By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.
The main pro of a prenup is control: two people replace their state’s default property rules with written terms they chose while they still agree. The main cons are cost, a hard conversation, and the chance that a rushed or lopsided agreement is not enforced. For a high-earning couple in California or Washington, the honest answer is narrower than most articles suggest, because California’s community property rules already protect a lot by default (Washington’s protect less at divorce, as explained below), so a prenup earns its cost only for specific assets and specific family situations.
This guide is for W-2 households earning roughly $750,000 to $3 million: physicians, scientists, and tech and biotech employees with RSUs, a house in an expensive market, and young children (or children planned). It weighs the pros and cons side by side, runs the numbers on a common Bay Area case, and covers the postnuptial agreement for couples who are already married.
What California and Washington already do without a prenup
Both states are community property states. In California, what either spouse earns or buys during the marriage while living in the state is generally community property, owned half and half regardless of whose name is on the account (Family Code 760). What you owned before the wedding, and gifts and inheritances you receive later, stay separate (Family Code 770). Washington’s core rules match: property acquired during marriage is community (RCW 26.16.030), and pre-marriage property, gifts and inheritances are separate (RCW 26.16.010). The big difference is at divorce. A Washington court divides all property, community or separate, in whatever way it finds “just and equitable” (RCW 26.09.080). Separate property is not automatically kept, and the split does not have to be 50/50, so a prenup can matter more in Washington than in California.
California also has a reimbursement rule many couples do not know about. If you put separate money into a community asset, such as a down payment on a jointly titled house, you are reimbursed that amount at divorce unless you waived it in writing. The catch: reimbursement is “without interest or adjustment for change in monetary values” (Family Code 2640). You get your dollars back, not the growth on them.
So the question a prenup really answers is not “do I keep what I had?” (in California, usually yes, if you can trace it). It is “how do we treat the growth, the mixing, and the things that straddle the wedding date?”
Prenup pros and cons at a glance
| Pros | Cons and limits |
|---|---|
| Sets how growth on pre-marriage money is split (the part Family Code 2640 does not cover). | Two lawyers, full disclosure and several drafts. Expect weeks of work, not days. |
| Settles unvested RSUs and options granted before the wedding, which otherwise need a court formula to split. | Cannot reduce a child’s right to support (Family Code 1612(b)), and custody is always decided on the child’s interests at the time. |
| Can require each spouse to sign a will or trust that carries out the deal, and can cover life insurance ownership and death benefits (Family Code 1612(a)(4) and (5)). | Spousal support terms are unenforceable in California unless the waiving spouse had independent counsel, and a court can still refuse terms that are unconscionable at enforcement (Family Code 1612(c)). |
| Protects children from a prior relationship when paired with an estate plan. | Cannot waive a new spouse’s 401(k) survivor rights. That consent must be signed after the wedding (Treas. Reg. 1.401(a)-20, Q&A-28). |
| Can mean a shorter, cheaper, more private process if the marriage ends, which matters most to the kids. | Keeping assets separate can cost a tax benefit at death (see the step-up section below). |
Worked example: a down payment from pre-marriage RSUs
Assumptions (illustrative, simplified): Mei is an Apple engineer. Before marrying Arjun, a physician, she sold vested company shares and has $400,000 of separate money. After the wedding they buy a $3,000,000 home in Palo Alto, titled jointly, using her $400,000 as the down payment and a $2,600,000 mortgage. Their combined W-2 income is about $1.2 million. Years later the home is worth $3,800,000, the mortgage is down to $2,300,000 (paid from salaries, so community money), and they divorce. Net equity is $1,500,000. We ignore selling costs and taxes.
| Outcome | No prenup (Family Code 2640) | Prenup: down payment keeps its share of growth |
|---|---|---|
| Mei’s separate reimbursement | $400,000 | $400,000 |
| Growth tied to the down payment (13.33% of $800,000 appreciation) | Shared as community | $106,667 to Mei |
| Remaining equity split 50/50 | $1,100,000, so $550,000 each | $993,333, so $496,667 each |
| Mei’s total | $950,000 | $1,003,333 |
| Arjun’s total | $550,000 | $496,667 |
The difference here is about $53,000. That is real money, but it is not the life-changing gap people picture, because California’s default rule already returned Mei’s principal. Now change one fact: Mei did not keep records showing the $400,000 came from pre-marriage shares. Without tracing, the reimbursement claim is much harder to prove, and her total can fall toward $750,000 (half of everything). For many couples, the most valuable part of a prenup is not the clever split. It is the attached schedule of what each person owned on the wedding day.
Where a prenup earns its cost for this kind of family
- Large unvested equity at the wedding. An RSU or option grant made before marriage that vests after it is partly separate and partly community. California courts typically divide it with a time-based formula, which is workable but invites argument over which formula fits. A prenup can simply name the split.
- A startup stake or early-employee options. Value can jump after the wedding because of work done during the marriage. Deciding the rule in advance avoids a valuation fight.
- Children from a prior relationship. The prenup handles divorce. A trust, will and beneficiary forms handle death. You need both.
- Expected inheritance or family money. Inheritances are separate by default, but they mix quickly once used for a house or school tuition. A prenup can set how mixed money is treated.
- One parent planning to step back from work. If one spouse will cut hours while the children are young, couples sometimes agree on how that affects property or support. Support terms face the extra rules in the table above.
If none of these apply, two W-2 earners starting with modest savings may be well served by the default rules plus good records, and the legal budget may do more good spent on wills, guardians and a trust.
The tax trade-off: separate property loses the double step-up
This con rarely appears in prenup articles. When one spouse dies, federal law resets the cost basis of the decedent’s property to its value at death. For community property, the surviving spouse’s half also gets that reset, as long as at least half of the community interest was included in the decedent’s estate (IRC 1014(b)(6)). Separate property owned by the surviving spouse gets no reset.
Example: a brokerage account of company shares bought for $500,000 is worth $2,500,000 when one spouse dies. If it is community property, the whole account can take a new basis of $2,500,000, and the survivor could sell without the $2,000,000 gain. If a prenup made it the survivor’s separate property, the survivor keeps the old $500,000 basis on it. In California, which taxes capital gains as ordinary income at rates up to 13.3% (2025 top rate, FTB), that difference is large. In Washington, long-term gains on stock above the state’s annual standard deduction ($278,000 for 2025) can face its 7% capital gains tax (9.9% on taxable gains above $1,000,000) on top of federal tax (2025 onward, Washington DOR). A well-drafted prenup can keep some assets separate for divorce purposes while the estate plan addresses death, but this trade-off should be on the table before anyone signs.
What makes a California prenup hold up
California sets out when an agreement counts as signed voluntarily (Family Code 1615). The spouse it is enforced against must have had independent counsel or waived it in a separate writing, at least seven calendar days must pass between first seeing the final agreement and signing it, an unrepresented spouse must be fully informed in writing of the terms and the rights given up, and there can be no duress, fraud or undue influence. An agreement can also fail if it was unconscionable when signed and the other spouse lacked fair disclosure of the property and debts.
In practice: start at least two to three months before the wedding, give each person their own lawyer, and attach a full balance sheet including every RSU, option and ESPP grant. Washington has no seven-day statute, but its courts look hard at fairness, disclosure and independent advice, so the same habits protect an agreement there.
Already married? Postnuptial agreements and Washington community property agreements
Most parents reading this are already married. A postnuptial agreement can still define what is separate and what is community, but the bar is higher. California spouses owe each other fiduciary duties in their dealings (Family Code 721), so a deal that favors one spouse gets close review. Changing an asset’s character, such as making community shares one spouse’s separate property, requires a writing with an express declaration by the spouse giving up the interest (Family Code 852). Common triggers are an inheritance, a startup grant, or one parent leaving work to care for young children.
Washington couples should know about a different document: the community property agreement. State law lets spouses agree on the status or disposition of their community property at the death of either, signed and acknowledged like a deed (RCW 26.16.120). Many couples sign one that leaves everything to the survivor. That can be simple for a first marriage, but it can override a trust plan meant to protect children from a prior relationship, so review it alongside any prenup or postnup.
A five-question check before you call a lawyer
- Does either of you bring unvested equity, a startup stake or more than a few hundred thousand dollars of savings into the marriage?
- Will pre-marriage money go into a jointly owned home?
- Does either of you have children from a prior relationship?
- Do you expect a meaningful inheritance or family gifts?
- Will one of you step back from work while the kids are young?
Two or more yes answers usually justify the conversation. Zero or one usually means good records and an updated estate plan matter more.
What to write down for your kids
Children will never read the prenup, but they will live with the choices behind it. A one-page note explaining what you each wanted to protect, how you thought about fairness to each other, and why you chose the terms you did teaches more than the agreement itself. As Kevin Luu puts it: “Your kids don’t need to inherit your portfolio. They need to inherit your decision-making process.”
Frequently asked questions
Is a prenup a good idea if we both earn high W-2 incomes?
Often it matters less than people expect. Salaries earned during the marriage are community property either way unless you agree otherwise, and few couples want to change that. The prenup is most useful for assets that straddle the wedding: pre-marriage equity, unvested grants, a down payment from separate money, or an expected inheritance. Without those, records and an estate plan may do more.
What does “no prenup” mean in California or Washington?
It means state law decides. Earnings and purchases during the marriage are generally community property owned equally. Pre-marriage property, gifts and inheritances stay separate if you can trace them, though a Washington divorce court can divide both kinds on a just-and-equitable basis. In California, separate money put into a community asset is reimbursed at divorce without growth or interest unless waived in writing.
Can we sign a postnuptial agreement after having kids?
Yes. Married couples in California and Washington can sign agreements about their property. In California the bar is higher than for a prenup, because spouses owe each other fiduciary duties and changing an asset’s character needs an express written declaration. Each spouse should have their own lawyer and full disclosure.
Next step
List every account, grant, policy and property each of you owned on the wedding date (or own now), with statements that prove where the money came from. Take that list to a family law attorney and your estate planning team together, and decide whether you need a prenup, a postnup, or just better records. Related reading: naming a trust as beneficiary of a brokerage account, why beneficiary account names matter, domestic partner vs. spouse, questions to ask an attorney about inheritance, and our family governance work.
This article is general education, not legal or tax advice. The right agreement depends on the family’s full picture, and each spouse should have their own lawyer.
Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.
Connect on LinkedIn → · About KevinThis is part of how we approach Estate Planning for high-income W-2 families at Bright Advisers.
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