Our speaker today was our own fellow Rotarian, Ashley Andrews.  Frank Hall introduced Ashley by explaining “I never knew what real happiness was until I got married, and by then it was too late.”  “Community Property is where your wife gets half and her attorney gets the other half.”

Ashley is a graduate of UC Davis and Loyola Law School.  She is currently a partner at Hoffman and Andrews, LLP where she limits her practice to Family Law.

Ashley Andrews:

She started out with a stern warning that the purpose of her talk was neither to give legal advice nor to establish an attorney client relationship and that those in attendance should refrain from asking personal questions pertaining to their individual situations. Following this disclaimer, usually in fine print on the back of a contract, she launched into her talk.

Premarital agreements, often called “prenups” or “antenuptial agreements”, are created between two prospective spouses and become effective upon marriage. Should the marriage end in divorce, and amongst other issues, prospective spouses enter into these types of agreements to protect and preserve their separate property and/or limit the creation of community property during their marriage. These agreements are also used, again, should the marriage end in divorce, to limit the duration and amount of spousal support, protect spouses from creditors, and for estate planning purposes. Ashley explained that California is a “community property” state where, with some exceptions, every asset acquired and every debt incurred during a marriage is community property and is, in theory, to be divided 50/50 at the time of a divorce.

Prospective spouses who often enter into these agreements are those with larger disparities in age, assets or income. Prospective spouses with children from a previous relationship may also enter into these agreements to protect and preserve separate property assets for their children because, for example, their children may have concerns about a new spouse interfering with their inheritance.

Ashley talked about the uncertainty surrounding enforcement of complete spousal support waivers in these agreements and mentioned that possible remedies could be setting an amount or time duration ceiling on spousal support. She, again, stressed the uncertainty of any such limits and suggested that if this purpose was really important then, really, perhaps marriage between these prospective spouses is not a good idea. She also talked briefly about cohabitation and the possibility of a Marvin action in terms of creating a duty to provide spousal support to the lesser earning spouse.

Ashley mentioned that estate planning is also a purpose of these agreements in terms of setting aside separate property gifts for children from a previous marriage and/or gifts of separate property or community property for the new spouse.

Finally, Ashley talked about using these agreements to protect separate property from creditors; yet, she warned that there is a fine line between this purpose and committing fraud.

Premarital agreements cannot be used to waive child support, set custody and visitation, or establish forms of punishment for inappropriate behavior, such as adultery.

Just when everyone was sold on premarital agreements, Ashley then mentioned that the going rate, per prospective spouse, is $10,000 to begin the drafting process. All assets, debts and income must be disclosed; and, accurate valuations must be given. She gave us a hot tip and said, if we remembered nothing else from her talk, to remember that prospective spouses contemplating a premarital agreement should never, ever set a marriage date until the agreement is signed; for more information as to why, she briefly explained the 7 day rule between receipt of the agreement and signature of the agreement and directed us all to California Family Code section 1615 for more information. She also said that it might be a good idea to involve an estate planning attorney, certified public accountant and an appraiser in the drafting process.

Some alternatives to premarital agreements are: refraining from marrying or cohabitating with the prospective spouse, keeping all separate property assets, debts, income and payments on debts separate or, in the words of Mr. Helms, “set up a living trust.”

Whether a premarital agreement is good, bad or a divorce up front is really a fact specific determination; but, the bottom line is, if the wedding date is on the calendar, take it off and wait to re-schedule the date until the premarital agreement is signed by both prospective spouses.  If you can’t take the date off the calendar, then another option is a post-marital agreement, which is more costly and has stricter disclosure requirements.