People contemplating marriage or domestic partnership should realize that a vast body of law governs these relationships. The statutory basis in California is the Family Code. It is rooted in Spanish community property law, which was followed in the Southwest for centuries before it became part of the United States.
Community property law treats marriage as a partnership, while English common law, followed east of the Mississippi, treats marriage essentially as a husband’s sole proprietorship. Community property rules have gradually become the norm throughout the United States.
The basis of community property law is the idea that the parties to a marriage are equal owners of all the property they acquire while married, as if their marriage were a general partnership. This principle includes both tangible and intangible property, which causes results that divorcing parties often find difficult to accept. For example, half of every dollar earned by either of the parties during their marriage belongs to the other party as well -- even if one party worked during the marriage and the other did not. Similarly, the skill and effort of each party is treated as a community asset. So, if one party owned a business prior to marriage the business continues to be that party’s separate property -- but if it increases in value during the marriage due to the efforts of either party, the increase is considered community property.
The primary objective of a premarital agreement or ‘prenup’ is to avoid the application of community property rules. Typical prenup provisions prevent one party’s acquisition of any interest in the other’s earnings, or prevent one party’s acquisition of any interest in a business or other asset either owned by the other party before marriage or acquired during marriage in that party’s name.
One of the most difficult problems with prenups is spousal support. Contrary to relatively recent conventional wisdom, either or both parties to a prenup may forgo or limit the right to spousal support after the marriage fails. However, the California Legislature has mandated that a party willing to waive spousal support cannot do so unless he or she is represented by an attorney at the time the prenup is made.
When a marriage fails, a prenup nearly always disadvantages one party over the other. As a result, a prenup will almost always be challenged and litigated. Fortunately the legal profession has devised stratagems to make prenups bulletproof. Some of these may seem overly elaborate and expensive, but, if a premarital agreement is truly worth doing, it is worth doing right.If you are contemplating marriage and feel uncomfortable with the likely application of community property rules to your financial situation, you would be well-advised to consult an attorney who specializes in family law and has experience in drawing premarital agreements.
San Diego Family Law Attorney Stanley D. Prowse is a California Certified Family Law Specialist. We welcome your legal inquiries.