More and more couples these days are entering into prenups, but few couples actually should get or need prenups.  The media hype surrounding prenups has made it so that everyone now thinks they need a prenup when they actually do not.  

However, there are cases in which one spouse wants to protect real property or other assets acquired before the marriage, or wants a different arrangement on how to pool their other assets and real property after marriage. In these cases, before committing to a prenup, it’s important to understand how they work.

Inspired by client questions, here are important facts to know about prenups.


How Prenups Impact Business or Intellectual Property Acquired Before Marriage

Any asset (whether it is real property, a business, intellectual property, etc.) may develop a community property interest if it is further developed during the marriage. So, for example, let's say the wife owns a nail salon before marriage that earns approximately $200,000 gross revenue each year. During the marriage, the husband manages the salon, and it grows to a multi-million dollar franchise having branches in various states.  By California law, the husband can claim an interest in the multi-million dollar franchise, even though the wife started the business before marriage.  

Had the parties entered into a prenup, they could have agreed that regardless of what happens during the marriage, the business would remain 100% wife's separate property.  


How Prenups Can Possibly Affect How You Divide Assets During Marriage

In most traditional marriages, if you pool your income during marriage and acquire assets together, you decide everything as a partnership. For example, if the husband brings home $100, and the wife brings home $200, and then they buy something together for $300, it is still 50% the husband's and 50% the wife's -- because there is no prenup.  People like pooling income and acquiring assets together because it falls neatly within their idea of what married life is supposed to be (i.e., what's mine is yours, what's yours is mine, everything is ours).  

However, if there is a prenup, the prenup might say, for example, that whatever the husband earns remains his separate property and whatever the wife earns remains her separate property (i.e., what's yours is yours, what's mine is mine). In the above scenario then, the husband would own 1/3 and wife would own 2/3 of the asset. In my opinion, this is more like living with a roommate than living with a spouse, but people do certainly enter into these types of prenups.  


Need To Know More About the Finer Points of Prenups?

If you are considering a prenup and need to know more, contact Park Family Law. Whether you need a mediator with a proven track record or an aggressive litigator, Park Family Law can work with you every step of the way.