“Can We Opt Out of California’s Community Property Laws?”

Sometimes people may NOT want California’s community property laws to apply to their marriage.  Generally speaking, property acquired during the marriage is presumed to be community property.  “Property” includes “assets” and “debts.”  If property is considered to be community in nature, if there is later a divorce or a legal separation, community property is equally divided between the spouses.

There are many reasons for people to want to avoid the application of California community property laws.  One example is if one spouse comes into the marriage with an already significantly high amount of wealth and the other spouse has little or no wealth.  In this case, the wealthy spouse may want to ensure that he or she will retain his or her wealth as separate property.

Another example is where “older” previously divorced adults with children are marrying again.  In this example, a parent may have saved a significant amount of money for the benefit of a child and wants to ensure that the other spouse will not be able to invade this savings.

Regardless of the reason to want to avoid California’s community property laws, there is an opt-out option.  If the parties are not yet married, the opt-out tool is called a “premarital agreement,” also known as a “prenuptial agreement.”  If the parties have already married, the opt-out tool is called a “marital agreement,” also known as a “antenuptial agreement.”

Whether you are potentially considering a premarital agreement or a marital agreement, there are certain rules that have to be followed.  Otherwise, the agreements may not be enforceable, and you don’t want to spend a lot of time and money on a worthless piece of paper.

One of the rules is that there is no duress or pressure on either party.  If the procedure is too rushed, for example, there could be a perception of duress.  Therefore, regarding premarital agreements, you want to draft a premarital agreement well in advance.  Do it before you send out wedding invitations and before wedding plans are underway.

There are many other rules to follow and potential traps for the unwary.  Therefore, if you are considering a premarital or marital agreement, get educated early as to what the process entails.

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