Monday, April 26, 2010

WHY SHOULD I HAVE A PRENUP?

Donald F. Conviser, Certified Family Specialist, owner of Warner Center Law Offices, located in the San Fernando Valley in the Warner Center area of Woodland Hills, serving Prenuptial Agreement, Divorce, Paternity, and other Family Law clients in the Courts of Los Angeles County and Ventura County for over 38 years, offering a free confidential consultation to address your family law questions, presents this blog entitled: Why should I have a Prenup, in an effort to clear up misconceptions that many people have about property rights in a marriage.

A Prenup is one and the same as an Antenuptial Agreement, a Premarital Agreement, and a Prenuptial Agreement.

In this era when more marriages fail than survive, a Prenup is a wise planning tool for anyone with assets or earnings of any significance to have in place before any wedding date has been chosen, or if already chosen, at least before a marriage license has been obtained, or wedding plans have been committed to.

Far too frequently, people enter into a marriage under mistaken beliefs about their property interests, a few of which are:

BELIEF: Whatever money I earn during our marriage is my own money. WRONG - Your earnings are community property. However, a properly and timely drafted and entered Prenuptial Agreement can make your earnings your own separate property.

BELIEF: If I own property before the marriage, my spouse can't ever get an interest in it. WRONG - even if you don't transmute the property into community property or the separate propery of your spouse, certain things can create a community interest in your separate property, including but not limited to using community income (yours or your spouse's) to pay down the mortgage or improve the property, using your or your spouse's labors or talents to improve the property, refinancing the property, etc. Your spouse could be entitled to a PRO TANTO community interest, under the MOORE/MARSDEN rule. You are far safer by having a Premarital Agreement drafted and entered before the marriage which preserves your property as your separate property and removes risks of community interests and reimbursements.

BELIEF: If I get a quitclaim deed to my separate property from my spouse, it will eliminate the risk of a community property claim to the property. WRONG. This is a common misconception. As addressed above, the community could still obtain an interest in the property through the use of your or your spouse's earnings to pay down the mortgage or improve the property, or using your or your spouse's labors or talents to improve the property, refinancing the property, etc., making you vulnerable to a MOORE/MARSDEN apportionment of community and separate interests in the property. A well-drafted Premarital Agreement can protect you against such an interest being acquired by your spouse.

BELIEF: If I refinance my separate property during the marriage, the proceeds of the loan will be my separate property. WRONG. Under Marriage of GRINIUS (1985) 166 Cal.App.3d 1179, the court would look to the intent of the lender to determine whether the loan proceeds are community and separate, and in this era of declining or uncertain property values, lenders are no longer providing "stated income" loans, but are requiring and scrutinizing detailed loan applications to ensure that the borrower can afford to make the loan payments - and remember, without a Prenup, earnings during the marriage are community property, so the risk is that the loan proceeds will be held to be community property. Far better for you to have a Prenuptial Agreement crafted in advance of the marriage for you by an experienced Certified Family Law Specialist, to avoid such risk.

BELIEF: If I buy an asset with my separate property duirng the marriage, the asset is my separate property. WRONG - kind of. Property acquired during a marriage is presumed to be community property, and the burden is on the spouse asserting its separate character to overcome the presumption. You will be far safer with a well-drafted Prenup.

If you wonder whether or not you should have a Premarital Agreement, you probably have enough to lose to take the wise step, early, and get the ounce of protection to avoid the pound of cure.

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