Pre-Marital and Co-Habitation Agreements
Are you considering marriage? Perhaps you’ve already been married and you’ve been through the divorce process, and for the first time in a while, things are looking up. Maybe you’ve started a new business, or you’ve made significant career advances. Perhaps you’ve finally finished paying off your last child or spousal support obligation, and financial recovery is on the horizon. Along with new beginnings come new relationships. These can be exciting, but when they turn from casual fun to serious commitment, you may experience anxiety riding on the coattails of your happiness.
If you are about to be married for the first time, there are important considerations, one of which is whether or not to enter into a pre-nuptial agreement. If you’re one of the many people in a post-divorce relationship, there is good reason to proceed with caution. The downside to remarriage is that post-divorce relationships have a higher failure rate than first marriages, and the odds are typically against those in second, third and fourth endeavors.
Pre-Marital (known as pre-nuptial) agreements are contracts made before marriage, outlining how a couple’s financial affairs will be handled during the marriage, and how assets will be divided in the event of a divorce. Pre-nups are no longer just for billionaires and celebrities.
A pre-nuptial agreement is something to seriously consider, especially when:
- You or your partner earn significantly more than the other;
- You own your own business;
- You have significant pre-marital assets (real estate, pensions, investments, etc.);
- You have children from prior relationships;
- You expect to receive a large inheritance;
- Your fiancé has had multiple former marriages;
- You have established brand name recognition in your industry;
- You have a high likelihood of future success.
Many people are afraid to bring up the issue of pre-nup to their significant other. But timing is everything. Waiting until a week before the wedding to bring it up is well…. not the way to go. In fact, you’ll be too late – there are serious time considerations in drafting and entering into pre-nuptial agreements. Give yourself and your new spouse at least 90 days before the wedding to work out the details.
If your relationship is moving into the serious zone, before anyone starts talking about fantasy weddings and dreamy honeymoons, make your monetary expectations clear, early on. Some people think pre-nups are “unromantic” and indicate a lack of trust. Quite to the contrary, talking about a pre-nup before or at the time of engagement actually opens up candid dialogue about each other’s expectations and critical views on money management. Where one spouse intends to be a “work-at-home” spouse, a pre-nup can actually define the value of the stay-home spouse’s work, and provide for compensation to that spouse should the marriage terminate. Pre-nups also require full financial transparency. The pre-nup process requires that you and your fiancé disclose to one another each one’s assets and debts. That takes a lot of trust – particularly if you’re a very private individual!
If you are looking to “do marriage right” and get the proper agreements in place, your Bennett Family Law attorneys are keenly skilled at helping you and your fiancé navigate those important discussions, and decide on the terms for a pre-nuptial agreement tailored to your unique circumstances.
What About Co-Habitation?
At Bennett Family Law, we often see older people after the death of a spouse or a divorce, decide to live with a new partner instead of embarking on a second or third marriage. Regardless of the reasons for co-habitating instead of re-marriage, like a pre-nup, a written co-habitation agreement is the smart way to go. California does not recognize “common law marriages” (the old concept that if you live together long enough, eventually you’ll be considered married in the eyes of the law). Co-habitation agreements in California are governed by contract law and may give rise to other rights in the civil courts. If drafted properly, co-habitation agreements are enforceable like any other written contract. Many people will live together, split-up, then claim they have verbal contracts regarding property and entitlement to support. Verbal contracts are tough to prove and give rise to ambiguity and uncertainty. The better tool is a written agreement where all expectations are spelled out in black and white, and where it is clearly stated that there shall be no other agreements or changes, unless put in writing and signed by both parties.
Whether it be a pre-nuptial agreement, post-nuptial or a co-habitation agreement, let’s get ready for a successful marriage or serious partner relationship!