In May of 2011 former California Governor Arnold Schwarzenegger and his wife of 25 years, Maria Shriver, announced they were separating. According to a recent CNN article, the cause of their rift was a child fathered by Schwarzenegger as a result of an affair he had with a member of his household staff nearly 13 years earlier.

As soon as Schwarzenegger and Shriver announced their separation, the question on everybody’s mind was:  Did they have a premarital (prenuptial) agreement? The answer: nobody knows for sure. If they did not, then Schwarzenegger may be in some trouble when it comes time to divide the assets. According to news channel CNN’s report, “the statement of economic interests lists Shriver’s assets – stocks, real estate, and trust funds – as ‘separate property of the spouse.’”  Conversely, Schwarzenegger’s statement did not contain any separate property items. This means that upon division of the assets, Shriver could very well walk away with half of anything she and Schwarzenegger acquired while married, while items listed as her separate property will remain hers.

This leaves many people wondering: would a premarital agreement protect against situations like this? What can I include in my premarital agreement? These are important things to consider before determining whether a premarital agreement is right for you.

Premarital Agreements in California:

As discussed in this blog’s December 2010 post, “Prenuptial, or premarital, agreements allow couples to decide how property will be divided and/or spousal support paid should the marriage end. These agreements must be carefully drafted and comply with specific requirements in order to be enforceable.” Essentially, a premarital agreement is a contract, and is therefore governed mostly by the principles of contract law.

Many people wonder if there is anything that the law forbids them to include in a premarital agreement. For the most part, premarital agreements can include practically anything, from division of property upon divorce to financial responsibilities during the marriage. However, there are certain provisions that the law says cannot be included, and that are unenforceable if they are included.

Every jurisdiction is different with respect to what may and may not be included in a premarital agreement, but in California, a premarital agreement cannot waive either spouse’s rights to child custody or child support.  The agreement also cannot require either spouse to do anything illegal or unconscionable.  It is legal, however, for a premarital agreements to provide that the entire agreement is unenforceable after a certain number of years of marriage, or to provide for a change in the division of assets as the marriage continues over the years.

No matter how you approach your premarital agreement, it is crucial to have adequate legal representation to prepare it and to advise you of the risks you are undertaking and the benefits you will receive.  For preparation of a premarital agreement, or advice on an agreement that has been prepared by a lawyer representing the person you intend to marry, please contact one of our skilled divorce, support, and custody attorneys here at San Diego Law Firm today. Call (619) 794-0243 to schedule an appointment. We look forward to helping you.

California is a community property state.  This means that property acquired during a marriage belongs equally to both spouses.  However, couples can modify their property rights by contractual agreement.  Prenuptial, or premarital, agreements allow couples to decide how property will be divided and/or spousal support paid should the marriage end.  These agreements must be carefully drafted and comply with specific requirements in order to be enforceable.

It is becoming increasingly common for unmarried couples who share a home and expenses to enter into co-habitation agreements.  These agreements govern how expenses will be shared during co-habitation and how property will be divided should the relationship end.  Co-habitation agreements are becoming more popular because many couples now wait until they are older to get married.  By that time, each person often has more assets to bring to the co-habitation arrangement.  Many couples prefer to make an agreement in advance in order to minimize disputes if the relationship ends.

If you are considering a prenuptial or co-habitation agreement, it is important to consult with an attorney who is experienced in drafting these kinds of agreements and who can make sure that your agreement complies fully with all legal requirements.  The attorneys at San Diego Law Firm understand the law regarding property shared by couples in all types of domestic relationships, and can prepare an agreement that is tailored to your specific situation.  Please call San Diego Law Firm at 619-794-0243 to schedule your consultation with an experienced family law attorney.

Grounds for Challenging a Prenuptial Agreement

The method for challenging a prenuptial is to demonstrate that it is defective in some manner and therefore should not be enforced.  This is never an easy undertaking, because much of the evidence will be disputed testimony about what each spouse said or did, or did not say or do – facts that are very difficult to establish without other supporting evidence.  The dispute typically centers on whether the prenuptial agreement was revoked, amended, or invalid from the start because it was entered into as a result of fraud or duress.

For example, fraud might be claimed if one party or the other failed to fully disclose their assets.  Duress might be claimed where one party had exerted emotional pressure on the other to sign the agreement.  In any such situation, a court will make the final decision based on all of the facts.

The Infamous Bonds Case

Barry Bonds, the former major league baseball player, once stood to lose part of a $44 million dollar contract in his divorce.  During the divorce proceeding, his soon-to-be ex-wife argued that she signed the prenuptial agreement under duress, as evidenced by the fact that she signed it just one day before the wedding.

In some situations, a last-minute signing might be evidence that threats were made by the more wealthy party to embarrass the other party by calling off the wedding at the last minute if the agreement was not signed.  However, in the Bonds case, the judge ultimately determined that the wife had actually had time to fully investigate the agreement before the last-minute signing, and so the agreement there was free from duress and enforceable.

The situation of the Bonds spouses illustrates why couples with high income or substantial assets should begin the process of discussing and drafting of the prenuptial agreement with their attorneys months in advance of the wedding. 

Call San Diego Law Firm for Skilled Help with Prenuptial Agreements

The team of experienced family law attorneys at San Diego Law Firm can assist you with all aspects of prenuptial agreements.  We can draft them to fit your specific situation, review agreements drafted by another attorney,  advise you on whether or not an agreement is likely to be enforceable, advise you on whether to sign an agreement or negotiate on your behalf, and assist you in either challenging or defending against a challenge to a prenuptial agreement.  Please contact us at 619-794-0243 for more information or an appointment.

What happens if one spouse keeps the house?

Option 1: The Buyout

If one of you does keep the home, then you’ll have to buy the other spouse out.  To buy out your spouse’s share, you might even things out by making trade-offs.  Often, the spouse keeping the house will give up a share in other community property with equal value.  As with your other assets, getting an accurate appraisal of the property’s value is critical.

Option 2: Sell Later

You may both agree (or the court could decide) to let one spouse continue living in the home, but only for a set period of time.  For example, the court might let one spouse stay in the property while the kids are still minors and living in the home.  The court will often require that spouse to pay the mortgage and related expenses.  When the house is later sold, the proceeds will be divided.  If your ex-spouse continues living in the home, then as your divorce lawyer we’ll seek important protections for you.

Before going either route, remember that by keeping the family home, you need to be sure you’ll be able to pay for the house and expenses after the divorce.  It’s crucial for the spouse who’s not keeping the home to require the other spouse to refinance under his or her name only.

Should you both sell the home, instead?

For many, a better option is to sell the house and split the proceeds.  According to a CBS Moneywatch.com blog, this seems to be the route taken by Sandra Bullock, who’s recently filed for divorce and has already put the Southern California family home up for sale. 

When a divorcing couple has kids together, it’s common for the parent who will spend the most time with the kids to want to keep the house.  In any event, you shouldn’t automatically decide to try to hang on to the house.  It may not be your best option financially or strategically.  What’s more, you may be better off getting a fresh start in a new home that’s not tied down with old memories.

What if the house can’t be sold?

Sometimes, it’s not possible to sell the house.  It may be because of the real estate market, and/or because you don’t have any equity in the house.  This happens when the house is worth less than what’s owed on it due to the mortgage, secured lines of credit, and so on.  In these situations, we’ll coordinate with other professionals to find you the best options.  At times, this could involve bankruptcy.  

What if one spouse put their own money into the home?

In California, most property you obtain while you’re married is called “community property.”  Identifying what’s community and what’s separate can get tricky when community and separate assets are mixed.  For example, a common scenario involves a spouse who used pre-marriage savings as a down payment on the family home.  We’ll examine your situation, because if this can be proven, a spouse might be entitled to a reimbursement. 

Get skilled legal help in planning your divorce settlement

If you and your spouse can’t come to a fair agreement in writing about what to do with the home, or can’t agree on its value, then the court will decide.  The same is true of vacation homes, other real estate, and your other assets.  We’ll always promote your best interests when negotiating with your spouse or advocating for you in court, and make sure you’re well informed of your options.  Contact your San Diego Law Firm divorce attorney at (619) 794-0243.

Even though California did away with common law marriage, couples who live together may still have rights to financial support and property division as if they had been legally married, but only under strict circumstances.  In these cases, if one or both persons in the relationship had a reasonable and good faith belief that they had entered into a valid marriage, but it turned out the marriage was void, then that person can be considered a “putative spouse.”  To be given the status of a putative spouse, it’s legally not enough to say that you simply believed you had a common law marriage.  Instead, the couple must have actually gone through the motions to get married, yet had something go wrong when trying to comply with the legal requirements for marriage (often this happens when one person was in a prior marriage and mistakenly thought that he or she was legally divorced).  Not only that, but this good faith belief that you’re married must continue throughout the marriage, if you find out that the marriage is invalid, then you lose putative status.  Recently, it was also established that these same principles can be applied to couples who were in an unregistered domestic partnership.  A person with putative spouse status will be entitled to share in property acquired during the invalid marriage or domestic partnership under our community property laws, and to any spousal support that’s required once the relationship is terminated.  A putative spouse may also have marital-type rights in other situations as well, such as workers compensation or retirement benefits.

A second category involves the rights of unwed couples who aren’t putative spouses (because they never tried to get married), but had an agreement to treat assets like community property or promised lifetime support, despite the fact that both partners knew they were not married.  Here, no one is entitled to support or property rights under California family law, but there can be rights created under the oral or written contract.  One person may have promised to provide support for the other that’s similar to spousal support (alimony), and this has come to be known as “palimony.”  These palimony actions started in the early 1970s after actor Lee Marvin (think The Dirty Dozen and Cat Ballou) broke up with his girlfriend Michelle Triola who he had lived with for several years.  After the break up, Triola took Marvin to court claiming that he had orally promised to financially support her for the rest of her life in exchange for her giving up her own acting career to take care of him.  Marvin denied he ever made that promise, and in the end, Triola lost her case, but in the process, the California Supreme Court had established the rights of unmarried cohabitants.  The problem for Triola, and many since, is that it can be very hard to prove the terms of an oral agreement.  For this reason, it’s important to put promises into writing and couples who live together without getting married or entering into a domestic partnership should be forewarned.  Many of these troublesome issues can be resolved with a written “cohabitation agreement” to help protect your interests if the relationship dissolves.  As the two of you contribute toward your financial future together, a cohabitation agreement can set out fair arrangements regarding property ownership and division, and any support, similar to how a prenuptial agreement works.  If you lived together before getting married, then both a civil palimony lawsuit and family court divorce (dissolution) action may be necessary, but note that palimony suits must be brought within a certain time period after the agreement is broken to prevent your claim from being barred.  Our skilled family law attorneys can prepare an effective and comprehensive cohabitation agreement, or pursue your rights and protect your assets in a putative spouse partition action or a palimony lawsuit.  To reach San Diego Law Firm, call (619) 794-0243.

Even if there aren’t any financial battles in your household, you may have other reasons for wanting a postnup.  Here are a few common reasons why couples get a marital agreement:

• To change the terms of a prenuptial agreement created before getting married
• To prevent your ownership in assets from being controlled by California’s community property laws
• To gift property to your spouse that would otherwise be only yours or shared by both of you
• If one or both of you has children from a prior marriage, to resolve inheritance concerns
• To account for significant changes in finances post-marriage, e.g. a spouse earned a degree, or put his or her career on hold to raise the kids

Not all marital agreements are created equal, and not all are valid under the law.  First and foremost, under California law, spouses are held to be in a fiduciary relationship with each other.  To be enforceable, a marital agreement will have to meet stricter standards than will a prenuptial (or premarital) agreement, as California’s family laws expressly prohibit a spouse from taking any unfair advantage of the other.  Among your many obligations is the duty to fully disclose all assets and their value, as well as to disclose all income, liabilities, and any rights that will be given up if a marital agreement is signed. 

As with any contract, a marital agreement can’t violate public policy, such as by taking away the family court’s ultimate authority to decide child support and custody matters.  Forcing a spouse to sign under duress, or as a result of fraud or undue influence are other clear examples of conduct that will make the contract unenforceable.  Also note that different California and federal laws apply to different types of transactions that may be covered by your marital agreement (e.g. changing rights to pension benefits or to inheritance and similar rights).  These laws must be complied with in order for your plans to be enforceable.  When writing your marital agreement, we’ll take precautions throughout the process to strengthen the contract, and to help ensure that your interests have been handled fairly.  Get your financial goals in order with a marital agreement by contacting San Diego Law Firm’s family law attorneys at (619) 794-0243.

A Familyresource.com article provides guidance on how to “be smart about time apart,” discussing the different reasons couples choose to separate and how to handle the transition period. If you and your spouse decide to end the relationship, you may choose to legally separate instead of divorce for practical reasons, since to get a divorce in California (called “dissolution”) you have to meet a residency requirement that doesn’t apply to legal separation. Other times, it’s seen as an easier transition than divorce, while for some legal separation is elected for religious reasons.

Our San Diego attorneys are here to advise and protect your best interests throughout the legal separation process, both in court and through negotiations. If you’ve decided to legally separate and later choose to divorce, we’ll file the necessary legal papers with the court to modify the separation, and seek to change any other orders when needed. To reach us at San Diego Law Firm, call (619) 794-0243.

Hollywood prenups aside, a premarital agreement is a smart idea for many engaged San Diego couples, including professionals or people who have been married previously.  With a premarital agreement, you (instead of the State of California) decide together how you’ll want to divide assets in the event of divorce, and also identify who can sell or encumber property during the marriage.  In his Nola.com blog, certified financial planner John Gin advises that couples get off to a strong start by discussing current and future finances before getting married, and cautions on the added importance of this talk if either of you have been married before or have kids.  In these cases, a premarital agreement not only protects your assets, but helps you to better provide for your children’s future.

As experienced San Diego attorneys, we’re able to create a premarital agreement that is fair and reflects your financial planning goals, and carefully abides by California law to help ensure your wishes will be upheld in court.  Also be sure to create or update your will and living trust to fit the new circumstances.  Take the right steps now as you get ready to begin your marriage, and contact San Diego Law Firm at (619) 794-0243.