Once a decision is made to create an agreement as to how to handle the property owned and attained by a couple once married, a further series of decisions are required to determine precisely what is to be owned jointly, what is to be kept separate, how to keep track of what is what, and what to do in the event of death, disability, etc.

The outline below is a guide to the decisions to be confronted and to be discussed between the couple, with independent legal counsel for each prospective spouse and with experienced accountants, since there are also tax ramifications. It is presumed that competent legal advice is being obtained independently for each prospective spouse and that the articles on Prenuptial Agreements, Community Property and Community Property Debts have been already reviewed.

Addressing the questions below are essential for a legally binding and appropriate Prenuptial Agreement in California and, indeed, should be addressed by any couple planning on joining their lives together. There are no “right” or “wrong” answers. Each couple has its own plans and challenges and have their own separate obligations and family connections. What is appropriate for a couple with few assets and in their twenties marrying may be completely wrong for a couple in their fifties on their third marriage with each having children in college and substantial child support payments imposed by law, etc.

This will not be an easy discussion for most couples. There will be a inclination to procrastinate and possibly to evade the tough decisions or to become depressed as the possibilities of death, disability, divorce, etc. are confronted and planned in advance. One client likened it to buying a cemetery plot while in your thirties.

But another client put it well. She stated that before things can possibly go wrong is the time to plan for events if they do go wrong. The choice is between your own decisions now as to what is best or a decision possibly made by a judge. And who knows what is best for you better than yourself?


The Issues to Consider:


(A) Standard Premarital (Prenuptial) Agreement.

(B) Separate Property Agreement (allocating what is separate property of the parties before marriage.).

(C) Spousal Waiver Agreement (waiving certain rights that spouses have once married.

(D) Living Trust to hold separate property so no commingling can occur.



(A) Complete written disclosure of separate property owned.

(B) Includes a brief description of each property and estimated value.

(C) Confirmation that all “rents, income, issue and profits” from your separate property are to remain your separate property. This requires maintenance of separate investment and bank accounts and perhaps use of a Living Trust.

(D) Provision specifying the separate property ownership of future gifts and inheritances that you will receive from family members.



(A) Are your wages, commissions, fees and/or other forms of compensation, that are acquired by you during marriage community property or separate property?

(B) Are your employee benefits, such as, deferred compensation, pension, 401K plans, stock options, etc. community or separate property?

(C) Is it going to be the same for your prospective spouse?

(D) How are earnings to be used to pay down already existing debts of one spouse or the other? Will earnings, if community, only be used for community obligations? How will the assets of one spouse be protected from the debts of the other both existing and in the future?



(A) Will there be one or more joint household accounts established in both names to pay ordinary living expenses? What expenses will be covered?

(B) How will the household account(s) be funded?

(C) Is it intended that the household accounts will be community property even though one of you deposits separate property in the household account? Does the deposit automatically create community and will all things purchased from it become community?

(D) Can the household accounts be used for joint credit card payments?

(E) Can the household accounts be used to acquire jointly owned property and/or jointly owned investments?



(A) If you use your separate property funds to buy something jointly with your spouse, is it a gift or a loan to the community?

(B) If it is a loan to the community, how and when does it get repaid? Is it to be repaid with or without interest? If not a loan, will one spouse own more of the asset than the other and how computed for future appreciation and expenses of upkeep?

(C) Will there be a different plan in the agreement for a primary residence acquired with some of, or all, your separate funds? Will the family home be treated differently than other assets? How?



(A) Do you want a waiver of spousal support, if your marriage does not work out? If so, the California Family Code Section sets forth the Family Court’s criteria to enforce the waiver and should be fully understood.

(B) If you want a waiver of spousal support, is this waiver to be for the entire length of the marriage or only if the dissolution is during the first (X) period of years of the marriage? Many couples conclude that after five or ten years, spousal support should be awarded, as well as certain minimum inheritance protections for the surviving spouse.



(A) Normally, wedding and anniversary gifts are marital or community property. Is this your desire? Does this include the engagement and wedding rings? Or, is one or both of them intended to be his or her separate property?

(B) Normally, birthday gifts are the separate property of the recipient. Is this your desire? Are there any exceptions, such as, a gift in excess of $ (X) dollars is intended to be community property, unless there is a writing at the time of the gift to the contrary.

(C) Normally, all personal motor vehicles for the family are community property. Is this your desire? If not, does the title on the registration govern the ownership? How about boats and airplanes?



(A) Often, when one spouse has a significant financial statement while the other has a modest statement, the one with the significant statement provides some minimum death benefit to the other, such as, $ (X) which can be provided by bequest, insurance proceeds, retirement plan proceeds or property. Is this issue relevant to you and your prospective spouse? If so, is there some agreed minimum amount of death benefit that is to be provided for? Should it only vest after X years of marriage? Or if certain events have been completed (support of children through college, for instance)

(B) This type of death provision is also helpful to obtaining a finding that the waiver of spousal support was made for valid consideration. It also assures the spouse of modest means that he or she will have sufficient funds to live on after the other spouse dies. A typical “waiting period” before this vests is three years but there is no hard or fast rule. Life insurance paid for by the spouse with the larger assets is also fairly typical, with an agreement to fund premiums for at least X period of time. Remember that premiums can increase with age unless the right policy is purchased.



It is important in California that each party has separate independent legal counsel who sign off on the agreement that they have reviewed the agreement with their clients and that the clients understand the terms of the agreement. Often, the spouse with significant assets provides the other spouse with a gift of funds to pay his or her attorney’s fees. If one spouse refuses to have separate counsel, clear warnings and recommendations to do so must be in the agreement and the enforceability of the agreement will not be as strong.



(A) You will have a choice annually whether or not you want to file joint United States income tax returns. The agreement will provide that your decision to file joint returns in any year is not intended to change the ownership of marital assets from either party’s separate property to community or marital property.

(B) Generally, the CPA prepares a worksheet for filing jointly and filing married but separate. Then, you decide which way you want to file your returns for that year. Since tax laws and income changes year to year, this will be an ongoing series of decisions for the couple.



There are several other standard provisions for whatever type of agreement you select. The foregoing introduces you to the main provisions that need to be discussed and agreed upon by both of you.

One strong recommendation: the sooner you do this, the better. Under the law, each of you must have seven days to review the agreement before you can sign it to have it be enforceable. The closer you are to the actual marriage, the greater the stress and tension and it can make the seven days harder and harder to accomplish.

More, the sooner it is over the sooner you can concentrate on the more positive aspects of the union. This may be necessary and sensible…but it is seldom enjoyable and never easy. Do it as soon as you can.



Article Categories