Prenuptial Agreements

You may have caught Laura Petrecca’s article in USA Today on the importance of the prenuptial agreement. Drafting these agreements is a challenge for the family law attorney as they not only consider the recognized legal principles of family law, but also converge with estate planning. Ms. Petrecca’s spotlight on the oft grimacing reaction that a request for a prenuptial agreement typically will invoke is something a family law attorney must empathize with.

In the modern era, the social institution of marriage has become not only the loving bond between two people but is also viewed a socioeconomic partnership akin to a business relationship. Just like any other economic relationship, certain contingencies must be satisfied before certain obligations should exist. A prenuptial agreement can serve as a safety net that says “if this doesn’t work out as we both intended, we should ensure one of us doesn’t stand to harm the other.”

Such agreements are also referred to as premarital agreement. Under Cal. Fam. Code § 1610, a premarital agreement is defined as “an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.” To be enforceable, it must be in writing and signed by both parties. Section 1612 specifies the subject matter that the parties may contract around. This includes property rights and obligations, the disposition of property in the event of certain triggering events such as death or dissolution, insurance policies, and other subject matters that are not in violation of public policy or criminal statutes. In contrast to a postnuptial agreement, a prenuptial agreement cannot contain issues affecting the welfare of a child such as custody or visitation.

These agreements may be amended upon marriage, but two key limitations are that they must be voluntarily entered into and cannot be unconscionable. To be unconscionable, Cal. Fam. Code § 1615(2)(A) focuses on whether the party had received a fair, reasonable, and full disclosure of the property or financial obligations of the other party so as to make an informed decision about whether to enter into the agreement. This is an issue for the court to determine.

California also allows domestic partnerships to enter into prenuptial agreements. Such a feature is illustrative of the unique treatment California gives to prenuptial agreements. Other issues include provisions triggered in the event of certain “bad acts” by a party as well as choice of law provisions. Because of the complexity of drafting such agreements, it is highly critical to consult a family law attorney before entering into any agreement.

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