16th Dec 2013
In California, marriage does not necessarily mean the integration of all properties in the union of two partners. As single individuals, before marriage, a couple owns separate properties. Once they are married, they may own community properties. Community properties are those properties which a couple decides to own jointly. They may, for example, title a house they bought under joint ownership. On the other hand, a couple may opt to retain sole ownership of their separate properties.
This is where a prenuptial agreement gains significance. A prenuptial agreement will identify who owns a property prior to a marriage. Dwight Tompkins, an estate planning attorney from Orange County cites 3 major instances where a prenup agreement is used to determine how to transfer an estate’s separate properties.
Preserving Family Business Interests. It may be possible that one of the partners in a marriage is a co-owner of a business. The partner may want to stipulate in his/her prenup that, if he or she were to pass away, the business interests would not remain separate property. Thus, the family or group that controls the business would retain control of the enterprise.
Multiple Marriages. A person with multiple marriages may have substantial separate properties which he or she may not want to share with their future spouse as a community property. He or she may want to bequeath it to his or her children from an earlier marriage. Again, a prenup can clearly identify which properties are separate properties.
Protecting the Rights of the Deceased and Surviving Partner. This is similar to the instance cited above. Before an individual enters a marriage contract, he or she may want a Prenup which would identify each individual’s separate property. Thus, when a trustor prepares a Living Trust, he or she can rest assured that his or her separate property is protected. At the same time, he or she is assured that the beneficiaries from a present marriage will receive the inheritance due to them. The rights of the family of the deceased and surviving partners will all be protected under a prenup and living trust.
Dwight Tompkins, an Orange County estate planning attorney, points out that a prenuptial agreement is not only valuable when the couple divides their property in the event of a divorce. The prenup may also be used as a helpful tool when estate planning.