The More You Know: 5 Interesting Facts About Prenups
When thinking of prenuptial agreements, images of celebrity divorces and big-money settlements often come to mind. Prenups, however, are far more than just legal safeguards for the rich and famous. These agreements are practical tools that allow couples from all backgrounds establish clear financial expectations, protect certain assets, and avoid conflict.
As a full-service Los Angeles family law firm, Shayan Family Law, APC fields many questions about prenups, ranging from when to draft them to what they can contain or address. This blog post explores five interesting facts about prenuptial agreements that will be helpful to couples planning to get married:
Plan in Advance: When considering a prenup, it is important to have a few months’ lead time before the wedding, for both legal and personal reasons.
First, in California, each side must typically be represented by an attorney for a prenup to be valid, so each spouse will want time to find a lawyer that they are comfortable working with. Second, prenups must be finalized at least 7 days before signing in order to be enforceable, so it is essential to plan enough of a buffer. This is generally known as the cooling off period.
In addition to these requirements, prenups are more nuanced and technical than most clients expect. Even where both spouses generally agree on major points before beginning the process, there are technical matters that the parties will need to discuss. The weeks leading up to the wedding tend to be the most stressful, so it may not be the best time to discuss a prenup! Taking care of it well in advance can help minimize stress and tension.
Family Business Is About More Than Money: When people think about prenups, the first thing that comes to mind is protecting assets, by which they really mean money. There are other important, less financial reasons for asset protection though.
For example, many clients seek prenups to protect their interests in family businesses or properties. While there is undoubtedly a financial incentive to specifically carve out a spouse’s family-owned assets, issues like control and voting rights are often equally (if not more) important. This is true across businesses of all sizes, especially where parents or siblings are also co-owners.
Where a spouse already owns a business or works for his or her family’s business, prenups can not only address financial concerns - such as treating the increase in value of the business as separate property - but they can also ensure that control over the business and voting rights remain with the spouse and other stakeholders, such as that spouse’s parents or siblings. This can help avoid messy situations, such as stalemates over major business decisions or forced buyouts or sales of the business.
Not the Right Venue for Child Support: While prenups can help establish many rules for the distribution of assets and for other matters such as spousal support, it is not the right venue to contract over child support. Courts make child support determinations based on the best interest of the children. Because personal circumstances and needs change with time, child support agreements and orders are addressed at the time of the marriage dissolution.
When You Separate Matters: No one goes into a marriage with the intent of getting a divorce. Where a marriage doesn’t go according to plan, however, the date of separation is crucially important to determine asset division and other important matters.
Unlike what many people think, the date of separation may not be the day that a divorce is filed or the day that a spouse moves out of the house. There are many factors that go into determining the date of separation during divorce proceedings. The date of separation will be used to establish the length of the marriage and, depending on what the date is, this may have a significant impact on spousal support and on what assets each person is entitled to.
Prenups can help establish processes and notice requirements at the time of separation to avoid costly litigation about the date of separation.
Continue Keeping Good Records: Getting the prenup done is a major step but continuing to abide by its terms and documenting transactions properly is very important. Case law about prenups is constantly evolving and, in states like California, changes in law may retroactively impact a prenup’s enforceability, even if the prenup was drafted in conformity with the law or with commonly accepted practices at the time of drafting.
Keeping clean and accurate records of your property and taking title to assets in accordance with the terms of the prenup will bolster enforceability. Simple steps, like naming accounts properly, will also help both spouses easily recall what is separate or community property as years progress and their wealth grows.
Prenuptial agreements are a healthy tool that promote transparency and communication between soon-to-be spouses. They help set clear expectations, avoid surprises, protect against debt, and can also be helpful for estate planning purposes.
Shayan Family Law, APC is a Los Angeles family law firm with experience helping clients from diverse backgrounds draft and negotiate prenuptial agreements. To learn more about how prenups can help based on your specific circumstances, please contact us and schedule an initial consultation.
For more information about prenups, you can also read our blog post about Restricted Stock Units (RSUs) and Prenups or check back in periodically for future related posts.
