Marital Property Laws in California
California is a Community Property State, meaning that all property acquired during marriage by earnings or labor of either spouse is presumed to be Community Property. On the other hand, all property acquired prior to marriage or a physical and permanent separation of the parties, or after divorce, is presumed to be Separate Property. These are very important distinctions, because if a divorce action is filed, what property is community verses what property is separate can have a profound effect on how the various assets between the parties will be divided.
California law provides that community assets, and community debts acquired during marriage, are subject to equal division upon a dissolution of marriage. What if, one or even both of the parties of the marriage, have substantial assets and/or substantial debts prior to marriage, how can either or both the parties be protected against an equal division of certain substantial assets they came to the marriage with, or have protection from substantial debt acquired by one of the parties prior to the date of marriage when a divorce action is filed?
Premarital (Pre-Nuptial) Agreements in California
Here in California, parties have the option of executing a Premarital Agreement (PMA) governed by State law, which requires the agreement to be in writing, completely voluntary, and include a full financial disclosure to be enforceable. Under California Family Code §1610 – 1611, this agreement is a written contract between the prospective parties that is drafted in contemplation of marriage. Further, this agreement would outline the rights and obligations of the parties concerning property, debts, and/or other financial matters in the event a dissolution of marriage occurs. (see also, CA Family Code §1612 – Statutorily enumerated matters parties can contract for in a PMA). However, under California Family Code §1612(b), there can be no limitations on the right of child support under any such agreement.
If the parties enter into the marriage with assets deemed to be separate property prior to marriage what could possibly give the other party any interest in such property?
A spouse could gain interest in the other spouses separate property through avenues such as transmutation (changing the character of the property), comingling separate property with community property or by community contributions (In re Marriage of Wolfe (2001) 91 Cal.App.4th 962, 110 Cal.Rptr.2d 921).
How to maintain sole interest and ownership of their separate property assets upon divorce
Well, a PMA may completely avoid California Community Property Laws concerning such assets and any interest that could potentially be created during marriage. The PMA is available for couples to define their respective rights and obligations in the event of divorce. As such, a PMA has the potential to foster good relationships, and a good understanding of the party’s responsibilities.
There is much more to a PMA, and as such, couples should always consult with an attorney prior to entering into a PMA