What is a Prenuptial Agreement?
Largely, a prenuptial agreement defines what property will be owned by each party should they later divorce. However, this is not the only thing they provide. They also address maintenance obligations (i.e., alimony) and even the custody of children. If one of the parties is waiving the right to spousal support, then it goes without saying that they would want to have certain protections for the future. This would mean that the lawyer should be thinking beyond mere property division.
For a prenuptial agreement to be enforceable, it has to be proper in three ways: 1) both parties must have had an attorney defend their interests or there must be an extensive and correct waiver of the right to legal counsel, 2) it must be entered into voluntarily and without duress , and 3) be fair and reasonable at the time of execution.
Unfortunately, prenuptial agreements come with a stereotype. The idea is one person is wealthy and the second must sign a prenuptial agreement to keep the wealth from being taken away in the event of a divorce. Or, that it is terribly unfair. This could not be farther from the truth. A prenuptial agreement can be favorable to the wealthier person. It can also be favorable to the other because it provides a framework for what happens in the event of a divorce. It is vitally important to understand how these agreements work. Most importantly, a prenuptial agreement should be looked upon as a tool to make the life of both parties easier if the relationship ever ends.
Hiring a Los Angeles Prenuptial Agreement Lawyer
Hiring an experienced Los Angeles Prenuptial Agreement Lawyer is essential to drafting and reviewing a prenuptial agreement that meets your needs and protects your interests. While it’s certainly not illegal to draft a prenuptial agreement without the benefit of a lawyer, it’s ill-advised. A skilled attorney will ensure that both parties have a fair and equitable understanding of all provisions and the potential long-term implications of those provisions. A prenup is a binding legal agreement, but what most clients do not realize is that if a particular provision is found to be unfair or unenforceable, the entire agreement could be found to be invalid. So, as a skilled prenuptial agreement attorney in Los Angeles, my job is to draft and review the document and help our client get the best deal possible—both financially and with regard to protecting their interests—so that the prenup is not found invalid later. Regardless of your gender, age, or annual salary, hiring a skilled Los Angeles divorce attorney to help you get over the hump may be all you need to ensure you receive the protection you deserve.
Considerations When Drafting a Prenuptial Agreement in California
When it comes to prenuptial agreements in California, there are a number of key considerations that come into play. California is community property state, which means that any income or property acquired during the marriage is considered to be jointly owned by both spouses. This can be an issue when one spouse earns significantly more income during the marriage, and also when one spouse is bringing significant assets into the marriage. A prenuptial agreement can protect both spouses with regard to these issues.
In addition to property, California law also presumes that one spouse will support the other after divorce. This means that if one spouse has been out of the workforce for a period of time to raise children, they could be entitled to spousal support, or alimony, when the marriage ends.
Another consideration in California is that the ownership of business interests can become murky if both spouses are involved in the business. This can create a situation where it is not clear who owns what percentage of the business and who gets what in the event of a divorce.
With a comprehensive prenuptial agreement, any of these areas can be addressed before a marriage takes place. Prenuptial agreements are not necessarily unenforceable in California if they are unfair. However, there are a few things that can make a prenuptial agreement unenforceable.
How to Locate a Los Angeles Prenuptial Agreement Attorney
Finding an experienced and reputable prenuptial agreement lawyer in Los Angeles will take some careful research. Since few people start the search for a prenuptial counselor until they are in a committed relationship, it is best to have a legal professional in mind long before the wedding plans are in full swing. Your lawyer, mandated by your relationship to collect critical financial information, must be a trusted ally as you begin to open your finances up to someone else. Since prenuptial agreements can have major ramifications for both you and your future spouse, you will want to choose your lawyer with care.
The process starts with setting up an initial consultation. Most law firms offer an initial consultation free of charge. For a possible $100 fee, or even less, you can sit down with your prospective attorney and discuss the details of your relationship and your potential prenuptial agreement. Be sure to ask what the initial fee for consulting covers. Will it be done over the phone or in a face-to-face meeting? Will you receive paperwork to fill out ahead of time, or will you describe everything to the attorney in person and she will take notes? If the lawyer requires you to fill out a questionnaire in advance and return it to her, there may be some added costs involved, as she will need to review your responses before the meeting, sometimes even hire a paralegal to do the paperwork. You can weed out the lawyers you don’t want to work with just by the way you are treated on the phone. If the secretary and the attorney seem too busy to help you find answers, you will probably be fighting an uphill battle with that firm over the course of your work together.
Next, consider the attorney herself. Since the law firm is going to do a lot of their work on your behalf, you need to feel comfortable with all the staff members that will be involved. Check credentials, make sure your attorney knows how the law is currently being practiced in California, and see if she has any testimonials. Inquire about a potential billable hours schedule, so you know what to expect. A good attorney can explain all the details you need to know in a way that is free of legal jargon. She is there to work for you, not the other way around.
Take notes during the first few meetings and don’t be afraid to ask a lot of questions. Make sure you understand the answers, and if any of them don’t make sense, ask for more clarification. The attorney should be able to break down the various components of the prenuptial agreement process and relate that information to how your case will be handled. Take your time in finding the right attorney. Your relationship is too important to not feel secure in the process.
Cost of a Los Angeles Prenuptial Agreement Lawyer
A typical agreement for a lawyer to prepare a prenuptial agreement ranges from $3,800 to $12,000. Again, it depends upon the complexity of the prenup and whether or not you require both a review and a negotiation or if you can handle one or the other. Sometimes, due to power dynamics, the parties will end up in a negotiation. In that case, the more complex the assets and income the party possesses, the more the negotiation can last. It is important that to understand that attorneys do not work for free. The cost associated with the lateral hires and associates often require a high billing rate. It is important to choose a lawyer who has experience with q prenuptial agreement. There is little room for "on-the-job" training during a prenuptial agreement case. It is important that your lawyer understand when he or she needs to get out of the way for the transaction attorney as opposed to weighing in as a consultant/economic expert. This will help avoid any unnecessary billing. If you are talking about a simple prenup and your lawyer bills $700/hour , it’s probably costing you around $10,000 – $15,000. Most people are not aware of these rates. You want to shop a ‘deal’ and find an attorney who has a good reputation in the community. Some clients hire an inexperienced associate at the firm for a reduced rate and that associate is not experienced with all of the specialty issues inherent in a prenuptial agreement. A fee that sounds too low is just as concerning as a fee that sounds too high.
What to Anticipate with a California Prenuptial Agreement
In general, a prenuptial agreement lawyer in Los Angeles will explain the process as follows: Once the couple has decided to move forward, both parties will have to provide the prenuptial agreement lawyer with documentation of their assets and liabilities, including property titles, bank statements, income sources, information on personal and real property, and their credit cards and debts. This financial disclosure is crucial for the creation of the document to be valid. This disclosure does not include future assets, such as anticipated inheritances.
The terms of the document will be negotiated, whether among the parties directly or through their lawyers. While some provisions of the agreement are negotiable, others are strictly governed by law, such as waivers of spousal or child support. A good prenuptial agreement lawyer will make sure that such terms comply with the laws of the jurisdiction.
In most cases, after the contract has been signed, the agreement can only be amended via a new writing that both parties sign. There are limited circumstances under which a prenuptial agreement may be challenged in court after a marriage has taken place, such as upon a showing that the agreement was entered into involuntarily.
Typical Terms Included in a Prenuptial Agreement
A carefully crafted prenuptial agreement can address many concerns that quickly arise in the event of a divorce. For California residents, the following is a brief overview of some of the most commonly encountered clauses in prenuptial agreements and how they can be custom-tailored to uniquely fit your particular situation.
Characterization of Property: Many couples have children from previous relationships or marriages and often wish to define their rights with respect to those children. In general, a prenuptial agreement can classify property as being separate or community property, including how any increase or decrease in value may occur during the marriage. For example, a spouse may create a portion of his or her estate plan in reliance on the agreement and therefore should be able to include that property as a part of his or her gross estate without having to divide it.
Property Division: Many spouses want to know how the property will be divided in the event of death or divorce. The prenuptial agreement can address the issues of spousal support or also address how the debts of a spouse should be divided.
Sunset Provision: Couples often want the terms of a prenuptial agreement to expire after a certain period of time or after one party becomes ineligible for particular public assistance benefits. A sunset clause avoids having the terms extended forever; however , California courts may be hesitant to enforce such provisions if a child is involved, or if the spouses were married for a long period and one spouse has become reliant on the other, thus creating an economic disadvantage.
Waiver of Spousal Rights: Each spouse may want to waive various statutory rights in the event of divorce, such as waiving the right to certain contractual benefits, interests from a trust, death benefits and retirement benefits.
Management of Future Property or Business: Spouses may have existing businesses or assets that they do not want to share with their spouse. Thus, a prenuptial agreement can define property as presumptively separate or deal with how to divide such property in the event of a divorce.
Relinquishing Rights to Spousal Support: Spousal support may be included in the terms of the prenuptial agreement. If one party makes significantly more than the other, waiving such support may be beneficial. However, a court will not uphold such a provision without considering the current circumstances.
Life Insurance Provisions: Couples may wish to use life insurance as a tool for asset protection purposes. For example, reducing the amount of life insurance a spouse gets through a divorce settlement if a life insurance policy is created or reduced in connection with the separation.