If you live in one of the nine community property states, should you get a prenup? That is, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. A community property state (i.e., the states just mentioned) generally splits all assets and debts acquired during the marriage equally. A prenup can help change these rules, along with spousal support modifications. You can override the state laws (such as the 50-50 split) with a prenup, which allows you and your future spouse to make the rules about your money, and not the state. So, let’s dive into what you need to know about prenups in community property states.
What is a prenup?
A prenuptial agreement (i.e., a prenup) is a contract between future spouses that predetermines certain issues like property division, alimony, debt, gifts, inheritances, pets, death, and more. Prenups are signed prior to walking down the aisle and only become effective once you actually get married. Each state sets out the laws that govern prenups– what is required in California is not the same as in New York. A prenup is also an emotional contract. It lays the groundwork for marital expectations and boundaries and facilitates deep communication. You are “forced” to discuss topics such as retirement, money management, death, debt, and so much more. Getting aligned on these topics before tying the knot can help ensure both spouses walk into the marriage with eyes wide open.
What is a community property state?
In the United States, there are two different legal frameworks for dividing up property without a prenup: community property and equitable distribution. The majority of states are equitable distribution states, while nine states are community property states. The community property states are:
- Arizona,
- California,
- Idaho,
- Louisiana,
- Nevada,
- New Mexico,
- Texas,
- Washington, and
- Wisconsin.
In community property states, the general principle is that assets acquired during a marriage are split equally (50/50) between spouses in the event of a divorce. The term “community property” refers to any property accumulated during the marriage, while “separate property” refers to any property acquired before the marriage.
To illustrate, let’s consider a scenario where one spouse owned a boat prior to getting married and then bought a home during the marriage. Typically, the boat would be considered separate property since it was acquired before the marriage, while the house would be considered community property since it was purchased during the marriage. As a result, the house would be subject to the 50/50 split, but the boat would not.
Can a prenup override community property laws?
The short answer is yes, it can, as long as it’s valid and enforceable! A prenup lets you make your own rules regarding certain topics, such as property division and spousal support. Let’s break it down with an example: the default law in a community property state is that anything acquired during marriage is split 50/50. But you create a prenup that says anything you acquire during marriage is actually your separate property, not subject to division. So, let’s say you buy a house during the marriage. Under the default law, it would typically be split 50/50, but under your valid and enforceable prenup, the house is considered your separate property, not subject to division. So, as you can see, you can use a prenup to override default community property laws and make your own rules.
Why get a prenup in a community property state?
Without a prenup in a community property state, your property will likely be split 50/50, regardless of who bought it. So, for example, if your spouse doesn’t work and sits home all day and does absolutely nothing, and you work 80 hours a week to support the two of you, the property you buy during the marriage is most likely going to be split 50/50 (with a few exceptions). If you are okay with that, then by all means, do not get a prenup. However, if you want to make sure “what’s mine is mine, and what’s yours is yours” (or somewhere a little less rigid than 50/50), you may want to consider a prenup. With a prenup, you can make sure to keep certain assets separate. You don’t have to keep everything separate, either. Maybe you’re super generous and you do want to share, but just not everything. That’s perfectly okay and possible with a prenup, too!
Examples of prenups in community property states
Let’s walk through some hypothetical examples of what a prenup might look like for a couple residing in a community property state. Remember, each community property state has its own laws, so what might work in one community property state may not work in the other.
Example 1: The business owner prenup
John and Jennie are getting married in California (a community property state). John plans on starting a business during the marriage and knows about the 50/50 rule in California (property acquired during the marriage is split 50/50). He doesn’t want to subject his business interests to the 50/50 rule in case of a divorce. So, he gets a prenup. In his prenup, he makes sure that his current and future business interests are listed as separate property, not subject to division. They live happily ever after!
Example 2: The breadwinner vs. stay at home parent prenup
Katie and Kevin are getting married in Texas (a community property state). Katie knows she will be earning a very high income (in the upwards of $500,000 annually) during the marriage. She will be the main breadwinner, and Kevin will likely be a stay-at-home dad. She wants to keep much of her property separate, but is okay with sharing some things. She decides to keep her income separate, but is okay with sharing any appreciation on assets she earns during the marriage. She and Kevin talk about this and decide this is what’s best and fair for their situation. The result? Katie’s income is kept separate, but any separate asset appreciation is split. For example, Katie’s houses, which she purchased, increased by $800,000 during the marriage. She’s okay with splitting this 50/50, but wants to keep the income separate.
Frequently Asked Questions (FAQs) about community property states and prenups
Q: Are prenups enforceable in community property states?
A: Yes! You can definitely enforce a prenup in community property states, as long as you follow each specific state’s legal requirements for a valid and enforceable prenup in YOUR state. For example, Texas prenups are governed by the UPAA, whereas Louisiana’s prenups are governed by their own statute.
Q: How do I get a prenup?
A: You can get a prenup by hiring a lawyer in your state and having them draft an agreement. You can also utilize HelloPrenup’s platform to create an agreement with your partner while also having the option to add on licensed attorneys in your state directly through the HelloPrenup website.
Q: How does a prenup work in a community property state?
A: A prenup can override the default property division laws of a community property state (i.e., the 50/50 rule). Your partner can always challenge this prenup in the event of a divorce, but it will be up to a judge to decide if it’s enforceable (or a settlement between you and your spouse).
Q: What are the community property states?
A: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin
The bottom line on prenuptial agreements in community property states
Yes, you can get a prenup in a community property state, and yes, they can be enforced as long as you follow the requirements laid out by each state. The best news? You can set the rules for your property and actually override the community property 50/50 rule in your state. And remember, prenups are more than just contracts—they’re also a way for you and your future spouse to get on the same page and align on certain life goals before tying the knot. Plus, if you want to ensure your assets are not split up 50/50, then getting a prenup may be something you want to consider! Happy planning!
Nicole Sheehey is the Head of Legal Content at HelloPrenup, and an Illinois licensed attorney. She has a wealth of knowledge and experience when it comes to prenuptial agreements. Nicole has Juris Doctor from John Marshall Law School. She has a deep understanding of the legal and financial implications of prenuptial agreements, and enjoys writing and collaborating with other attorneys on the nuances of the law. Nicole is passionate about helping couples locate the information they need when it comes to prenuptial agreements. You can reach Nicole here: Nicole@Helloprenup.com
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