The Effect Of Premarital Agreements

It seems fitting that in contrast to reviewing premarital agreements, we have the opportunity to discuss how matters may proceed in a dissolution without the benefit of a premarital agreement.

First and foremost, is the issue of support. It is recognized that California’s child Support Guideline shifts a significant portion of the total earned income of both parents to the household where the children reside. This can present particular problems for a professional, non-custodial parent, not only because of their higher earnings, but because of their limited ability of time to co-parent. Child Support cannot be addressed in any type of premarital agreement and is not reduced due to any spousal support or property buy out received. Spousal support is generally paid from the higher income earner to the lower income earner. The general rule of thumb is that the support would be paid for one half the length of the marriage. One of the factors the Court must look at in setting the amount of spousal support is the marital standard of living.

As to the division of property, a professional or business owner who established a business prior to marriage is subject to paying the soon to be ex for their community property interest in the business or practice. Valuing the small business is an area in which reasonable minds can differ significantly and it becomes more complicated when an analysis has to be made, not only of the value of the business, but allocating a certain amount ot separate property and a certain amount to community property. Most frequently, forensic accountants or other evaluation professionals are retained in addition to the attorneys to analyze cash flow available for support as well as render an opinion as to the value of the business or practice.

In the absence of premarital agreement or other agreement of the parties with respect to support or division of assets, it is nearly impossible to avoid the retention of multiple professionals to deal with these issues. Reasonable experts could vary significantly in their opinions on these matters and parties may, and often do, “posture” then litigation predictability is significantly compromised.