The ABCs of prenuptial pacts, when to get one

As wedding season approaches, brides- and grooms-to-be find themselves obsessing about things like limos, honeymoons, bachelor parties and — for those with wealth or a previous marriage — prenuptial agreements.

“Right now I’m probably doing four or five prenups for June weddings,” says Tanya Prioste, a family law attorney in Palo Alto, Calif.

There are no reliable figures on how many couples enter into prenuptial agreements, but attorneys say their numbers are growing as more people marry later in life and multiple times.

The purpose of a prenuptial or post-marital contract is to override state laws that govern who owns what during and after marriage.

Q: Who should have a prenup?

A: “Everybody ought to consider one. In the process, they will learn what state law says about property rights once they marry,” says Katherine Stoner, a family law attorney in Pacific Grove, Calif. and co-author of Nolo’s “Prenuptial Agreements: How to Write a Fair and Lasting Contract.”

You should definitely consider a prenup if:

•You’ve been married before, especially if you have children.

“The stepparent does not have responsibility for children from a previous marriage,” Ruben says.

If the parent pays child support out of community property, that parent might have to reimburse the community after divorce. “You might want to define and clarify existing spousal and child support obligations before you couple again,” Ruben says.

•You have substantial assets.

As part of a prenup, spouses must fully disclose income and all their assets. This “sets a baseline for what (existed) before marriage,” Stoner says.

Some people see full disclosure as a reason to avoid prenups.

•You started a business before marriage. If you work in the business during marriage, part of the appreciation in the firm’s value will become community property, absent a prenup.

•One partner has a big debt.

In a prenup, you can clearly establish that it is one spouse’s separate debt and that any community property used to repay the debt is reimbursable upon divorce.

Young couples without lots of assets or kids probably don’t need a prenup, but they should understand the difference between separate and community property and how to keep them segregated.

Q: What can a prenup do?

A: It can redefine what will be separate and community property. “You can say that earnings during marriage are going to be separate property of the person who earned them,” Stoner says.

Spouses can waive their right to spousal support after a divorce. The spouse waiving the right must have an attorney for the waiver to be valid, “and it can’t appear to the judge that it would be unconscionable to enforce it,” Stoner says.

In one case, both spouses had waived alimony, but one spouse became permanently disabled and the judge ordered the other one to pay support, Ruben says.

You can waive certain rights you are entitled to if your spouse dies. For example, state law allows a judge to use some of a deceased spouse’s separate property to support the surviving spouse for a certain amount of time, Stoner says.

These issues are best addressed in conjunction with an estate plan.

Q: Can I keep separate property separate without a prenup?

A: Yes, if you are careful.

If you have premarriage money in a bank or brokerage account in your name, make sure you reinvest earnings into the same account. Don’t put your paycheck into the separate account. Avoid paying community debts with money from a separate account. If you own a rental property, pay the expenses out of the rental income.

If you use separate property to make a down payment on a community house and get divorced, state law allows you get back the amount you put toward the down payment, but no more. You won’t get the appreciation on that investment as separate property.

Some couples set up trusts before marriage to help keep separate property separate.

“You can’t accidentally put your wife or husband on the account. A check made out to a trust can’t be deposited into a joint account,” says Joan LeBlanc, a trust and estate attorney with Larkin Spears. A trust does not guarantee that you won’t commingle your funds, but, “It’s just going to be harder to mix your money up.”

Q: How do I get a prenup?

A: Many family lawyers do prenups. You also might need the help of an estate lawyer.