Separate property is any property that was acquired prior to marriage, but it also includes property that is inherited during marriage or gifted during marriage to a particular spouse, as well as income produced during marriage from separate property. This would include the interest earned on an account owned separately by a spouse. Community property is basically everything else; everything acquired by a married couple during their marriage, including earnings of both parties from labor and any assets that are acquired from that community property income, unless the parties agree otherwise in a prenuptial agreement.
These issues can become somewhat murky at times, such as when a party owns a rental property prior to marriage as separate property but following marriage, uses community assets to make repairs to the property or spends his (community property) time to improve it. In a divorce proceeding, the court would likely award the wife a certain amount of value in that separate property as her share of the community property that was invested in it.
Separate and community property can easily become commingled; one of the purposes of a prenuptial agreement is to prevent that from happening. For instance, you can agree that even if one party does invest community property time or income in his separate property during the marriage, the community does not acquire an interest in that property. The same thing can be agreed to with respect to separate property investments with respect to community property
The difference between separate and community property is important is because it determines the rights of each party in a divorce and potentially affects inheritance rights at death. It is important for parties each with their own estates to define and record which assets are separate and which are not, so that it will be easier to trace them in the future.
Can the Parties Amend the Terms of a Prenuptial Agreement After Marriage?
They can, although during the negotiations to modify the prenuptial agreement after marriage, the parties are now fiduciaries to each other, meaning they have a higher obligation of disclosure and fairness to the other spouse than existed when the prenuptial agreement was negotiated. Amendments to a prenuptial agreement after marriage are significantly more subject to challenge in the court.
What About Pre-Marriage Indebtedness and Prenuptial Agreements?
Pre-Marriage Indebtedness should always be a matter of discussion about whether such debts should be paid from community property, earnings after marriage or from separate property sources owned by the party with the debt. Such issues need to be addressed ; a common issue among newlyweds these days is student loans, which can also create issues in the marriage if not addressed in advance.
My experience is that prenups are becoming more common, especially with the legalization of same-sex marriage. Also, as couples get married later in life having acquired significant estates, they are more motivated to require prenuptial agreements to address issues like spousal support and property identification and treatment after marriage. Also more couples have children from prior marriages which can create issues that need to be sorted out in a prenuptial agreement. I expect them to become much more common in the future.
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