You and your partner love each other and want to get married. But with the divorce rate being what it is nowadays, you’re looking for a way to protect yourself financially in the event things go south.
In this event, family law attorney Elizabeth Yang said it might be a good idea for you and your partner to look into drawing up a prenuptial agreement.
But what exactly is a prenuptial agreement, or “prenup"?
“A prenuptial agreement is an agreement that is signed by husband and wife before they get married,” said Yang, president of Law and Mediation Offices of Elizabeth Yang. “It can stipulate almost anything.”
One reason to write a prenup is just to get the couple talking about subjects that can be considered touchy and uncomfortable to talk about, adding those topics sometimes lead to divorce.
“They’re definitely useful,” she said. “They allow the parties to sit down and talk about their finances. Finances are the number one reason why people get divorced. It’s such a touchy topic. People like to avoid it, not discuss it. If it becomes a big enough issue for whatever reason, it creates a lot of miscommunication for the parties. So, it’s a good idea to sit down before making such a big commitment to know what all the assets and debts are.”
And what goes in a prenup? Yang said pretty much anything of value, like real estate, bank accounts, retirement accounts, stocks and other investments. Also, personal property like jewelry, art and other family heirlooms would also be included.
Besides assets, Yang said debts should also be listed as they can cause friction down the road.
“Debts play a role in this,” she said. “If someone comes into the marriage with a significant amount of credit card debt or student loan debt, they can put into the prenup that this is their separate debt and shield the spouse from being responsible for it.”
But often prenups do get thrown out in court. Yang said there are three ways to help your prenup stand up against a judge.
“You should definitely have an attorney to help you draft it, but you should also have an attorney on the other side so that party knows exactly what they’re waiving, what they’re giving up and what they’re asking for,” she said. “The prenup should also be signed by both attorneys. Otherwise, it’s really easy later to get it set aside. One of the parties later can say, ‘Oh, I was pressured to sign this. I didn’t have time to read it. I didn’t understand what I signed.’ Each party needs to be individually represented. You cannot have one attorney representing both parties.”
Her second tip is simple: Be as specific as possible.
“Some people want to be vague in the prenup,” Yang said. “They don’t want to disclose all their assets. They’ll come to me and ask, ‘Can I just put in a general provision that all of the assets in my name are mine and all the assets in my partner’s name are theirs? I don’t want them to know every asset I have.’ But the answer is no. In order to do a prenup properly, the other party has to know what they’re waiving. You need to be as specific as possible because for each asset that’s not listed in the prenup as the other party can later challenge on the grounds that they did not know about it originally.”
And her third tip? Be reasonable in what you’re asking.
“An example of something not reasonable is, let’s say the spousal support was agreed to be $5,000, but one of the spouses is making millions, then the court can invalidate the prenup and make orders based upon the current circumstances,” she said. “Bottom line is no prenup is ever 100 percent guaranteed.”
Yang does admit prenups are not perfect and don’t account for the passage of time, adding they are invalidated by the court “a little less than 50 percent of the time. But it’s better than having no document.”
If the prenup gets tossed out in court, then “the laws of the jurisdiction apply, which in this case is the state of California, meaning community property laws take over.”
Persons who would like to discuss any aspect of family law can phone Law and Mediation Offices of Elizabeth Yang at (877) 492-6452 or log onto www.yanglawoffices.com.