Prenuptial Agreements, also called Premarital Agreements, are agreements between two persons who are planning on getting married, and want to define their rights regarding separate property compared to community property during their marriage. California is a “Community Property” state. Community property means that property classified as such belongs to both parties, regardless of who purchased it. This is compared to “Separate Property”, which is property that belongs exclusively to one party. The main effect of classification of Community versus Separate Property usually arises during a divorce. Unless the parties agree otherwise, Community Property is divided equally between the parties, while Separate Property reverts to the original owner without having to be shared. The classification occasionally arises during Probate, when one party dies and has either or both Community Property and Separate Property.
Prenuptial Agreements are normally used when at least one of the parties has been previously married, and has acquired substantial property in his or her own name that he or she wants to keep as Separate Property. But it can be used in a first marriage when the same considerations are important.
One of the features that can be included in an agreement is to keep any earnings after marriage as your own Separate Property where it would normally be considered Community Property under state Community Property law. Those earnings must be kept in a separate bank account in your name only that was originally agreed upon to remain your Separate Property. If you put any funds in a joint bank account that is in both your names, it becomes Community Property.
Both parties must provide complete disclosure of what they own and what they owe. Keeping debts in the name of one party or the other as Separate Debts can be important because creditors trying to collect a debt of one party cannot go after the other party or any of that party’s Separate Property.
Prenuptial Agreements are not recorded or filed with any government agency. They come into use only when there is an issue of what is Separate and what is Community, usually in a divorce action, but also in a debt collection action by an outside party. Each party to the Agreement has their own original copy of the Agreement, and produces it only when it is needed.
Each party may have their own attorney involved in the preparation of the Agreement, although is normal for both parties to agree to use a single attorney as long as they both agree to the terms of the agreement.