There are several ways to address alimony in a prenup, and it mostly depends on you and your partner’s situation and what makes sense for you. Another vital thing to keep in mind is that alimony is handled differently from state to state. How California deals with alimony may be completely different than how Alabama deals with alimony. These are just general suggestions for how to address alimony in a prenup, with a focus on California.
What is alimony?
Alimony, also called spousal support or maintenance, depending on what state you’re in, is the financial support paid from one ex-spouse to the other financially disadvantaged spouse in the event of divorce. The laws that dictate alimony are established by each state. How alimony is treated in California may be slightly different than in New York.
Generally, states have a formula that dictates the amount and duration of alimony. For example, in California, according to California Family Code Section 4320, a court will first determine if spousal support is necessary by looking at a set of factors, such as the duration of the marriage, the age of the parties, the standard of living they had during the marriage, and more. If the court deems alimony is necessary, then the next step is how much and for how long. Again, each state is different, but in California, a court will first determine if the spousal support should be temporary or long-term. Depending on that, there are different formulas for reaching a conclusion.
Full waiver of alimony in a prenup
One of the ways you can address alimony in a prenup is to waive it altogether. This means alimony is completely off the table in the event of a divorce, and neither party can request it from a court during the divorce proceedings.
Whether or not you should waive alimony is up to you and your partner, and your respective financial situation at the time of marriage, as well as what you each expect to earn during the marriage. To get the wheels turning on this topic, you can start discussing the following questions: Do you both have financial independence? How much do you each make? Does either of you plan to stay at home with the kids? In the event either of you becomes disabled, would you (or your partner) be okay without financial support? These are some of the considerations you should be taking in deciding whether or not to waive alimony in your prenup.
You could also choose to waive alimony up until a certain date. For example, you could say that you want to waive alimony until you’ve been married for 20 years (or any other number of years). After that, you’re okay with the court deciding on whether or not alimony is appropriate for your situation. Twenty years is a long time, and you feel that things will probably have changed drastically, and alimony may be more appropriate at that time. This is opposed to getting divorced after five years and then paying alimony, which you might feel is unfair for such a short-duration marriage.
Waiving alimony can come with many stipulations, depending on your state. For example, in California, if you waive or limit alimony in your prenup, you are required by law to have legal representation. If you do not have legal representation and you waive or limit alimony, the court will not enforce it.
Leaving alimony in and letting the court decide
One way of addressing alimony could be to not address it at all! Yes, that’s right, you can simply add a clause in your prenup that states you and your partner do not want to decide on alimony, and you leave the decision in the court’s hands in the event of a divorce. Why would anyone do this? Well, they might feel like, without a crystal ball, it’s so hard to determine whether alimony would be necessary. Maybe they’re not sure if someone will stay home with the kids yet. Maybe one person is starting a business, and the other isn’t. What if something tragic happens, like an accident, and someone becomes disabled? The possibilities of the future are truly endless. A court’s job is to make fair decisions, so it’s reasonable that a couple would leave it up to the divorce judge.
Equalization payments in exchange for the alimony waiver
Let’s say you are set on waiving alimony. There is a way to offset this waiver by writing into your prenup an equalization payment in the form of a lump sum clause that will equalize the loss of alimony. For example, you could have a couple that waives alimony in their prenup, but one party feels slightly disadvantaged by this, so they request a lump sum payment from the other party (who probably has more wealth). It might look something like this: John and Mary are married; John is the breadwinner, and Mary is a stay-at-home mom. In their prenup, they both waived alimony, but there is a lump sum clause that allows for Mary to receive a $100,000 payment from John upon divorce. This is not alimony but instead a lump sum payment in exchange for waiving alimony.
Why would someone choose to do this? This might be for someone who likes definitive answers. Alimony can sometimes be hard to pinpoint exactly what a court will order, and by waiving alimony and paying a lump sum instead, both people have cold, hard numbers and financial expectations.
Caps on the amount and/or duration of alimony
Another way to address alimony in your prenup is to explicitly write in a cap on the amount and/or duration of alimony. For capping the amount of alimony, this could be the actual end-game amount of alimony or simply a cap on the percentage of income. For example, maybe you want to say that alimony is capped at no more than $100,000 in total alimony paid. Or maybe you want to say alimony is capped at no more than 10% of the yearly income. You can definitely get a bit creative with this and determine a cap that makes sense for you and your partner.
Limiting what sources of income can be used in determining alimony
As we discussed earlier, each state has its own method of determining how much alimony and for how long. States may look at the different sources of income from the paying spouse to calculate a percentage and dictate alimony. For example, let’s say John is required to pay alimony. His sources of income are rental property, dividends, and a salary. A court may add up his total income for the year and calculate alimony on all of his income sources. Circling back to the prenup, John may say, “I don’t want my rental property income to be included in that alimony calculation because that’s for my kids’ inheritance.” In that case, John would write into his prenup that his rental property income is off the table when it comes to calculating alimony. Now, if this is an enforceable clause, the court will only add up the dividends and salary in determining alimony.
Unconscionability of alimony in prenups
We can’t mention alimony in prenups without mentioning a potential pitfall of such. Courts can be weary of too much limitation or waiving of alimony and can strike it if it finds it necessary. Why? Well, a court may find the restriction of alimony or waiver of alimony to be unconscionable (i.e., extremely unfair) for a variety of reasons. For example, if the waiver of alimony would leave one party destitute and needing public assistance, a court would likely deem that clause to be unconscionable and strike it from the prenup and potentially award alimony anyways. Another example would be if the restriction of alimony leaves one person with absolutely nothing while the other person zips off in their Lambo.
In California, whether or not a limitation or waiver of alimony is unconscionable is generally measured at the time of the divorce. So, if it would be extremely unfair at the time of the divorce to limit alimony, then the court may strike the clause and award alimony how they see fit. For example, perhaps at the time of the prenup signing, Spouse A earned $350,000 a year, and Spouse B earned $250,000 a year. They waived alimony and kept all assets separate because they both felt financially secure. At the time of the divorce, Spouse A’s income is now $1,000,000 a year, Spouse B is no longer working, and Spouse A’s income drops to $0. A court might see a waiver of alimony here impractical as it would leave Spouse B with nothing and no support.
The Bottom Line
How you address alimony in your prenup is ultimately up to you. What you decide will depend on your financial situation, life goals, and each person’s wishes. There are many options, but some to consider may be waiving alimony altogether, leaving it in for the court to decide, equalization payments in exchange for alimony waiver, and limiting income sources for alimony payments. Don’t forget about the potential pitfall of unconscionability in a prenuptial agreement, alimony waivers, or limitations.
Raymond Hekmat’s practice of law has been devoted exclusively to areas of California family law focusing on prenuptial agreements, divorce consulting and mediation, since earning his Juris Doctorate degree from Loyola Law School in 2009. During his tenure at Loyola, Raymond was President of the Evening Bar Association, and was awarded the Alumni Association Governors’ Alumni Award. While earning his degree, Raymond worked as a law clerk, and later an associate, for a Beverly Hills family law firm. Prior to founding HLM, Raymond’s practice involved complex family law litigation involving high-asset property division, complex custody litigation, jurisdictional issues, division of community estates and prenuptial agreements.
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