Before buying a house, you receive all kinds of disclosures. When creating a Will & Trust, you get a ton of documents describing what happens in the event of death. Even when downloading an app on your phone, you get a chance to read over terms and conditions.
However, when you get married, you don’t even get a pamphlet!
Aside from death, getting married is the most legally significant event in your life. Yet, most people don’t take the extra steps to understand their state’s laws, or the financial implications of getting married. Most importantly, without this information, you miss out on making important legal and financial decisions that can benefit you and your partner as a married couple.
Meeting with a family law attorney before getting married enables you to get a full, detailed picture of the ins and outs of marriage. With a clear understanding of the legal and financial aspects, you and your spouse enable yourselves to achieve long-term success in marriage. Let’s take a look at 5 ways a marriage lawyer can help you achieve this goal.
1. Find Out What Happens To Your Rights
Marriage affords you and your spouse financial and legal benefits, but it’s also important to recognize how states like California treat property acquired during marriage.
Potential new benefits
In California, you could earn the following spousal rights after getting married:
- Ability to open joint bank accounts
- Ability to file jointly on federal and state tax returns
- Right to receive (often favorable) health insurance rates on “married” or “family” plans
- Right to receive life insurance claims as next of kin
- Right to inherit your spouse’s property upon death
- Right to sue for your spouse’s wrongful death
- Right to make decisions for your spouse when incapacitated
- Right to receive your spouse’s benefits from work or government programs (e.g. Social Security, Military pension, Worker’s Compensation, Disability Insurance)
These abilities and rights are baked into the contract of marriage, but does that work for you and your goals? Were you intending to blend your finances into a joint account or did you plan to retain your financial autonomy? Did you want all your property to go to your spouse upon death or did you have other plans for distribution? It’s imperative to walk through these questions with a legal expert in order to leave no stone unturned when it comes to you and your spouse’s rights. This way, you don’t just accept the default set of rules. Instead, you consciously choose and apply these potential new benefits in a way that truly aligns with your goals.
When you get married in California, your time, energy, effort and skill are no longer owned by you, but by the “community”—the partners in marriage. The “community” generally means the property and everything that goes into acquiring property during a marriage, except when received by gift or inheritance. Simply put, both spouses get equal rights (50/50) to property acquired and income earned during the marriage.
The important thing to realize here is the community can gain an interest in property simply by spending the time, skill, effort and/or money in various activities during marriage including:
- Building your business
- Making improvements to and/or maintaining your real estate or any personal property
- Investing in stocks and bonds
- Earning interest in and/or contributing to retirement plans (e.g. 401(k), Roth IRA, pension)
- Commingling separate and community funds
Carefully reviewing current property and future plans with an attorney will ensure that you aren’t unexpectedly converting your separate property into community property.
2. Understand Your Marital Obligations
In a wedding, you typically vow to care for your spouse “in sickness and in health”, but once married, you’re accepting additional responsibilities that weren’t required of you when you were single.
Mainly, you are committing to truth and partnership in finances with your spouse. This means you can’t lie about money or hide debts and assets during your marriage. Once you’re married you owe a fiduciary duty to your spouse, much like a business partner, which requires full disclosure and consent of all financial transactions which may affect the community. That’s right, you can’t spend money secretly once you’re married, or send money to your family members without your spouse’s consent. For example, you’d be violating your obligation by profitably investing your separate money in stocks during marriage without disclosing it to your partner. In fact, you have a fiduciary duty to offer the investment opportunity to the community before you even think about investing with your own separate money. If you don’t offer the investment to the community first, it could be considered a breach of the fiduciary duty you owe to your partner, and could be grounds for reimbursement or other detrimental legal action.
For a complete understanding of your spousal obligations, it’s imperative to get the counsel of a family law attorney who can guide you through the specific points relevant to your life. You may have special circumstances that appear to be in a gray area or have questions about how your situation is handled in a specific state. Our expertise at Hekmat Law & Mediation is in helping people thinking about marriage in California navigate through the spousal responsibilities, so there is no mystery in what obligations you’re signing up for when getting married.
BEFORE getting married, what questions about MONEY should you ask your partner?
Use this guide to discuss budgets, assets, debts, goals, joints bank accounts and more.Get your free prenup planner
3. Get Complete Clarity On Money Matters
Before marriage, you made money, put it in a bank account, and you were the only one checking the statements and spending it. Not anymore. Your income equally belongs to your spouse, even if the money is in separate bank accounts. Money issues are the most common reasons for marital issues and divorce, so it’s crucial to understand what happens to your finances after you get married.
Income earned by you or your spouse will be classified as if it had been earned half by each of you no matter where it’s deposited.
Community income typically includes:
- Salaries, wages, and other pay from employment during marriage
- Income from community property assets
- Rental income from community property, and possibly, separate property assets
- Gains from real estate, businesses, stocks, bonds, and other investments
- Distributions from trust/estates
- Business profits
Similar to income, debts you and your spouse incurred before marriage still belong to each of you, but you’ll both become equally responsible for debts you take on as a couple, or individually, after you get married.
It’s important to note that any money, assets, or debts that you collected before or after the marriage are classified as separate property. However, there are several ways that even this separate property can become part of the community property.
Just because you own an asset prior to marriage, doesn’t mean it will always stay yours. California community property laws allow the community to gain an interest in many different assets based on the skill, effort, time and money you spend on that asset, as we describe above in “Find Out What Happens To Your Rights”. For example, if you owned a house pre-marriage, and you added a swimming pool or paid the mortgage, with income earned during marriage, the community (and therefore, your spouse) will earn an interest in your home.
On that note, even if an asset or business is owned prior to marriage by your family, if you are actively involved in the management of the business, your interest, or a portion thereof, can become a community property interest. So, if you help own and manage your family’s restaurant business after you get married as a part-owner with an interest in the business, your spouse also gains an interest in your interest via the community property law.
Financial matters can be complex. You’ll want to talk to a family law attorney to find out how income and assets become community property, and decide whether or not that is right for you and your partner. An attorney can help you carefully and comprehensively organize your finances and assets not only to protect yourself, but also to provide for a successful marriage.
4. Uncover Laws Pertaining To Your Specific Circumstances
No two marriages are the same. You may have particular details in your situation that simply need a real and clear legal explanation or answer (beyond a quick online search). Here are a few questions that have come up in our experience:
- Are there any separate rules for same-sex marriages in my state? What about rules in the case of divorce?
- I work in my family real estate business. Will my partner gain an interest in our real estate holdings?
- I receive quarterly trust distributions. How will this money be treated during our marriage?
- I own property overseas. How will this property be treated during our marriage or in the event of divorce?
- What if I have a lot of debt? I understand that I need to be honest but am not sure how to discuss this with my partner.
- I have children from a previous marriage, and need to pay child support. How will this be handled during my new marriage?
If you live in California, we would be happy to consult you on any question you may have before getting married. Please—ask us anything! Without compromise, we are driven to help you achieve your marriage goals and provide exact and simple counsel for your specific case.
5. Find Out If You WANT (Not Need) a Prenup
It’s no surprise that prenups can be a turn-off. They are often seen as a way to handle mistrust in a relationship or only protect a wealthy person from losing their money. The real story is that prenups help couples build trust and open lines of communication. They empower people to set guidelines and create custom rules designed to fit the needs of both partners.
Whether you like it or not, your state has default rules in place for you and your marriage anyway (as we have seen in the previous sections). So, do you want to have the power to create the guidelines for your married life, or do you want your state’s government to apply the one-size-fits-all agreement for you? It’s your choice.
A couple must want a prenup together. The reason is because a prenup is not just a protection against the worst case scenarios, it’s an active plan to build a strong foundation cemented by trust, communication, and honesty. It’s a conversation between partners on how their financial life will be planned together after asking all of the right questions and going through the answers. An effective family law attorney will guide you through these tough questions and create an agreement designed to empower your marriage and achieve your goals.
Our passion at Hekmat Law & Mediation is to help marriage-hopeful couples kickstart their new lives with a powerful, future-minded plan designed to promote a healthy relationship and long-term success. Connect with us and know that we’ll be excited to meet you and help answer any questions.