Pre- and Post-marital Agreements
Philosophy and approach
Often called “prenupts,” premarital agreements are contracts that define ownership and control over financial assets during marriage. Premarital agreements often address what should happen at the end of a marriage, whether by death or divorce, so that future disputes are avoided. Postmarital agreements have the same effect, but are executed after the parties are married. They often address property rights that may have already been created under law and offer the opportunity to modify or expand those property rights by mutual agreement.
Contrary to popular perception, prenupts are not just for individuals who seek to protect pre-marital assets from their soon-to-be spouse. One of the most common mistakes couples make is not discussing how they plan to handle money and finances during their marriage. If your marriage ends, whether by death or divorce, the law of the state or country where you are living determines what happens with your estate. Having a premarital agreement allows you and your future or current spouse to define how you will handle finances during marriage, and when your marriage ends, either by death or divorce. Having a clear understanding of each spouse’s expectations about marital finances is a cornerstone of long and happy marriages. Not having a clear, mutual understanding about finances can increase the chance of a divorce.
One of the factors in enforcing an agreement under California law is how close to the marriage the document was finalized. If there isn’t a lot of time between the signing of the agreement and the marriage, then more questions are raised. Parties take the risk that the agreement will not be enforceable later if they don’t take care to plan ahead.
Mediation is well-suited for pre- and post-marital agreements since it allows a couple to fashion their own financial arrangements which are consistent with the shared goals and values of the couple. While we always recommend that each party have the proposed agreement reviewed by an independent attorney before signing, working with a neutral can help both parties to consider approaches and different options available that are appropriate to their specific circumstances , and, therefore, are more likely to prevent future disputes.
Things to think about
Cohabitation agreements are used by unmarried parties to clarify and define any financial agreements or understandings, or to ensure that no such agreements or understandings are created inadvertently by the couple’s actions during the relationship. The laws are quite specific for married couples when the marriage ends, but the law does not clearly define property rights for those in relationship but who are not legally married.
Because of the lack of specific legal protections under the law, unmarried couples who want to protect or preserve their rights to certain property, such as a home, or who wish to define specific financial agreements and understandings, are advised to consider cohabitation agreements. This is especially important so that there are fewer disagreements (and less chance of litigation) in the event you ever separate.