How a California Prenuptial Agreement Could Help Cement Your Legacy

People often believe that prenuptial agreements are only necessary for couples with immense wealth or incredibly valuable assets. In general, the primary purpose of a “prenup” is to ensure that one spouse’s assets are protected in the event of divorce. However, prenuptial agreements have a purpose that goes beyond contingency planning. California couples can, in fact, use prenuptial agreements as a low-cost and convenient estate planning strategy.

Prenuptial Agreements in California

Prenuptial agreements are sometimes called antenuptial agreements. Irrespective of their name, these agreements serve to separate certain financial and property interests before marriage.

A “Prenup” Determines

Individual rights to property
Interest in non-joint financial accounts
Alimony obligations and limitations

Why People Sign Prenuptial Agreements

Both partners are financially independent before marriage
One spouse has or is entitled to significant wealth
One spouse has substantial debt

However, people have other reasons for signing prenuptial agreements. An often overlooked reason is estate planning. A prenuptial agreement provides an easy, low-cost way for couples to determine which assets will remain exclusively theirs after marriage.

How Prenuptial Agreements Protect Estates

California is a community property state. Under the Golden State’s community property statutes, each spouse is entitled to a co-equal share in all assets acquired after marriage.

Community Property Assets Can Include

A home
A business
An investment retirement account
Other real property
Cash reserves
Financial accounts
Stock portfolios
Jewelry
Automobiles

However, two financially independent spouses might wish to circumvent community property laws to pass on certain assets directly to their children or other beneficiaries. But California courts will typically assume that any estate planning omitting a spouse was made in error.

While you could create an estate plan which specifically addresses the issue of community property after a marriage, a well-considered prenuptial agreement could be easier to create and validate.

When to Consider a Prenuptial Agreement

You and your partner are individually secure in your finances
You or your future spouse have a significant difference in financial circumstances
You are entitled to a large or substantive inheritance
You own your own business
You own interest or equity in a family-owned business or other valuable venture
You own a home that was purchased prior to marriage that you plan to inhabit after the marriage
You or your future spouse have substantial debt

Why You Should Speak to an Estate Planning Attorney

You could use a prenuptial agreement to clearly define which assets should remain individual assets, making probate and inheritance disbursements easier for your heirs. However, a prenuptial agreement should never be considered a replacement for a will or trust. While you could create a prenuptial agreement without a will—or a will without a prenuptial agreement—you must ensure that these documents do not conflict with one another. Any apparent conflict could be misinterpreted by a court or used by a prospective beneficiary to contest the estate.

People planning to tie the knot are often reluctant to discuss prenuptial agreements and for good reason. When you are about to embark on an exciting new future with a loved one, the last thing you want to imagine is a divorce. However, prenuptial agreements have other purposes. Your prenuptial agreement could complement an estate plan, ensuring that your children and future heirs are afforded a legacy that is free from conflict and California’s difficult probate system.

Do You Need to Speak With an Attorney About Estate Planning?

If you need to speak with an experienced estate planning lawyer, please contact us online or call us directly at 800.756.5596 to first register for one of our free, informative seminars. Your attendance will qualify you for a special discount for our estate planning services should you decide to make a free appointment at the conclusion of the seminar and choose to proceed with us. We proudly serve clients throughout California with offices in Torrance, Newport Beach, Orange, Woodland Hills, and Pasadena.

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