You’re about to take one of the biggest steps of your life—tying the knot! But before you say “I do,” let’s make sure your financial future is secure. Prenuptial agreements have become increasingly popular, with more couples recognizing their value in building transparency and protecting assets.
A well-drafted prenup can give you peace of mind, but one filled with mistakes can lead to costly disputes.
Here are mistakes to avoid when creating a prenuptial agreement and tips to ensure yours is fair, enforceable, and works for both of you.
Common Mistakes to Avoid When Creating a Prenuptial Agreement
Failing to Disclose All Assets and Debts
Honesty is the foundation of any solid prenuptial agreement. If one of you hides assets or debts, it could lead to the agreement being thrown out in court. Imagine discovering unlisted debts after marriage—you’d not only feel blindsided but also face financial burdens you didn’t plan for.
Include everything—from bank accounts and investments to student loans and digital assets—to ensure the agreement holds up.
Drafting Too Close to the Wedding Date
If your prenup is signed under pressure just days before the wedding, it could be seen as coerced. This risks the agreement being invalidated. California courts are particularly strict about ensuring prenups are signed without duress.
Give yourselves enough time to discuss, negotiate, and finalize it without any time crunch. For some couples, this might be a month or two while others with more complex assets may want give themselves several months or more.
Skipping Independent Legal Counsel
Each of you should have your own lawyer to review the agreement.
If your prenup includes a waiver or limitation on spousal support—a common clause—California law requires both parties to have independent legal representation for this provision to be enforceable.
Seeking the guidance of a family law attorney for prenuptial agreements ensures your rights are protected and the agreement is legally sound. Without proper counsel, the agreement could be easily contested, leaving you vulnerable to hefty legal bills down the line.
Making It One-Sided
Unfair agreements rarely stand up in court. A clause that leaves one spouse with nothing while the other keeps everything is likely to be considered extremely unfair or unreasonable by the court.
This could lead to years of legal battles and resentment. Work together to create terms that feel fair to both of you.
Forgetting to Address Future Assets and Earnings
Think beyond what you have now. Future income, businesses, or properties acquired after marriage should be included in the agreement.
A clause outlining how these will be handled can prevent disputes that not only strain your relationship but also cost you financially in court.
Including Unenforceable Clauses
Prenuptial agreements cannot include clauses that violate public policy or state laws. California law prohibits prenups from affecting child support or custody decisions, as these must align with the child’s best interests at the time of divorce.
Additionally, lifestyle clauses—such as requiring one spouse to maintain a certain weight or handle specific household chores—are unenforceable and may undermine the entire agreement.
Financial Oversights That Can Cost You Later
Ignoring Digital Assets
Today, your assets might include more than physical property or savings. Digital assets like cryptocurrency, NFTs, or even revenue from an online business need to be addressed in your prenup.
Imagine your Bitcoin portfolio triples in value during the marriage—how will it be divided? Without clear provisions, disputes over ownership can lead to costly litigation.
Forgetting Financial Schedules
What are financial schedules? These are comprehensive lists attached to your prenuptial agreement that document all your assets, liabilities, and income sources at the time of signing.
They ensure transparency and accuracy in the agreement.
Why does this matter? Without detailed schedules, one spouse could later claim they didn’t have a full understanding of the other’s finances. This can lead to disputes, expensive legal battles, and even invalidate the prenup.
Imagine one spouse claiming ignorance of a high-value stock portfolio simply because it wasn’t listed—the financial fallout could be substantial.
Overlooking Professional Licenses and Degrees
Did you know that advanced degrees or professional licenses earned during your marriage could be considered marital property in California?
If one spouse supports the other through medical school, for instance, courts may consider that degree a shared investment.
Failing to address this in your prenup could result in financial compensation being awarded to the supporting spouse.
Failing to Address Potential Inheritances
Inheritances you or your spouse expect to receive in the future can become contentious if not addressed. Without proper provisions, inherited wealth might be treated as marital property in some situations.
Including clauses that designate inheritances as separate property can help avoid disputes later.
Neglecting Future Business Ventures
If you’re planning to start or grow a business during your marriage, clarify how its value and ownership will be handled. For instance, if your spouse invests time or resources, will they share in its success?
Include clauses specifying how future earnings, stock options, or business growth will be divided. This adds clarity and reduces the likelihood of disputes.
If one of you starts a tech company post-marriage, your prenup can outline how shares or profits will be allocated.
Overlooking Tax Implications
Taxes can come into play both during the marriage and after a divorce, making it crucial to address them in your prenup. For example, transferring a property as part of the prenup terms could trigger gift taxes or capital gains taxes down the line.
Similarly, alimony payments, which are no longer tax-deductible for the payer, can create unexpected financial strain if tax implications are ignored.
By clearly outlining who will handle any potential tax liabilities and consulting a tax professional during the drafting process, you can prevent future disputes and costly surprises.
Not Planning for the Long-Term
Failing to Plan for a Move to Another State or Country
What happens if you move to a state or country with different prenuptial laws? Including a clause specifying which jurisdiction’s laws will apply ensures your agreement remains enforceable wherever you live.
Without this, you may face legal challenges adapting your prenup to new locations.
Missing Regular Updates
Life changes—and so should your prenup. Whether you have kids, inherit significant assets, or relocate, including a clause for periodic reviews keeps your agreement relevant. Ideally, you should review your prenup every 3-5 years or after major life events such as buying a home, starting a business, or having children.
Without updates, you risk having outdated terms that no longer reflect your financial reality, leaving one or both of you unprotected.
Forgetting Inflation Adjustments
Money today doesn’t hold the same value it will in the future. If your prenup includes fixed amounts for spousal support or other financial terms, those amounts might become outdated.
For example, a $10,000 payment agreed upon years ago might not cover the same expenses today. Including a clause that adjusts for inflation ensures these amounts remain fair and relevant over time.
A simple way to do this is by tying payments to the Consumer Price Index (CPI), so they increase with the cost of living.
Neglecting Estate Planning Integration
Your prenup should align with your overall estate plan to avoid conflicting instructions. For instance, if your prenup states your spouse will not inherit a specific asset, but your will includes them as a beneficiary, this could create confusion and potential legal disputes.
Coordinating your prenup with wills, trusts, and other estate planning tools ensures consistency and clarity.
Forgetting to Address Custody of Unusual Assets
Not all assets are straightforward, like bank accounts or homes. Special considerations, such as companion animals, cherished family heirlooms, or valuable collections, can become emotional sticking points during a divorce.
Including provisions for these in your prenup about how these will be handled ensures clarity and avoids unnecessary disputes.
Ignoring Digital Privacy Clauses
Your online presence matters just as much as your physical assets. A prenuptial agreement can include specific rules to protect your personal information, photos, or sensitive details.
For example, you can add clauses that prevent either party from sharing private photos or information on social media without prior consent. These terms help protect your reputation, reduce disputes, and are especially important in high-net-worth divorces where privacy is crucial.
Communication Mistakes to Avoid
Avoiding Difficult Conversations
Talking about a prenuptial agreement isn’t always easy, but avoiding the conversation can lead to misunderstandings. Approach the topic with honesty and focus on mutual protection rather than mistrust.
For instance, framing the prenup as a way to protect both of your interests can foster cooperation.
Lack of Transparency
Miscommunication or withholding details about finances can undermine trust. Discuss everything openly, from financial goals to existing obligations, to ensure you’re on the same page.
Hidden surprises, like unlisted debts or secret accounts, can lead to resentment and financial complications.
Documentation Errors That Undermine Your Agreement
Using Vague Language
Terms like “fair” or “equitable” can mean different things to different people. Define terms clearly to avoid confusion or misinterpretation.
For example, instead of saying “shared assets will be divided fairly,” specify percentages or conditions for division.
Let’s Secure Your Future Together
Your prenuptial agreement should bring clarity, not conflict. Our team at Provinziano & Associates is here to simplify the process for you. From understanding your unique needs to ensuring every detail is handled correctly, we’ll guide you step by step to create a solid agreement that protects your future.
Schedule a free case evaluation today by calling 310-820-3500, and let us help you create a plan that works for you both.
