Young Wealthy Couples Seek Prenup Agreements Before Popping the Question
Millennial Couples Fall Madly in Love, but Still Protect Wealth
Younger wealthy couples with big assets aren’t taking any risks when it comes to marriage.
Lately, California couples are seeking out “cohabitation agreements” and “prenuptial agreements” — long before they are even engaged.
The trend is particularly noticeable in the Silicon Valley area where millennials in the tech industry are millionaires before they reach 30. Also, young entrepreneurs in the Orange County area are seeking these legal agreements. However, it’s not because they are greedy or uncommitted. Rather, it’s because fewer couples are taking chances these days. Divorce experts say today’s young adults are often the children of divorced couples. They have seen firsthand how a divorce can impact a person’s financial situation. Furthermore, there is no longer a stigma associated with talking about money before a marriage as there was in the past.
Indeed, a divorce may be a quick way to lose hard-earned assets such as real estate assets, stocks, and a business. These are typically divided up not only because of the divorce, but also if one spouse survives the other after a death. It may be particularly important if there are children involved. Also, these agreements often address embryo ownership, who gets the beloved pet and even student loan debt.
According to a report by Nerd Wallet, student loan debt averages between $28,950 for a bachelor’s degree up to $292,169 for dental school graduates. Additionally, the average student loan debt for 2019 graduates was $28,950, but the average U.S. household with student debt owes $57,520.
“Most young couples don’t think about debt when they get married, but when they divorce they find out quickly that it’s a big deal,” said Attorney James Johnson.
Previous generations weren’t so gun shy about first marriages. It wasn’t until their second or third marriage that they sought a prenuptial agreement to protect their assets. Also, in the past, it was typically only engaged couples who wanted to protect themselves. Also, it was usually younger people wishing to protect inherited wealth that created a prenup to protect those assets. However, today’s tech millionaires and entrepreneurs are often still in their early 20s when they get rich. So by the time they reach their 30s and 40s, some may even be a billionaire. That’s why younger professionals seek to protect their own assets or future assets with prenuptial agreements in affluent California communities.
A well-drafted prenuptial agreement should cover all potential scenarios a couple may face.
The prenuptial agreement is a written contract made between a man and a woman before they marry. It outlines how their assets such as property and money should be divided if they get divorced. Also, the agreement will stipulate each party’s existing assets as separate property, including their loans and other debts. A spouse who takes a business loan may not wish to burden the other spouse with repaying it if there is a divorce. Some of these agreements will waive each party’s statutory rights to inherit or make a claim to to their spouse’s separate property in the event that there is a death.
Roughly 28% of millennial couples between 23 and 37 years old report they want to keep their finances completely separate once they are married. They do not want to create a traditional joint bank accounts when they are married, according to a 2018 Bank of America survey. However, finances kept in separate bank accounts or real estate property held under only one spouse’s name may still be subject to California community property.
Today many couples are quite comfortable living together before considering or instead of getting married. This has prompted a growing need among wealthy couples to seek out a “cohabitation agreement” to iron out what belongs to each party. It’s wise to agree early on to what property would be considered community property if there is a breakup. Oftentimes, couples living together purchase property, mix their assets such as bank accounts and loans, or make investments together.
Silencing Social Media Posts
Sometimes breakups get messy and can be downright embarrassing in the age of social media. That’s why many younger couples may ask their partner to agree to specific romance rules pertaining to posts on social media. In the event of a breakup, they agree to remove each other from Facebook, Instagram and Twitter accounts. Additionally, they may agree that there will be no disclosure of the end of the relationship or tweeting about personal matters. To ensure the other party adheres to the rules, any violation of the agreement may result in a financial payment to the injured party.
In California, community property laws state that each spouse owns half of the property and half of the debt accumulated during the marriage. A prenuptial agreement will not waive a spouse’s rights to property except if it is defined as separate property. However, this separate property must be kept separate during the marriage to remain protected. Typical assets a person may wish to protect include a home, business, stock or retirement funds.
- Spouses must be represented by their own attorney;
- There is a seven-day waiting period before signing;
- A party may waive their right to representation, however, they are required to write a summary of the agreement to prove they understand what they signed.
- Was the contesting party fully informed of her spouse’s wealth prior to executing the Agreement?
- Does the Agreement set forth a clear waiver by the contesting party?
- Were the provisions of the Agreement fair and reasonable at the time the Agreement was executed?
Johnson Family Law Attorneys
There is no room for mistakes when it comes to writing up a prenuptial agreement. Johnson Attorneys Group understands the importance of finding the best solutions that will enable a couple to protect their rights should they later divorce.
Our Southern California family law firm has experience with all major family law issues. Whether it’s prenuptial agreements, child custody, child support, property division, divorce or alimony, we’ve got your back.