How do I protect assets acquired prior to marriage now that we're buying our first house as a couple?

Asked over 4 years ago - Sacramento, CA

We're buying our 1st house as a couple & using proceeds from our current home, which is in my name, as a down payment. I bought current house in '98 and husband-to-be moved in in '03. Since assets acquired prior to marriage are not divided, how can I protect what I invested on my own prior to him moving in? What if we were to divorce in, say, ten years and we have to sell our home. Is there a document that can be signed now that ensures I get back a bigger percentage of our assets at that time?

Thanks

Attorney answers (3)

  1. Pamela Koslyn

    Contributor Level 20

    Answered . Whether or not you're now married, CA's property laws and community property laws already protect your separate property, i.e., things you owned before marriage or after separation, and inherited property at any time.

    Same goes for your investment and equity in your current house. He might have a claim for reimbursement for his contributions to that house, if any, so you can have a family lawyer prepare a pre-nuptual agreement (if you're not married now) or a similar document that recites what each of you is bringing to the marriage and is separate property, to avoid any disputes later.

    Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.

  2. Donald Andrew Hansen

    Pro

    Contributor Level 11

    Answered . As the previous response indicated, California Community Property law is very clear about division of real property assets (e.g., a house) in dissolution. But your pre-marital situation is a little complicated. If you have good records, the value of the home, including appreciation/depreciation to date of sale, is yours. But since he was living in the home for 7 or so years before the sale, he could claim a right to reimbursement under contract law for contributions to mortgage payments he may have made during that time.

    Assuming your will take joint title to the new home and jointly assume responsibility for the mortgage, until you are married it will be treated in the same way as any joint venture between unmarried persons, so contract law will prevail. Once married, community property law applies.

    In either case, if there is a divorce down the line, clear documentation of who paid what and when will be required. So here are two things you should do now.:

    (1) Be sure you have a safe and secure place to keep all escrow, mortgage payment and improvement cost documents for your prior home and and your new home in a safe place in case you need to trace your investments.

    (2) Write a strong pre-nuptial agreement (or, if you are already married, a strong marital agreement) detailing both the contributions made by each of you to the new home, and the agreement you have for possession and division of the marital home and assets in case of divorce. And keep in mind that these contracts can also apply in case you die -- do you want the interest you can trace to your pre-marital assets to automatically go to your spouse, or would you rather they go to someone else? The wording is critically important, so you should engage competent counsel to draft such an agreement, which can also avoid legal arguments over other issues during a time of stress.

    Good luck!


    Disclaimer: This information about California law and procedures is based on the limited facts provided by the person asking the question. It is not offered as advice to that person or any other reader and does not form an attorney-client relationship. Readers in other jurisdictions should be aware that California law may differ from that of their state.

  3. Jonathan H Levy

    Contributor Level 20

    Answered . In theory you can protect your interest but better have an attorney draw up an agreement now if you are concerned. What typically happens is that as you are married and making payments on the mortgage your separate property interest shrinks and shrinks.

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