While prenuptial agreements are often associated with the wealthy, many California couples can benefit from this type of agreement regardless of income level. Commonly called a prenup, this legal document can indicate how couples will share property and debt if they divorce.
Engaged individuals may want to consider a prenuptial agreement if one or more of these factors applies.
Owning a business
When one or both spouses owns a business, a divorce could have serious implications for the company. A prenuptial agreement makes sense for sole proprietors who may not have a business agreement that governs the fate of the company in divorce or dissolution.
Prior marriages and children
When either spouse has already divorced or has children from another relationship, a prenuptial agreement can potentially smooth some of the situation’s complexities. For example, spouses can use this document to establish a fair inheritance for each of their separate children. However, these documents may not address future child custody or child support.
Couples should consider a prenuptial agreement when either or both have:
- Significant debt that they want to keep separate, such as student loans from law school or medical school
- Family heirlooms they want to establish as separate property
- Substantial assets, especially when the couple has a notable income discrepancy
California couples can establish provisions about spousal support in a prenuptial agreement, as long as a judge determines the arrangement is fair to both parties. Because California follows community property rules for dividing marital debts and assets in a divorce, the couple must divide everything 50/50 in the absence of a valid prenup.