California Prenups

Feb 11, 2021 | Finances, Prenuptial Agreements, Second Marriages, Uncategorized

Ah, yes. The sunshine state.

The birthplace of the internet, Tom Hanks, and everyone’s favorite blue jeans.

The avocado capital of the world (yes, you still have to pay extra for it on your Chipotle though).

And the only state where you can potentially see a celebrity film a movie, head to the beach from the snow, slam your double-double and animal style fries from Inn-out, all within 24 hours.

With so many iconic people, places, and things coming out of the most populated state in the country, it’s worth addressing what policies and reputations this state is known for – especially in the legal realm.

With almost 40 million people populating the liberal state, it goes without saying that Californians deserve an official “shout out” when it comes to prenuptial agreements (prenups).

Yes. The rich and famous celebrities thrive in this state – and are notorious for prenups.

Yes. There is more wealth here thanks to Steve Jobs, Mark Zuckerberg, and Sundar Pichai – and they’re probably all very familiar with prenups.

However, a majority of prenups are being born in California than any other state – and not just for the wealthy celebrities and high tech millionaires that are spreading throughout the state like an epidemic – but with everyday couples who are trying to get the impossible accomplished and spend their lives together.

With each state demanding its own set of rules and guidelines for prenups, let’s dive into what’s enforceable for a California prenup – what it can include, and what it cannot, and some major things to include when drafting yours so that it’s enforceable no matter what.

What is a California prenup?

This is a trick question since a prenup is a prenup (regardless of what state you are from).

However, according to the Legal Info Legislature of California, the legal jargon for a prenup is presented as a “premarital agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.”

Within this agreement, prospective spouses will address property and “the interest in present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings.”

In other words: a prenup discusses what will happen to your and your fiancé’s assets, debt, property, etc. upon marriage.

🧐Will we have community property? (Where your stuff is mine and vice versa).

Or.

🧐 Will we have separate property? (Where we keep our assets and debt separate).

A California prenup is particularly interesting since California is one of the only nine states that are considered community property states.

Meaning, sun kissed engaged couples (from all those days and rays of endless sunshine) will automatically merge property acquired after marriage (unless a prenup completed prior to marriage says otherwise).

Therefore, the reason to get a prenup is arguably higher since, unless you want all of your stuff acquired during marriage to automatically be given equal custody amongst the two of you, you will need to sign a prenup that addresses exactly what you want to do with your property (and most importantly, if you want to keep some things separate).

What you can include in a California prenup (well, a few of the things):

Here are the major things that you and your spouse can contract between the two of you within the terms of a prenuptial agreement (prenup).

  1. Property rights & obligations – who’s property is who’s while married, and how will the two of you manage property moving forward?
  2. Disposition of property – what happens to your property in the event that the two of you separate, divorce, die, (or any other event that would disrupt your prenup’s policies).
  3. Provision carryouts – point to a will, trust, or other arrangement to carry out the provisions of the agreement (essentially point to another document with more information regarding topics like death, life insurance, etc.)
  4. Choice of counsel – you have the right to choose who serves you when drafting your prenup, and if legal counsel is not sought out, then it must be very clearly written with the prenup that the “uncounseled” spouse knows very well what they are doing and can’t turn back for any reason once the document is signed and notarized.
  5. Waivers – if you plan to waive something (like alimony), it has to be clearly stated that the waiving spouse fully understands what they are signing away and thus continuing forward with the agreement anyways.

Basically, you and your fiancé can decide what happens to your stuff (assets and debt) while married, if you two separate, and/or divorce or death, and you have to both be on the same page about it (and sober while signing).

What you cannot include in a California prenup:

Though you can pretty much throw anything you want into your prenup, there are a handful of definite “no no’s” to exclude from your prenup.

  1. Child support / custody – prenups are about the parents only; custody is a separate issue entirely and will be decided based on your state’s guidelines (if the two of you cannot come to an agreement on your own).
  2. Deceit – leaving out any information (like bank accounts, property, financials, or pertinent information) automatically deems the prenup unenforceable. So sorry, but you’ll have to list all of your stuff (whether you want your spouse to know about it or not).
  3. Anything that incentivizes divorce – if a court thinks that there might be incentive to get a divorce, then your prenup will not be enforceable. An example is “hey, if we get a divorce and I have more money than you, I’ll give you some of it!” This won’t fly because it’s consider an incentive to divorce.
  4. Anything Involuntary – both parties must voluntarily agree to the terms of the agreement. This is why it’s soooo important to be on the same page as your partner and construct all of the reasons, feelings, and beliefs into your document – so that the two of you are equally and fairly represented and feel great about the terms of your agreement.

Clauses to consider

Not all prenups are the same (and they shouldn’t be). Yes, just like anything, there are standard templates and boilerplate prenups that state the bare minimum information needed to be considered enforceable.

However, we highly discourage letting anyone (or anything) be basic (cause let’s be real, you two aren’t basic, so your prenup shouldn’t be either).

Here are some clauses to consider while soaking up the sun and drafting your prenup:

Alimony

Alimony may be awarded in California to the less wealthy spouse upon divorce or separation, or temporarily during legal proceedings. It is paid by the wealthier spouse. Factors to be considered in alimony calculation, per the California Family Code Section 4320, include the supporting party’s ability to pay spousal support, the needs of the parties, extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage, the age and health of the parties…. And the list goes on.

Do you and your fiancé want to include alimony or waive right to alimony in your prenup?

This controversial topic can be summed up by two extremely common place scenarios:

Scenario 1: Childcare.

Let’s say one of you decides to put your career on hold to stay home and take care of the kids (and like the smart couple you are, the less wealthier spouse decides to quit their job so that as a couple, you can make the most income possible while slicing your income in half).

Now, let’s say that its been a few years and you and your spouse are separating.

Should the wealthier spouse have to compensate the less wealthier spouse – who took one for the team to stay home and give the kids some serious TLC, upon divorce – to cover for the time lost that could be used advancing in less wealthier spouse’s career, and help them keep a similar standard of living that they had while married?

Or, are you two deciding that no matter what happens, you two are on your own for financial income and won’t rely on one or the other (regardless of why a divorce occurs). What about child support, you ask? Our question right back would be – will child support be enough? What about the fact that the stay-at-home parent has now reduced their future earning potential by staying home and out of the workforce for 5-10 years?

Now, childcare isn’t the only scenario that can deem alimony fair.

Scenario 2 (ok and scenario 3, also):

What if two of you decide to not have kids, and make relatively the same amount of money. Does alimony make sense for you then?

What if one of you receives a sizable inheritance during the marriage that brings in significant income? Should alimony be awarded to the lesser earning party, even though the higher earning party’s stream of income came from property inherited?

Don’t skip over this crucial clause when drafting your prenup. Again, alimony is automatically awarded in California upon separation or divorce. So, if you two do not believe alimony makes sense for you two then you’ll both need to waive your rights to it in a prenup.

Confidentiality clause

This might be wrong, but we’re assuming that if you’re in California, you might be a business owner (or you’re about to marry one).

With startups popping up like whack a moles, the likelihood that you might make more money with investments (such as a business venture or equitable investment) seems very likely.

A confidentiality clause is ideal for people who want to keep their information private to protect their proprietary business information, investments (in their business, reputation, or both) as a finical blow like divorce might affect their financial status or company (or anyone else invested within their investment).

Confidentiality clauses are extremely popular in California to protect the well-being of a financially secure spouse (regardless of what happens to the marriage).

For more information particularly on this clause, check out our post for business owners specifically. We dive way deeper into this topic and clarify everything you need to know to protect your investments.

Sunset clause

Are one of you not super stoked about getting a prenup?

What if we told you that there’s a way for your prenup to expire (and be so expired it’ll be as if it never even existed)?

Introducing a sunset clause: a clause that acts as an expiration date for your prenup that allows the prenup to self destruct after reading. Just kidding. Kind of.

Sunset clauses state an expiration date (decided upon you and your partner) so that the less stoked spouse can feel good that the prenup will eventually go away, and the prenup pumped spouse can sleep at night knowing that prenup existed (for whatever amount of time makes sense).

Let’s say that the two of you have giant gaps in wealth, and the much wealthier spouse is asking for a prenup (for obvious reasons), while the less wealthier spouse is disappointed that a prenup is in route because it means they will potentially lose out on some of their spouse’s wealth (and go against the grain of what traditional marriages believe with “what’s mine is yours, honey!”)

Perhaps the less wealthier spouse will feel comfortable signing a prenup knowing that it will eventually go away since the two of you have proven to be working out and are much more comfortable with the idea of sharing everything (or mostly everything).

Sunset clauses are a great compromising tool to make the both of you feel good about this prenup (even if one spouse wants it more than the other).

The bottom line

California prenups are important for those couples that don’t want to leave their future in the hands of the California courts.

If the two of you decide to not make a plan (of all the potential what if’s that could occur during your marriage) California will decide them for you.

Prenups are there when you need them. By getting a prenup signed it means you are investing in your future and making sure that no matter what happens, the two of you are covered financially and emotionally, in case this thing just doesn’t work out.

HelloPrenup is specifically designed to make customizing your prenup easier, efficient, and stress free. By signing up for a free account, you and your fiancé can walk through the HelloPrenup questionnaire and negotiation process together- as a couple. Need more info on the law and how it applies to your specific situation? No problem. Your prenup exports as a word doc, so you can take it to an attorney of your choosing.

Whether you believe in community or separate property, or alimony or no alimony, HelloPrenup will help get you the prenup that makes sense for you and your future spouse, all while spending the least amount of time and money required.

Need help getting started? Head over to HelloPrenup.com/signup or send us a note at hello@Helloprenup.com to get some white glove support.

We’re excited for your future.

XO, HP 🥂

This blog is for informational purposes only. HelloPrenup, LLC (“HelloPrenup”) makes no representations as to the accuracy or completeness of any information on this site. HelloPrenup will not be liable for any errors or omissions in this information nor for the availability of this information. These terms and conditions of use are subject to change at any time and without notice. HelloPrenup provides a platform for legal self-help. The information provided by HelloPrenup along with the content on our website related to legal matters (“Information”) is provided for your private use and does not constitute legal advice. We do not review any information you provide us for legal accuracy or sufficiency, draw legal conclusions, provide opinions about your selection of forms, or apply the law to the facts of your situation. If you need legal advice for a specific problem, you should consult with a licensed attorney. Neither HelloPrenup nor any information provided by Hello Prenup is a substitute for legal advice from a qualified attorney licensed to practice in an appropriate jurisdiction.

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