What a California prenuptial agreement can and cannot cover

There is a list, and it is more specific than people expect

Most explanations of what a premarital agreement can cover are written as though the answer were "anything the two of you agree". It is not. There is a list of subjects, written down, and a catch-all at the end of it with a limit attached.

Knowing the list is useful for a practical reason: it is the difference between a conversation about what you want and a conversation about what a document can actually do. Couples routinely arrive wanting something that belongs in a will, in a company’s operating agreement, or in no document at all.

What follows is that list, the catch-all, and the things that sit outside it.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

Property, in every sense of the word

The first and broadest subject is rights and obligations in property, whenever and wherever it was acquired. That reaches what each of you brought, what either of you acquires during the marriage, and property that is nowhere near California.

It covers houses, accounts, investments, retirement interests, business interests, intellectual property, and debts, which people forget are property questions too. A couple who agree carefully about assets and say nothing about a student loan have answered half the question.

The width of this subject is the reason most of an agreement is about property: almost everything two people argue about at the end of a marriage sits inside it.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

Managing it, not just owning it

The second subject is often overlooked and is more useful than it sounds: the right to buy, sell, use, transfer, exchange, lease, spend, assign, mortgage, encumber, dispose of or otherwise manage and control property.

This is the machinery clause. Ownership answers who a thing belongs to; this answers who may act on it without asking. For a couple where one runs a business and the other does not, or where one manages the investments, it prevents a disagreement about authority becoming a disagreement about ownership.

It also matters for property held with other people. Somebody who owns a building with two siblings needs to be able to deal with it without a question arising at home every time.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

What happens on separation, dissolution or death

The third subject is the one everybody expects: what happens to property on separation, on dissolution, on death, or on the occurrence or non-occurrence of some other event.

That last phrase is worth noticing. An agreement can attach consequences to something other than the end of the marriage: a business being sold, a child being born, a couple reaching a particular anniversary. Terms that change with the length of the marriage are written on that footing.

Death is the part that gets least attention and arrives without warning. Couples plan carefully for a separation they do not expect and say nothing about the ending that is certain.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

Wills and trusts, and why the agreement alone is not enough

The fourth subject is the making of a will, a trust or another arrangement to carry out the agreement.

This is a mechanism rather than a subject, and it exists because an agreement between two people does not by itself move property when one of them dies. A clause saying what each of you will do, and an estate plan that actually does it, are two different things and you need both.

The common failure is an agreement drafted by one lawyer and an estate plan drafted by another, to different assumptions, neither knowing the other exists. This office does not prepare the estate documents as part of a premarital matter, and says where the two have to line up rather than leaving that to chance.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

Life insurance, and choice of law

The fifth subject is the ownership rights in, and disposition of, the death benefit from a life insurance policy. It is narrow and it is frequently the cleanest way to deal with an obligation the rest of the agreement removes: a party who gives something up can be secured by a policy instead.

The sixth is which state’s law governs the construction of the agreement. Useful where a couple expect to move, or already live apart, or where one has strong ties elsewhere.

A choice of law clause is not a way of escaping California while living here. It is a statement about how the words are to be read, and it is worth having for couples whose life is genuinely spread across more than one place.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

Debts, which are the half nobody plans for

Couples arrive with a clear picture of what they own and a vague one of what they owe, and the second is where the unpleasant surprises live.

Student debt is the commonest. A professional qualification frequently arrives attached to a six-figure loan, and the person who carries it usually assumes it stays theirs. What happens to the payments made during the marriage, from money earned during the marriage, is a separate question from whose name is on the loan.

Business debt is the sharpest. A personal guarantee given for a company borrowing is an obligation of the person, not the company, and a spouse who has never been near the business can find the household exposed to it.

Then there is debt that does not exist yet. A couple can agree what happens to borrowing taken during the marriage as well as to borrowing that already exists, and an agreement silent about future debt has dealt with half of the future.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

Property in other states and other countries

The property subject reaches property wherever it is, and for a great many couples that is not a technicality.

A flat in another country, land inherited in another state, an account held abroad: all of them can be dealt with. What an agreement cannot do is override the law of the place where the property sits about how title there is transferred.

In practice this means the agreement records what the parties intend, and something local may still have to be done to give effect to it. Saying that at the outset avoids a couple believing an asset has been dealt with when only half the work has been done.

The choice of law clause described above sits alongside this rather than solving it.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

The catch-all, and the limit on it

After the specific subjects comes a catch-all: any other matter, including personal rights and obligations.

That is where the "lifestyle clauses" people have read about live: terms about how often the couple will see relatives, about weight, about infidelity, about who does the school run. Whether such a term does anything is a separate question from whether it can be written down.

The limit attached to the catch-all is what decides it, and it is the reason this office will draft a property agreement and decline to draft a schedule of domestic duties. A clause that will not operate is not harmless: it invites an argument about the whole document from somebody looking for one.

Beyond the specific subjects the statute lists, a premarital agreement may cover any other matter that does not violate public policy or a statute imposing a criminal penalty. Fam. Code, § 1612, subd. (a)(7)

Children: outside the agreement entirely

The clearest limit in the whole subject, and the one most often misunderstood by people who have read a template.

Two parents cannot settle a child’s right to support between themselves. A clause purporting to fix it, waive it, cap it or trade it against something else is promising what it cannot deliver.

Custody and parenting time sit in the same territory for the same reason: they are decided on a child’s circumstances at the time, not by what two people agreed before that child existed.

This surprises couples who reason that they are the parents and it is their decision. In every other respect it is. Not here.

A premarital agreement cannot adversely affect a child’s right to support. Fam. Code, § 1612, subd. (b)

Spousal support: available, with conditions of its own

Spousal support is inside what an agreement may cover, and it carries conditions the rest of the document does not.

The short version is that a support term needs the party it is used against to have had their own independent lawyer, and that representation is not the whole answer, because the term is looked at again at the time somebody tries to rely on it.

It has its own page, because the detail is what decides whether a support term is worth having.

A term about spousal support is not enforceable against a party who was not represented by their own independent lawyer when the agreement was signed. Fam. Code, § 1612, subd. (c)

A term about spousal support is also not enforceable if it is unconscionable at the time enforcement is sought, even where that party had their own lawyer. Fam. Code, § 1612, subd. (c)

What the document has to be, whatever it covers

Two requirements apply to the whole agreement regardless of subject.

It has to be a written document signed by both of you. Nothing spoken and nothing implied does it, however clear the understanding.

And it does nothing at all until you marry. Every clause sits dormant until the wedding, and if the wedding does not happen the document never operates.

A premarital agreement must be in writing and signed by both parties. It does not require consideration. Fam. Code, § 1611

A premarital agreement takes effect when the parties marry. Fam. Code, § 1613

Changing what it covers later

A subject left out is not lost for ever. After the wedding, the agreement can be amended, in writing and signed by both of you.

The same formality applies as made it, and the same trap: an understanding you both hold is not an amendment, no matter how long you have held it.

After the parties marry, a premarital agreement may be amended or revoked only by a written agreement signed by both of them. No consideration is required. Fam. Code, § 1614

What people ask for that belongs somewhere else

Three requests come up often enough to name, and none belongs in this document.

Arrangements for a pet. Emotionally serious and legally a property question, which the agreement can deal with as property, but not by writing a custody schedule for a dog.

What happens to a family business owned by somebody else. A person cannot agree about property that is not theirs, and the answer sits in that company’s own documents.

And obligations to children of an earlier marriage, which are frequently the real worry behind a couple wanting an agreement at all. Those come from elsewhere and are not created or removed by what the two of you sign. What an agreement can do is keep the property those obligations are paid from clearly identified, which is a different thing and often enough.

Retirement accounts, which have rules of their own

A pension or a retirement account is property and sits inside the list, but it is the asset most likely to need something beyond the agreement to give effect to what the couple decided.

Employer plans are governed by their own federal rules, and what an agreement says between two people does not by itself bind a plan administrator. Dividing such an account generally needs a separate court order directed at the plan, and a waiver signed before a marriage is not the same thing as a waiver a plan will accept from a spouse.

None of that makes a clause about retirement pointless. It makes it a clause that has to be written knowing a second step exists, and this office says which assets need that step rather than leaving a couple to discover it at retirement.

A premarital agreement may cover each party’s rights in property, how property is bought, sold or managed, what happens to property on separation, dissolution or death, the making of a will or trust, the ownership of a life insurance death benefit, and which state’s law applies. Fam. Code, § 1612, subd. (a)

How this office approaches the list

The questionnaire asks what each of you owns, owes, earns and expects, and what you each want to happen to it. What comes back decides which of the subjects the agreement actually needs.

Where somebody asks for a clause that will not operate, they are told so before it is drafted rather than handed a document containing it. A clause that does nothing is not free: it is the loose thread somebody pulls later.

The fee is flat and quoted before anything begins, and it does not change according to how many of the subjects your agreement ends up using.

This office quotes a flat fee before any work begins, and the written fee agreement states what it covers, when each part is earned, and your right to a refund of anything not earned.