in writing and signed by both prospective spouses.[i] It is also recommended that both parties be represented by their own counsel, as certain provisions will only be upheld against a party who was represented by an attorney at the time of execution of the agreement.

Issues to Address in a Premarital Agreement

Parties to a premarital agreement may contract with respect to the following issues:

1. The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located.
2. The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property.
3. The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event.
4. The making of a will, trust, or other arrangement to carry out the provisions of the agreement.
5. The ownership rights in and disposition of the death benefit from a life insurance policy.
6. The choice of law governing the construction of the agreement.
7. Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.[ii]

Notably missing from the list of issues parties may agree to in any premarital agreement is custody. In the event of dissolution, a court will look to the best interest of a child in determining custody. Parties cannot change this via agreement.

Certain support obligations will also not be affected by a premarital agreement. First, parties may not contract away their right to support any children.[iii] Second, for an agreement re spousal support (including a waiver thereof) to be enforceable, the party against whom enforcement of the spousal support provision is sought must have been represented by independent counsel at the time the agreement containing the provision was signed.[iv] Further, while parties may reach such agreements regarding spousal support, any provision in a premarital agreement regarding spousal support, including a waiver of it, is not enforceable if the provision regarding spousal support is unconscionable at the time of enforcement.

Enforceability of a Premarital Agreement

A premarital agreement is not enforceable if the parties do not execute the agreement voluntarily.[v] In this context, to be voluntary a court must find the following, in addition to any other factors the court deems relevant:

1. Counsel:
   1. At the time of signing the agreement, the party against whom enforcement is sought was represented by independent legal counsel, OR
   2. After being advised to seek independent legal counsel, he or she waived in a separate writing such representation.
2. Wait Period: The party against whom enforcement is sought had at least seven days between the time he or she was first presented with the agreement/advised to seek counsel and the time of execution.
3. Disclosure of Effect: If unrepresented, the party against whom enforcement is sought was fully informed of the terms and effect of the agreement, including the rights and obligations he or she was giving up by signing the agreement.
4. Capacity: The parties had the capacity to enter the agreement, and did not sign the agreement under duress, fraud, or undue influence.

Neither is a premarital agreement enforceable if the party against whom enforcement is sought proves that the agreement was unconscionable when it was executed and, before execution of the agreement, all of the following applied to that party:

• That party was not provided a fair, reasonable, and full disclosure of the property or financial obligations of the other party.
• That party did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided.
• That party did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.[vi]

Thus, when negotiating a premarital agreement, best practices dictate that both parties seek independent representation. Spouses with a premarital agreement will ideally save time and money down the road in the event of dissolution.

[i] Family Code section 1611.

[ii] Family Code section 1612 (a).

[iii] Family Code section 1612 (b).

[iv] Family Code section 1612 (c).

[v] Family Code section 1615 (a) (1).

[vi] Family Code section 1615 (a) (2).