Estate planning is not usually the first thing that comes to mind for those about to enter into a marriage, but planning out financial matters ahead of time can have a positive impact on a marriage. Pre and post marital agreements can clearly define which assets are separate property and which are “community property.” There are only nine states that recognize marital “community property” as a legal category, and California is among them.
It is also important to understand the difference between “jointly owning” a property and “owning a half interest” in a property. Each spouse owns 50 percent of all community property, but each owns 100 perecent of their separate property. Assets acquired after a prenuptial agreement is signed are dealt with differently. Income is community property, but certain gifts and inheritances are given a separate property status. No one is required to leave their half of community property or separate property to the other spouse in a will. Premarital agreements speed up and simplify dealings with the IRS after the death or divorce of one’s spouse. They can also clarify who owns what, and prevent delays in distribution of trust property.
Another option many married people seldom think about is a postnuptial agreement. The difference between a pre and postnuptial agreement is not in either purpose or structure, but rather when the agreement is signed. Put simply, prenuptials are agreed to before marriage, while postnuptials are signed after marriage. Either way, it is typically required that they be in writing, be signed by both parties, and be duly notarized. Full disclosure of all assets by both parties is a major requirement affecting the validity of any pre or postnuptials. Any attempt to threaten, force, or deceive the other spouse into signing such an agreement would also void it.
Especially in cases of second marriage and “blended” families, it is common to get a prenuptial agreement or postnuptial agreement to sort out how assets will be disposed of. The desire to ensure children from another marriage are included is often a major concern. For assistance with pre and postnuptial agreements and other aspects of estate planning in or around Orange County, California, contact Mortensen & Reinheimer, PC today at (714) 384-6053 or fill out the online request form to learn more or schedule a consultation.