Steven Fernandez |

Prenup

When Brad Pitt and Angelina Jolie shocked the world with news of their divorce enquiring minds seemed to want the inside scoop on one thing in particular – was there a prenup, and, if so, who gets what in the divorce?

It seems as though, with the seemingly constant flow of celebrity weddings and subsequent divorces, prenuptial agreements have become a standard precaution. In California, engaged couples are permitted to draft contracts that, upon divorce, dictate any number of things, from the allocation of marital assets to payment of spousal support.

While the particulars of most celebrity prenups aren’t available for public dissemination, we believe the unfettered access they have to powerful attorneys means the prenups they sign are iron-clad, powerful documents that protect future rights. We’ve compiled a list of information we believe should be included in every prenup – and we’d bet those signed by the celebrities we follow, including Brad and Angelina, follow these guidelines closely.

Things to Include in a Prenuptial Agreement

When drafting a prenuptial agreement, we recommend including provisions that touch on each of the following aspects of property, finances, and behavior:

  1. Community or Private Property? Declaration that certain property, whether held prior to or obtained during marriage, will be considered private or community property.
  2. Who gets the house? How community property will be divided upon divorce. For example, certain assets (such as houses, cars, or investments) aren’t readily or easily liquid, so it may be wise to predetermine who will retain ownership in the event of divorce.
  3. Who pays the debts? Debts may also be difficult to divide. Predetermining who will be responsible for specific debts, rather than requiring each spouse be on the hook for half of everything, can significantly reduce the stress of a divorce.
  4. Alimony. Unlike child support, alimony or spousal support can be waived in a prenup. Similarly, prenups can impose certain spousal support provisions. If one spouse earns considerably more than the other a prenup can be used to construct spousal support payments if the marriage should fail.
  5. What State law governs? Different states have different laws governing prenuptial agreements. Be sure to specifically state that California law governs.
  6. How you’ll handle disputes. Even though you may agree to the terms of the prenup before you’re married, chances are that if the divorce is somewhat contentious one spouse may decide they don’t want to play by the ground rules you laid. Be sure to include exactly how disputes of this nature will be handled.
  7. Sunset clause. Many times, couples cave to family pressure when signing prenuptial agreements. Families may worry that their loved one’s spouse is deceitful or that they’re just too young to enter a successful marriage. Sunset clauses can be inserted to void the prenuptial agreement when the happy couple has been married for a certain number of years. These are a terrific way to insure your property up-front while betting on a long and happy marriage.

Limitations on Prenuptial Agreements

Prenuptial agreements are an increasingly popular tool for engaged couples to dictate how their lives will be affected should their marriage end in divorce. The laws governing prenups are codified in the California Uniform Premarital Act, which can be found in Section 1610 of California’s Family Law Code. California law grants couples broad discretion in drafting prenups, but does impose a number of limitations.[1]

In California, prenuptial agreements may not:

  1. Regulate child custody nor child support. Child support is the right of a child, not a parent, and cannot be negotiated through a prenup. That authority is left to the courts in the wake of a child custody battle;
  2. Include terms thought to encourage divorce; and/or
  3. Impose or require obligations on a spouse in the marriage. Though widely thought to be a common tool of celebrity couples to keep their soon-to-be spouses faithful, infidelity clauses or penalties for cheating are prohibited.

California also imposes certain limitations on how and when a prenuptial agreement may be signed. The state imposes a 7-day grace period between when a prenup is reviewed by the spouse(s) and when it may be signed. This affords the parties the opportunity to fully understand the importance and impact of the agreement. Failure to permit a 7-day period for review is grounds for voidance.

Effect of a California Prenuptial Agreement

Without a prenuptial agreement state laws concerning property and probate dictate how assets and liabilities of the divorcing couple are divided. California is a community property state, meaning that property accumulated during marriage belongs equally to both spouses.

Upon divorce, in the absence of a prenuptial agreement that says otherwise, community property is divided equally between the spouses. Property held by each spouse prior to marriage generally remains theirs, and theirs alone, and remains such after the marriage ends. Determining the true origin of ownership of spousal property can be expensive, often requiring the services of forensic accountants and investigators. Additionally, equally dividing property acquired in marriage can prove to be challenging, especially for assets such as houses, cars, and investment property.

Prenuptial agreements are a great tool for couples who want to avoid the headache (and expense) of pinpointing and dividing ownership, especially if the divorce is not particularly amicable. California law permits couples to designate the property – both assets and liabilities – that each spouse will be entitled to upon divorce.

For example, if a couple who each have significant individual assets prior to marriage want to ensure that their property is not forfeited to the other in a divorce, they can explicitly list property that each will retain. Alternatively, if one spouse earns a significantly greater amount than the other spouse, they can agree that earnings – which are typically considered to be community property and therefore equally divisible – be treated as separate property.

Enforcing The Terms of Your Prenup

As with many other legally binding contracts, California prohibits the enforcement of a prenup if certain circumstances apply. Prenuptial agreements, under Section 1615 of California Family Law, are unenforceable if:

  • Adequate financial disclosures of each future spouse were not provided;
  • The terms are unconscionable;
  • One spouse was coerced into signing;
  • One or more parties to the agreement did not understand what they were signing; or
  • There were not at least 7 days between when the agreement was first presented and when it was signed.[2]

Prenuptial agreements are a smart and safe way to dictate how assets and liabilities of a marriage will be distributed upon divorce. While they can be a touchy subject for couples who are nervous about broaching the subject of divorced before even tying the knot, they can provide a sense of comfort if things don’t go as planned. Divorces can be expensive, and determining how to divide marital assets can considerably ramp up those costs. Coming to an amicable agreement about the division of assets and responsibilities after divorce can help to minimize both the financial and emotional stresses of divorce.


[1] California Family Code Section 1610-1617

[2] http://www.prenuptialagreements.org/prenuptial-agreement-california/