2021 Guide to Prenuptial and Postnuptial Agreements in California

Having a prenuptial or postnuptial agreement can take a lot of the work out of a potential divorce. For some couples, a prenuptial agreement may be necessary to protect assets, inheritances for your children in a blended family, or business interests and investments for high-net-worth individuals. In other cases, a prenuptial agreement may seem irrelevant, but having a prenup or a postnup can still help make a potential divorce case smoother.

If you are considering seeking a prenuptial or postnuptial agreement in your marriage, talk to the Ventura prenuptial and postnuptial agreement lawyers at the Law Offices of Bamieh and De Smeth. Our attorneys are available for free legal consultations to help you understand how a prenup or postnup can help in your case and how new laws in 2021 can affect your agreement. To schedule a free legal consultation in your case, contact our law offices at (805) 643-5555.

The Purpose of a Prenuptial Agreement or Postnuptial Agreement

In any divorce case in California, it is assumed that the couple will split all shared assets 50/50 under the states “community property” rules. This means that anything acquired during the life of the marriage, from the day you say “I do” to the day you start legal separation, is divided in half and split among the spouses. Anything you owned before the marriage, you keep – but the increase in value of any of these items during the marriage is subject to division like any other shared assets.

In many cases, you may want to ensure that certain assets are set aside as individual property so that you keep those assets in the event of a divorce. A prenuptial agreement can dictate rules about whether asset division will touch things like business assets, investments, savings, and other assets. A prenuptial agreement can also dictate from the beginning how much a spouse will receive in alimony, as well as control other economic decisions that are made when a divorce takes place. A prenuptial agreement can be beneficial for couples who wish to protect the assets obtained before marriage. Otherwise, couples may be subject to divide their assets according to state law.

If you do not want to place restrictions on a marriage at the very beginning, a postnuptial agreement can be formed after you get married. A postnuptial agreement can also amend or replace a previous prenuptial agreement to update its terms to reflect your life as it is now, not as it was when you initially got married.

How Alimony Tax Changes for 2021 Affect Prenuptial and Postnuptial Agreements

In any divorce that took place before the end of 2018, alimony was typically taxed in a certain way. The person paying alimony in those divorces was able to deduct the payments they made as above the line deductions, while the recipient needed to pay taxes on alimony by reporting it as income. This rule will continue to apply to any divorces finalized on or before December 31, 2018. That means that if you are reading this and you are not already divorced, your rules will be different.

Alimony for any divorces in 2019 or beyond will be tax-free. Instead of the payor getting a deduction and the recipient paying taxes on alimony, alimony will change hands between former spouses without any tax paid on it. There are potentially unforeseen complications that courts and payors will face going forward with these rules, but there are also difficult implications for anyone with a prenuptial or postnuptial agreement who has not yet finalized their divorce.

These new alimony laws will not take effect on divorces that were finalized on or before December 31, 2018, but they will also not affect cases with a divorce agreement completed before that date. Sometimes there is a delay between when the parties agree to the divorce terms and when the divorce is granted, and this rule allows you to take advantage of the old alimony tax rules if you got your divorce agreement before a court in time. However, this does not apply to prenuptial agreements or postnuptial agreements that were not entered yet into court as part of divorce proceedings.

If you have a prenuptial agreement or postnuptial agreement that dictates some amount of alimony that might be paid in the event of a divorce, you may need to amend that agreement. If your prenup or postnup has not been entered in court as part of your divorce case, it will use the new 2019 alimony tax rule. This means that the alimony amounts may need to be changed to take into account the new tax rules since the amount paid will not be deductible to the payor anymore. As of right now, there are no changes to this disposition in 2021. However, it is always a good idea to consult with a family law attorney who can respond to any concerns you may have during 2021.

It is always in your best interest to consult with an experienced family law attorney. Dealing with a family law affair in California can be extremely overwhelming due to its complexity. Representing yourself in a family law matter is not prohibited, but it comes with a cost. If you decide to exercise your right to auto-representation, the court will understand that you are fully prepared to face the legal procedure for your specific case. Under no circumstance will the court halt proceedings because you made a mistake. Failing to comply with the court’s procedural rules can place you in a very difficult situation. Depending on your case, a judge may dismiss your case, leaving you without further recourse. Make sure to retain the services of a skilled, experienced family law attorney.

Call Our Ventura Prenuptial and Postnuptial Agreement Lawyers Today for a Free Consultation

If you are considering forming a prenuptial agreement or postnuptial agreement in California, call our Ventura prenup and postnup lawyers today. If you have an existing prenuptial or postnuptial agreement, you should speak with a family law attorney for help amending it to account for changes to the law in 2019. To schedule your free legal consultation, contact our lawyers today at (805) 643-5555.