When a couple in California is planning to marry, they may envision sharing not just their lives, but also their property. Perhaps one party owns the house that they both will live in. Or, perhaps they will open a joint bank account, in which both their paychecks will be deposited. When a couple shares their financial lives, however, discord can occur that might lead to and the subsequent division of assets. Couples can plan for this possibility by executing a prenuptial agreement before marrying.
To understand why a prenuptial agreement is so valuable, it is first important to understand the difference between community property and separate property. California is a community property state when it comes to property division.
This means that any assets (or debts) obtained by either spouse during the course of the marriage are community property, and both spouses share an ownership right to them. However, assets and debts obtained before marriage, along with inheritances and some gifts will remain the separate property of the spouse that obtained them, so long as the separate assets have not commingled with marital assets. Commingling transforms a separate asset into a marital asset when the two are combined in such a way that the separate nature of the asset is lost.
So, what does this mean when it comes to a prenuptial agreement? In a prenuptial agreement, couples can protect separate assets from becoming part of the marital estate should they one day by outlining who is to retain what in a . Similarly, in a prenuptial agreement, spouses can dictate who will receive what in terms of marital assets if their marriage does not last. This can be important to ensure that a fair result is reached during the property division process, and it can make the entire run smoother, as many key decisions will already have been made.
There are many good reasons to consider entering into a prenuptial agreement before walking down the aisle. This may especially be true for those who have a great deal of separate assets or who are anticipating a significant inheritance. No one getting ready to walk down the aisle necessarily believes their marriage won’t last, but that is a reality for many, so it is best to be prepared with a prenuptial agreement.