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The prenup in California, a 50/50 community property state

On Behalf of | Dec 22, 2022 | Divorce

In the event of divorce, a big part of the ensuing discussion is about property division. Most states follow an equitable distribution theory so that marital property is fairly divided according to state-provided guidelines. However, California follows a community property model for property distribution, in which each spouse has an equal claim to all the property they acquired during the marriage.

Property characterization

Property characterization refers to the identification phase of property division— working out which assets will be recognized as separate property, and which will be considered community property. Theoretically, a divorcing couple divides their community property 50/50, although it’s generally more complicated than that in practice.

By entering a prenuptial agreement, the couple can reduce to a minimum the property characterization phase of property division, thereby reducing costs and headaches should a divorce happen. For instance, a prenup can designate that certain property will be separate from the community property. Absent any sort of commingling during the marriage, this separate property will belong to the individual and not be subject to division.

California law: the Uniform Premarital Agreement Act

A prenup can clarifywhat assets and debts each spouse-to-be brings to the marriage, and what their respective expectations are. It might be discomfiting to sort through these material considerations, but experts advise it won’t get easier later.

Indeed, financial disputes and woes are often what derail couples later. Having the serious money talk prior to marriage and entering a prenup puts guardrails in place.

The prenup can go in many financial directions with agreed expectations regarding property; education funds; retirement funds; spousal support (if both parties have legal representation at the prenup’s signing); debt disposition; inheritances; life insurance policy payouts, and more. However, it may not touch non-financial concerns such as child custody or support; demands related to appearance or to the relationship; demands to commit illegal acts; and any language or demand that can be construed to be unjust, coercive or deceptive.

A prenup can get thrown out

No one saunters into a marriage casually. Neither should the prenuptial agreement be taken lightly. While it is permitted in California to write one’s own prenup, if the agreement fails to meet legal standards, the judge in a future divorce proceeding might invalidate it.

Further, there must be transparency and fairness. A prenup must inform each party of the whole financial picture, the assets, liabilities, and income, of the other. Conversely, if there’s reason to suspect coercion or one-sidedness, the prenup again can be tossed.

In the final analysis, the prenup is a difficult exercise. It’s also an added expense. But, many argue, it’s a form of readiness and preparedness, should this most important of ventures not succeed.