In regards to dividing marital property during a divorce, each state has enacted its own laws about property division. In the United States, we have two methods of dividing marital property: community property and equitable division. California is one of nine states that follows the community property method of distribution.
Under the community property model, each spouse is entitled to half of the community property, otherwise known as “marital property” acquired during the marriage.
Can spouses deviate from this automatic 50/50 split? Yes, of course they can but if they cannot agree on a settlement, the judge presiding over their case will have to decide for them. This is less than ideal; spouses almost always prefer to have a say in how their hard-earned assets are divided in a divorce.
For example, let’s say that a couple was married for eight years. In the absence of a prenuptial agreement, each spouse would be automatically entitled to half of all income earned and all assets acquired during the 8-year marriage, providing such property was not classified as “separate property.”
Even if only one spouse earned the money, or even if an asset, such as a home or a bank account was in one spouse’s name, the other spouse would still have a claim to 50% of the asset.
As a general rule, separate property includes all assets acquired before the marriage, gifts and inheritances acquired before or during the marriage, and personal injury settlements. Separate property is not subject to division.
No prenup? A postnuptial agreement may help.
While spouses in California are entitled to half of the marital assets in a divorce, a prenuptial agreement can change all of that. For instance, spouses can draw up a prenuptial agreement that states that all income and assets acquired by the spouses during the marriage shall remain separate, and that upon a divorce, each spouse keeps what they earned or acquired during the marriage.
A prenuptial agreement has a lot of flexibility so long as the terms are not immoral or unconscionable. If such an agreement would leave one spouse penniless, it would be nearly impossible to enforce.
Sometimes spouses are so in love they believe that a prenuptial agreement to be unromantic. They get married and then later on, they regret not creating a prenup, or they realize that they need one. This change of heart can occur for a variety of reasons, such as:
- The spouse starts or buys a successful business
- The spouse becomes financially successful
- The spouse realizes the need to protect their assets
- The marriage becomes shaky at best
- Both spouses take different career paths and become successful
If any of the above examples sound familiar and you do not have a prenuptial agreement, you may want to consider a postnuptial agreement, which is essentially the same as a prenuptial agreement, except for the fact that it is created after the marriage has taken place.
If you never created a prenuptial agreement, it’s not too late. A postnuptial agreement can address your concerns and put your mind at ease.
Whatever your personal reasons are for drafting a postnup, you should explore your options with our board certified family law specialist. Call today for a confidential consultation!