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How to Introduce the Idea of a Prenuptial Agreement and Work through the Process Successfully
Our 9-Point Survival Guide
When approached correctly, a Prenuptial Agreement can be introduced and discussed rationally, revealing its benefits and practicality. Following the 9 points below, will help you put your actions in the most favorable light.
Point 1
Everyone married in California, in a sense, already has a “Prenuptial Agreement”
California state law – referred to generally as California Community Law- will decide what is each person’s separate property, community property, alimony, and certain inheritance rights. So the bottom line is – everyone really has a Prenuptial Agreement. Unfortunately, the laws are convoluted and complex that often result in unknown and unintended consequences. What you are looking to do in a Prenuptial Agreement is to provide certainty in each person’s entitlements, which may be shared for most things.
Point 2
Start early
Start early! Too often, one party drops the idea of a prenuptial agreement on the other party’s lap unexpectedly and at the last minute. Many people react differently and often need time to process the idea, get educated about what it means, talk with others, etc. Discuss your desire for a Prenuptial Agreement early in your relationship.
Explain what is important to you and the reasons you would like to have a Prenuptial Agreement. Perhaps it’s to protect a business, business partners, family real estate, retirement you have worked so hard to build up, or you experienced a distressing divorce. So whatever the reasons, discuss the idea of a Prenuptial Agreement early in the relationship or talk of marriage.
Point 3
Put yourself in your Fiancée’s shoes
If you had no idea a discussion or idea of a Prenuptial Agreement was coming, put yourself in your fiancée’s shoes. Start small and be receptive to your spouse’s responses. Everyone reacts differently, many are practical thinkers, many emotional feelers. Some people may associate a stigma to a Prenuptial Agreement, thinking their partner has little trust that the marriage will succeed.
These feelings need to be addressed and topics need to be discussed. Actually the discussion and drafting of the Prenuptial Agreement resolves some initial negative, concerning feelings in several ways:
- Fair and Open financial disclosure and discussion of each persons’ rights – This provides a tremendous peace of mind for both parties in a marriage. With decisions about marital assets, support, etc. made in advance, you’ll both feel more secure knowing that your rights (and assets) are protected.
- Security in case of death of a spouse – Prenuptial Agreements can include what happens to martial assets in the event of death, as well as, divorce.
- When issues are resolved and recorded as in the Prenuptial Agreement, there are no surprises as to what each is entitled to.
Point 4
Choose your timing and level of discussion
Friday night after a long, hectic week when everyone is tired is probably not a good time to discuss the terms of your Prenuptial Agreement. Set a date and time in advance so each of you can prepare. Outline what each wished to discuss so expectations are managed. Put a time limit on a discussion, and avoid the pitfall of tryingto discuss every detail at once.
If things get heated, empower each person to use a 5-minute time out flag, if need be.
When you begin discussing the Prenuptial Agreement remember Guide 5!
Point 5
It is NOT ‘all-or-nothing,’ and DOES NOT have to be ‘all-or-nothing’ – Seek balance
Tailor the Prenuptial Agreement to meet your needs, BOTH OF YOUR needs. It does not have to be ‘all-or-nothing.’ Maybe you want to keep each of your retirements separate property during the marriage and let California community property law apply to everything else, except capping the maximum length of alimony payments at a certain time for both parties.
What are the top 2 or 3 of your must-haves? What are you really concerned about protecting? Focus on those points. Also, remember there are always several ways to accomplish your objectives. So if one objective seems offensive, talk through another solution or note the impasse with your attorney; the two of you can come up with a balanced solution.
Point 6
Remain flexible and keep your eye on the big picture
What is it that you wish to protect?There is no need to battle every point…there needs to be give and take. If you get a major concession, ask what is important to your fiancée. Perhaps your fiancée is concerned about being taken care of in the case of your death. One concession may be to include a term life insurance policy in the Prenuptial Agreement during the marriage with your spouse as the beneficiary. Your Attorney should provide sound options for the two of you to achieve your goals.
Point 7
Consider Mediation to resolve tough issues
If you start the discussions about a prenuptial agreement early and the communication lines areopen, you should be able to resolve most issues. If there are one or two points that you cannot agree upon, consider mediation. A neutral third party mediator can help facilitate discussion and assist with options to help you work to an agreeable solution.
Point 8
Discuss the Prenup and work on the terms jointly throughout the process
Involve your fiancée in each step of the process to come up with the terms of the agreement. From discussing your goals, objectives, and reasons…to completing the Questionnaire to provide to the draft attorney. Your fiancé is your partner and should be treated as such. Use the conversation to strengthen your marriage.
Approach the Prenuptial Agreement conversation from the perspective that you to want to make your upcoming marriage stronger by discussing difficult subjects in advance. The more you discuss finances in advance, the less strain you may experience later. Documenting financial resolutions via a prenuptial agreement provides certainty and ensures that there will be no surprises or unintended consequences if things do not work out.
Point 9
You are not locked in – you can make changes to your Prenuptial Agreement
Remember! You are not locked into the terms of the Prenuptial Agreement, nor should the Prenuptial Agreement be put away and forgotten. If your life circumstances change significantly, or you both have a change of heart on a term in the agreement; you can and should amend the Prenuptial Agreement.
An amendment to your Prenuptial Agreement needs to be in writing and should be completed by an attorney to make sure your intentions are accurately reflected and to make sure the changes do not impact any other sections of the Prenuptial Agreement you did not consider.
Ensure your Prenuptial Agreement is Valid – Avoid these 5 Conditions
Prenuptial Agreements (“Prenups”) are becoming increasingly common for couples who want to provide certainty to their financial and legal issues, not just high net worth couples. A Prenup identifies what assets are separate and community property, how retirement and business ownership is handled, and whether and how much alimony is appropriate, in the event of divorce or death.
While California law specifically allows for a Prenup and outlines what needs to be followed to ensure the Prenup is voluntarily entered into and enforceable, there remain grounds for challenging the validity of the agreement of which we need to be mindful. Here are five conditions we need to avoid:
1. The Prenup is rushed and not voluntary
California has a “7-day waiting period” before the Prenup can be signed – a cooling off period. After presenting the Prenup to your fiancée, 7 FULL days must pass (excluding the day it is presented and the day you both sign) before you both can sign the Prenup. Additionally and when possible, the Prenup should be signed/notarized 30 days before the wedding, or even better, before wedding invitations are sent. The further in advance of the wedding the Prenup is drafted, negotiated and signed, the better.
2. Fraudulent
Obviously, if you tricked your fiancée into signing the Prenup, where she or he did not know what they were signing, or forged their signature,if will not be enforceable. APrenup requires each spouse to make full and open financial disclosure of their net worth. If there is a material misrepresentation of income, or assets if would provide a basis for challenging the agreement. So be certain your financial disclosures are comprehensive.
3. The agreement was coerced, signed under duress or signed without mental capacity
Coercion, duress, or lacking mental capacity can be extremely difficult to prove and are dependent on all the facts. But if it can be demonstrated that your fiancée lacked mental capacity to understand the Prenup when you signed it – for example, if you were ill or under the influence of drugs — this may be a sound reason to invalidate it. Also, if you were told to “sign the Prenup or else…”, or “I am going to take the kids and leave the state,”these actions would definitely be a basis for challenging the Prenup.
4. One party signed without proper legal representation
Both parties to a Prenup should have separate and independent counsel. You never want to be in a position trying to enforce the Prenup and hear the words, “I signed the Prenup but I did not understand it.” With regard to limiting or restricting alimony or spousal support, that section will be thrown out if an attorney did not represent the party seeking to obtain the alimony. Therefore, each party should have separate counsel – a California Bar-certified attorney.
5. The agreement contains offensive or questionable provisions. . . or is simply too one sided
Even though divorce court judges are typically disinterested in most peculiarities of individual contracts, there can be factors that raise eyebrows. For instance, if your Prenup states no child support whatsoever will be paid in the event of a divorce or determines who gets custody of the child, it is likely to be thrown out. The courts always look out for the best interest of the child and will make that determination at the appropriate time; not allowing the couple to make the determination years in advance. Additionally, sections in the Prenup about weight gain, hair color, frequency of sexual relations, visits by in-laws are likely not to hold up in court, either.
In Summary in order for a Prenup to be effective, be conservative, ensure the agreement is balanced, and both couples must have their own separate attorney. Additionally, the Prenup should be:
- Written – Oral Prenups are not valid.
- Full Fair and Open Disclosure –if you hide assets and/or liabilities, you run the risk of invalidating the Prenup.
- Executed voluntarily and without coercion – a Prenup that’s signed the day before the wedding can be invalidated.
- Conscionable – a Prenup cannot be unconscionable. In other words, the Prenup could be invalidated if the agreement is unbalanced, with one party awarded almost everything and the other receiving only a pittance, or with terms that would “shock the average persons’ conscience.”
- Properly executed – executed by both parties, in front of a notary.
In drafting a Prenup keep these reasons in mind –it’s critically important to consult with California attorneys who have the expertise to help you navigate these sometimes choppy waters and plan for a secure financial future.Address the items you want to protect, but be balanced and fair.
