A frequent question that I get is: “Should I / we have a Premarital Agreement?” or “Should we have a Postmarital Agreement?” The simple answer is: “You already do!” Everyone who is contemplating marriage and everyone who is already married has one or the other. Here in California, we call it the California Family Law Code. The Family Code and related provisions in other California codes govern the relationships between you and your soon-to-be spouse, or you and your spouse.
There are differences. I think that the difference that may be most important is that, once married, you have a very high fiduciary duty to each other, to do the very best you can, to be honest, forthright, and totally transparent with your spouse. Before marriage, you do not have that same fiduciary duty. In creating a written agreement between you, there is the duty of fair dealing, a much lower legal and ethical standard.
Why Have a Premarital Agreement?
There is a Premarital Agreement law in California which governs the creation of Premarital Agreements. A lot of times, folks really want to be able to change the defaults that the Family Code provides. Anything you own before marriage is your separate property. As you are planning your life together, maybe you want to change separate property into jointly owned property. Possibly, you want to ensure that your separate property stays separate, or you might want to keep some or all of your earnings as your separate property. You can do all these things and even more.
I find that one of the real benefits of a Premarital Agreement is that it simply gets you thinking about finances. It is a wonderful world that you live in before you get married. It is a dream, and it is delightful, and nothing should get in the way of enjoying that time, enjoy planning the wedding, and enjoy the wedding itself. Too often, people do not think about the financial significance of life together after the wedding. Developing a Premarital Agreement gives you an opportunity to talk to each other about your expectations around money. Is one of you a “Spender” and one of you a “Saver”? Are both of you spenders or both savers? What is your view towards making plans for college education for your kids, if you are going to have kids? What about retirement planning? When we are working together, we will go through a short booklet that I have prepared that outlines many of the considerations that you and your soon-to-be spouse will want to discuss.
Regardless of your age, your family circumstances, and your finances, it could be important and helpful to have a Premarital Agreement.
Premarital Agreements – Plan Ahead
Do not try to do a Premarital Agreement two weeks before the wedding. Generally, you should start this process at least 6 months before the wedding. This allows plenty of time to explore your hopes and concerns and to still enjoy the fun parts of your planning and courtship.
To have an effective Premarital Agreement, both of you must have lawyers. Your choice of lawyers and of HOW you are going to negotiate your Premarital Agreement is critical. Work out the terms of the Premarital Agreement together. I recommend working with lawyers who regularly work in the mediation or collaborative community. They already are trained in and understand working together for the mutual benefit of both of you. A great way to create conflict and tension between you, and often between your families, is to have one of your lawyers create the draft Premarital Agreement and present it to the other. Wouldn’t it be better to start your life together by creating an agreement together? What neither of you need or want is to have an adversarial negotiation driven by lawyers. My approach to creating a Premarital Agreement is to work with my legal colleague and to listen to both of you talk about why it’s important to have a Premarital Agreement and what you want to have in it. It’s often very helpful to involve other professional disciplines to assist with positive communications and understanding finances.
Why Have a Postmarital Agreement?
There are a lot of reasons why folks would have a Postmarital Agreement (often simply called a “Marital Agreement.”) It could be that your finances have changed in some material way, maybe by an inheritance, maybe by getting an incredible job and significantly more earnings. It could also be pre-divorce planning. I have had folks that are thinking they may get divorced. They are not sure, and they feel that a big piece of their tension is relative to financial matters. They want to have something that spells out their mutual financial obligations in a way that works for them. Often, just working through the terms of a Postmarital Agreement leads to clearer expectations, stability in the marriage, and a reduction of the tensions that were infecting their relationship.
A Postmarital Agreement is often done as part of estate planning. Perhaps when you got married, you did not pay much attention to how you acquired the property. Maybe you had property before your marriage or received an inheritance after your marriage and you want to undo the commingling or you want to make sure that inheritance gets passed on to your kids or, more commonly, to your kids of a prior relationship. These and other things can be done in a Postmarital Agreement.
