What financial disclosure is required?
Disclosure is the part of a premarital agreement most often treated as paperwork and most often litigated later. What each party knew, and when, is frequently the central question.
California Family Code section 1615 requires fair, reasonable, and full disclosure of each party's property and financial obligations before a prenuptial agreement is signed, unless disclosure is expressly waived in writing. Disclosure is normally made through attached schedules listing real property, business interests, accounts, equity compensation, debts, and income — including assets located outside the United States.
The statutory standard
Under California Family Code section 1615, an agreement may be unenforceable where the party against whom enforcement is sought did not receive fair, reasonable, and full disclosure of the other party's property and financial obligations, unless that disclosure was expressly waived in writing and the party otherwise had, or reasonably could have had, adequate knowledge.
The standard is not satisfied by a general statement that one party is wealthy. It contemplates specific information about what the property is and what it is worth.
What a schedule should contain
Disclosure is normally made through schedules attached to the agreement. Each party's schedule should identify assets and liabilities with enough specificity that the other party can understand what is being addressed.
- Real property, with location and approximate value
- Business interests, with the form and percentage of ownership
- Bank, brokerage, and retirement accounts
- Stock options, restricted stock, and deferred compensation
- Trust interests and expected inheritances where relevant
- Debts, guarantees, and tax obligations
- Income from all sources
Values should be approximate but honest. A figure that is materially understated is worse than a range, because it suggests the number was chosen rather than estimated.
Foreign and hard-to-value assets
Property held outside the United States is disclosed on the same terms as domestic property. Clients with real estate, accounts, or company interests in another country sometimes assume those assets are outside the agreement's scope. They are not, and omitting them undermines the disclosure the agreement depends on.
Closely held business interests and early-stage equity are difficult to value precisely. The answer is to describe the interest accurately and state the basis of the estimate, not to leave it off the schedule.
Keeping records after signing
Disclosure establishes the starting position. Whether property retains its separate character years later often depends on records — which account received which deposit, which funds paid down which loan.
Agreements frequently include an obligation to maintain the records needed to trace separate property. That provision is easy to sign and easy to forget, and it does substantial work if the marriage later ends.
Primary sources
This article provides general information about California law and does not constitute legal advice. Every matter depends on its own facts. Consult an attorney about your circumstances.
Frequently asked questions
What must be disclosed in a California prenuptial agreement?
Each party's property and financial obligations: real property, business interests, bank and brokerage and retirement accounts, stock options and deferred compensation, trust interests and expected inheritances where relevant, debts and guarantees, and income from all sources.
Do foreign assets have to be disclosed in a California prenup?
Yes. Property held outside the United States is disclosed on the same terms as domestic property. Omitting foreign real estate, overseas accounts, or interests in foreign companies weakens the disclosure the agreement's enforceability depends on.
Can financial disclosure be waived in California?
Section 1615 contemplates an express written waiver of disclosure, but a waiver does not cure every problem: the party must also have had, or reasonably could have had, adequate knowledge of the other party's property and obligations.