A premarital agreement (also known as a prenuptial agreement or prenup) is an agreement between future spouses around how they want to handle certain things, especially financially during their marriage and what would happen if the marriage were to end in divorce or death. Prenuptial agreements do tend to have a negative connotation and a stigma attached to them, which is part of the reason that we like to refer to them as premarital agreements instead. They can be a great way for you and your future spouse to discuss the important financial implications of getting married and put in place certain agreements in the unfortunate case that your marriage ends in divorce.
Premarital Agreements are like an Insurance Plan
Let’s look at a premarital agreement like insurance. Just like nobody plans on getting divorced, nobody plans on getting in an accident and having high medical bills, yet we still have insurance in case we do. I don’t think that my house will burn down, but you sure bet I have homeowners insurance in case it does happen. A premarital agreement is there IN CASE the marriage doesn’t work, and you end up needing to get divorced. I tell my clients that we’re doing this and then you’re going to put it away and plan on never looking at it again. But if you do need it the agreement details how you want to handle things in the unlikely case that you guys don’t agree and end up in a lengthy court battle. Now I often hear from people “well we wouldn’t be like that if we got divorced” but the truth of the matter is you just don’t know. While you can say that you would never take your spouse to court and would be reasonable you don’t know how you’d feel in that situation, especially if infidelity was involved. Would you still want to be nice and work with them, or would you be focused more on getting back at them?
You are Both in Control
If you do not sign a premarital agreement, the California Family Code and local laws will automatically govern your divorce. California is a community property state. That means each spouse automatically has a 50% interest in all assets acquired during the marriage. This includes any earned and even some unearned income, business earnings, retirement, and more. For some couples, this is perfectly acceptable. However, for couples that own businesses or have specific financial complications, this may be devastating. Without a prior agreement, you lose a lot of control over your divorce process. Your dissolution could turn into a long and costly battle. With a premarital agreement, you and your soon-to-be spouse can dictate exactly what you both want to happen if a divorce should occur.
Premarital Agreements Precede Happy Marriages
As I said before nobody gets married planning to get divorced, but the reality is that while the divorce rate has been slightly decreasing it can still happen. Now the divorce rate varies depending on so many different circumstances, such as where you live (in California, Orange County has one of the highest divorce rates), how old you are when you get married (the younger you are the higher likelihood of divorce) and whether it’s a first, second or even third marriage (the rate increases for each marriage with a whopping 75% of third marriages ending in divorce).
You might think I’m crazy for saying this but one of the advantages of a premarital agreement is that it precedes happy marriages and people are less likely to get divorced if they have a premarital agreement than if they don’t. There are many reasons behind this but because you’re establishing a framework for problem-solving that will form a solid and secure basis for your future marriage, you’re less likely to end up divorcing. Working on a premarital agreement with your future spouse, especially through mediation, forces you to communicate about things that you may not have known about the other person.
Talking about money and finances is one of the most difficult conversations not just in marriages but amongst friends as well. Having a neutral third party that can help you open the door makes it far easier to continue this dialogue while married. Contact West Coast Family Mediation Center at (858) 736-2411 today!
by: Amanda Singer