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The Professor Nedley Series
The Shifting Tides of Marital Property
Premarital Agreements
March, 2002
This is the touching story of the ever-changing character of property in the hands of a betrothed couple as they progress from hand-holding, soon-to-be weds, to god-fearing, earth-scorching litigants queuing up at the courtroom door, waiting for the all-knowing, wise judge to bring justice and retribution swiftly crashing down on their opposite number in the form of a crushing award of property, demonstrating forever the correctness of their position of truth and light in this crazy world and thus affirming the judge's wisdom in the pantheon of justice or on the other hand the Judge could screw the whole thing up. Modern law leaves many questions unanswered.
1. Premarital Agreements: An Antenuptial Agreement is a contract between a man and a woman who plan to marry. (Conversely a Transmutation Agreement is a contract between a man and a woman who have already married).
a. History; Back in the dark ages prior to 1/1/86 they were in fact called Antenuptial Agreements, today the preference is for prenuptial or more likely Premarital Agreement. These documents were at one time also called “marriage contracts”. In the old days it was not uncommon for a single attorney, usually the husband's, to draft the document, but first, carefully getting a written waiver of any conflicts that might exist. Only in a more complex case would outside counsel be contacted because the courts wouldn’t enforce an agreement that seemed unfair or where there was undue influence.
The recommendation, however, was to get counsel
The word from the C.E.B. bible, The Family Lawyer (1962), was “for the parties who want a seriously enforceable agreement they are advised to obtain independent counsel despite the added expense”.
There could be no undue influence or fraud.
The rules are those of persons dealing in a confidential relationship.
There should have been full disclosure.
The agreement could not be promotive of divorce, which was a sticky wicket to interpret considering that any premarital agreement was in contemplation of a bitter end.
Consideration was another concern of the early drafter. This element was usually satisfied by finding that the promise to marry that is subsequently kept is sufficient consideration.
Believe it or not, oral agreements, just as in any contract, were given credence at one time. The real world pretty much eliminated oral agreements as a practical matter.
The agreement was valid without a notarial acknowledgement or recording, however, if it affected property it had to be recorded.
Note: At that time California courts routinely declined to enforce provisions by which either spouse purported waive S.S.. This was deemed to be “law-imposed” and solely within the discretion of the court.
b. Modern History; From 1/1/86 to Pendleton and Barry’s REAL homerun (We knew generally what we were doing). As the modern history advanced, the need for counsel advanced with it. Family Law Specialization had become a reality in 1980 and although not required, no competent Family Law Specialist would draft an agreement without sending the other prospective spouse out to other counsel for a full and honest review of the proposed agreement. Policy on S.S. support remained consistent. Consideration was no longer a major concern of draftspersons.
1. Statutory Starting Point; Family Code §1600 et. Seq. aka The Uniform Premarital Agreement Act was enacted in 1985 and became effective January 1, 1986.
i. Operates as Statute of Frauds requiring a writing signed by the parties
ii. No consideration necessary
iii. Recordation optional
iv. Some subjects of agreement expressly permitted and forbidden
v. Permits other subjects not in violation of public policy
vi. Expressly permits unconscionability (at execution, which may be cured by disclosure or waiver) and other unfair advantage defenses (lack of voluntariness)
Places burden of proof on party seeking to set aside
2. Bonds and Pendleton; The current case law and the 500 lbs Gorilla.
(a) In Re Marriage of Bonds
1. Confirms that knowledge trumps unconscionability. Reviews dictionary definition of voluntary.
2. Concludes that the UPA does not require strict scrutiny, knowledgeable waiver, or offer to pay for attorney: lack of attorney is just one factor among several
3. Burden of proof remains on party seeking to set aside
4. Affirms that subtle coercion may be sufficient to set aside (unlike commercial contract enforcement)
5. Affirms that marital fiduciary relationship does not exist at time of premarital agreement
6. Affirms trial court on substantial evidence standard.
(b) Pendleton
1. Waiver of spousal support is not per se against California public policy
2. Omission of legislative position lets the courts rule on public policy
3. Recognizes the difficulty in treating support differently than property
4. Does not attempt to define when enforcement of a waiver would be unjust.
(c). The Interval; From Bonds to Kuehl (The new frontier and the Wild, Wild West
(d) Kuehl Konkers All; Assemblwoman Kuehl, a true seeker of justice, tinkered with just a couple of little, tiny code sections thus providing full employment for a new generation of judges and lawyers and their malpractice carriers.
i. Unconscionable: still permits trumping by disclosure, waiver or adequate knowledge but adds requirement of “full” disclosure
ii. Voluntary Agreements (Bonds):
1. Changes burden of proof to person seeking enforcement: agreement not voluntary unless court finds all of the following….
2. Represented by independent legal counsel or advisement of right to independent legal counsel and express waiver by separate writing
3. At least seven days between presenting with agreement and advised to seek independent legal counsel and agreement was signed
4. If unrepresented by legal counsel:
a. Fully informed of terms and basic effects of agreement as well as rights and obligations he or she was giving up
b. Proficient in the language of the explanation and agreement
c. Explanation of rights and obligations relinquished shall be memorialized in writing and delivered to the signing party before signing
d. Receiver must sign a document declaring that he or she received the information described in “this paragraph” and indicating who provided it
e. Agreement and other writings not executed under duress, fraud, or undue influence and the parties did not lack capacity to enter into the agreement
f. Any other factor
5. Spousal Support (Pendleton)
a. Provision not enforceable if party was not represented by independent counsel at the time the agreement was signed or if the agreement was unconscionable at the time of enforcement
b. Otherwise unenforceable agreement is not made enforceable solely because party was represented by independent counsel
e. What’s Next? Where does it end? Is there retroactivity? Is there ever a “sure thing”? Should the bench be strict or easy in their application of the “new” rules?