For people marrying the first time, a prenup can keep one person’s  separate property out of the marriage, or it can even change separate property into community property. 

Rather than indicating a lack of trust, or expectation the marriage won’t last,  the preup is simply smart planning. It shows you care enough about each other to define things up front.

As an estate planning tool, the agreement works in conjunction with your Will to designate what is separate and what is community.  A community property agreement  can smooth out the understandings between a new spouse, and the children from the former relationship, in case the parent has died.  The distinction is that the surviving spouse would inherit community property of the new marriage, but the children from a previous marriage would inherit separate property. 

At best, the prenup will save much confusion and expense of a divorce case. Should the marriage not last, if the judge finds the agreement was fair when signed, the prenup will decide all or part of the outcome of a divorce in the sensible way the couple planned for when they were first married.

The prenup can also clearly define how the spouses want to handle potential mixing of property or funds. Interesting legal issues can arise. 

What if one spouse pays to improve the separate house of the other person? Does that create a joint interest, and if so, how much?

What if new earnings (community property earned during the marriage) are placed into a retirement account with “old” money from before the marriage?  Is the old money a gift to the marriage, or is the new money socked away from the other spouse? Or is there an in-between land?

Prenuptial and community property agreements can answer a lot of these questions before they arise. It can be one of the first steps a couple takes toward a solid financial future.

(c) 2102 William Brendgard Attorney

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