Understanding Community Property in California
When you marry in California, your salary after marriage is technically half your spouse's, and vice versa. If you purchase a home after marriage and use community funds for the down payment, that home belongs to both of you equally. The same applies to retirement accounts, IRAs, 401K contributions, earnings from business ventures, vesting stock options, increases in investment returns, and many other assets.
Should you divorce, all community property is divided 50-50 between you and your spouse, regardless of who earned it, bought it, or acquired it. (There are some exceptions to this rule; this is intended to be broad and general information. Please contact us for more specific information about community property law.)
What Does a Premarital Agreement Do?
A premarital agreement, in the most simple and broad terms, allows you and your spouse to contract out of default California community property laws should you divorce in the future. A couple can completely customize the division of all community property according to their individual needs, rather than having such a division determined by California law.
California community property law may seem straightforward in theory, but it is anything but when it comes time to actually apply it in a divorce. Any irresolvable dispute over an asset will eventually be settled by a judge, and family law judges are notorious for inconsistent and unpredictable applications of the law. Not to mention the time and expenditure of attorneys' fees needed to get even a minor issue before a judge.
Why Planning Ahead Matters
When you are in love and getting married, it's easy to take a peek into the future and think that if you were ever to get divorced, it would be easy. Everyone would take what is theirs. Assets and accounts would be amicably split. But when a couple actually gets divorced, nothing is ever this easy. Feelings are hurt and people can act outside of character.
I've seen arguments arise over houseplants, coffee mugs, lamps, coffee makers, and any number of mundane things you cannot imagine would cause a conflict. Not to mention the more obvious things like pets, bank accounts, and houses. If it exists, I've seen people fight over it.
A Prenup is About Love, Not Separation
When you are getting married it is difficult, if not inconceivable, to think about preparing a contingency plan for splitting up. This is completely understandable. A prenup is not planning for your marriage to fail any more than getting health insurance is planning to get sick.
I truly believe that a prenup is less about separation and more about love and commitment. Making the commitment to each other that should the worst happen, you will not have a nasty, drawn-out battle, costing both of you time, money, and emotional and physical energy. Life is short and divorce can severely impact your life, not to mention take years to complete. Why not do everything possible to make sure that a divorce has as minimal impact on your life and overall happiness as possible?
