Recently in Premarital Agreements Category

California's No Fault Divorce Travels to New York

February 3, 2012

A New York Court recently granted the state's first contested no-fault divorce. While New York's no-fault divorce law is only one year old, California enacted no-fault divorce over 40 years ago, in 1970.

nyc_skyline.jpg
photo by Keith Lovett

Wife filed for divorce under New York's year old no-fault divorce law on the grounds that her marriage was "irretrievably broken." Wife testified that she has not had marital relations with her Husband for over five years, they slept in separate bedrooms and never ate meals together. Although she is in poor health, she testified that her Husband had not taken her to her doctor's appointments in the last five years or even asked about her health for the past ten years. She further testified that she had "no hope for the marriage ... and that her only wish is for a divorce so that she can have one-half of her marital assets and leave them to her four children before her demise."
Husband contested the divorce because he wanted to remain married saying he "worked hard to acquire everything the parties had" and didn't want to lose it in a divorce.

The Court applied the new no-fault law and granted Wife's request for a divorce stating, "[I]t is this Court's determination that the parties' relationship has so deteriorated irretrievably ...the plaintiff is entitled to a judgment of absolute divorce,"

In California, a no-fault divorce allows for a divorce without requiring either party to present evidence of wrong doing or breach of the marital contract. The idea behind a no-fault divorce was that removing the fault requirement would also remove some of the bad blood from the divorce process, and allow couples who wanted to break up to do so without having to make false allegations to justify the divorce to the court. No longer would couples, or even just one party, who wanted a divorce have to choose between lying under oath in open court or remain married.

Prior to no-fault divorce in California, a divorce could be obtained only through a showing of fault. This requirement meant that one spouse had to plead that the other had committed adultery, abandoned them, was cruel, or some other culpable acts. To get a divorce, parties often lied, colluded and committed fraud upon the court in order to get around the statutory limitations of the fault based requirement. Prior to the enactment of no-fault divorce, many prominent attorneys and judges in California believed that the "legal fictions" used by parties to satisfy the requirements for divorce made oaths meaningless and threatened the integrity of our legal system by encouraging perjury. Without committing perjury, many couple could not obtain a divorce, even if both parties wanted a divorce.

California's no-fault divorce law provided a straightforward ground for ending a marriage - irreconcilable differences. Not only did California's no-fault divorce laws eliminate the fault requirements to obtain a divorce for spouses seeking a divorce by mutual consent, but also in cases where only one party to a marriage wanted a divorce.

No-fault divorce ushered in other changes to divorce laws. Under no-fault divorce, gender-based responsibilities such as the Husband always being responsible for child support while the Wife was always responsible for custody gave way to gender-neutral responsibilities such as both parties being eligible for custody and responsible for child support.

As an interesting side-note, California's no-fault divorce policy even invalided a Marital Agreement that was intended, after Husband had an affair, to "preserve, protect and assure the longevity and integrity of an amicable and beneficial marital relationship between them." In the Diosdado case, rather than divorcing, the parties agreed to be subjected to a legal obligation of emotional and sexual fidelity to the other. If either party volitionally engaged in certain acts with any person outside of the marital relationship, that party would be in breach of the Marital Agreement, which provided for liquidated damages should the obligation of sexual fidelity be breached. Damages included that the party in breach would be: (1) required to vacate the family residence, (2) solely responsible for all attorney fees and court costs, and (3) pay $50,000 over and above any settlement or support obligations. Of course, Husband had another affair and Wife sued for breach of contract, seeking to enforce the liquidated damages clause of Marital Agreement. However, the Trial Court granted Husband's judgment on pleadings, because the Marital Agreement was contrary to the public policy underlying California's no-fault divorce laws. Wife appealed, but the Court of Appeal affirmed stating, "Here, where the agreement attempts to impose a penalty on one of the parties as a result of that party's 'fault' during the marriage, it is contrary to the public policy underlying the no-fault provisions for dissolution of marriage. [See Family Code §2310, Family Code §2335.] For that reason, the agreement is unenforceable."

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Should I get a prenuptial agreement before I get married in San Diego, California?

The most recent controversy in Hollywood is the split between multi platinum recording artist, Katy Perry, and movie actor, Russell Brand, who announced the end of their marriage on December 30, 2011 after only 14 months. Rumor has it that the couple did NOT have a prenuptial agreement. Katy Perry made a record breaking $45 Million during the marriage. Russell Brand only made about $7 Million. In California, which is a community property state, assets are split evenly among the couple if there is no pre-nup, meaning Perry stands to lose over $20 million not including the two homes the ex-couple purchased together during the marriage.

A prenuptial agreement is a contract between two people about to get married that spells out how assets will be distributed in the event of divorce or death. Premarital agreements or "pre-nups" establish the property and financial rights of each spouse.

At one time, a premarital agreement that was not made in contemplation that the parties would remain married until death was considered to be against public policy in California and other jurisdictions, but the CA Supreme Court concluded in 1976 that the validity of a premarital agreement "does not turn on whether the parties contemplated a lifelong marriage" and in 1985, the California Legislature adopted most of the provisions of the Uniform Premarital Agreement Act. Pursuant to Family Code section 1615, a premarital agreement will be enforced unless the party resisting enforcement of the agreement can demonstrate either (1) that he or she did not enter into the contract voluntarily, or (2) that the contract was unconscionable when entered into and that he or she did not have actual or constructive knowledge of the assets and obligations of the other party and did not voluntarily waive knowledge of such assets and obligations.

The most important factor of a solid premarital agreement is honesty. Both parties must fully and completely disclose of their assets. If it turns out either person was hiding something, a judge can throw out the entire contract. The document should be signed as early before the nuptials as possible to avoid the appearance of coercion, another key reason why some agreements are rendered null and void by the court. A valid pre-nup should also be "fair" and will not leave one of the parties destitute.

You should consider getting a pre-nup if you fall into any of the following categories:

• You have assets such as a home, timeshare, stock or retirement funds
• Own all or part of a private or family business
• You may be receiving an inheritance
• You have children and/or grandchildren from a previous marriage
• You or your spouse is much wealthier than the other
• One of you will be supporting the other through college
• You have loved ones who need to be taken care of, such as elderly parents
• You have or are pursuing a degree or license in a potentially lucrative profession

Continue reading "Should I get a prenuptial agreement before I get married in San Diego, California?" »

Football Legend Deion Sanders Files for Divorce

According to FOX news, former NFL superstar Deion Sanders has filed for divorce. His wife, Pilar Sanders, filed a response this week in which she alleges Deion was unfaithful. "She accuses him unkind, uncaring, insensitive, cruel and unusual treatment, as well as physical, mental and emotional abuse of her and their three children." The response urges the court to punish Deion for "immoral, corrupt, lewd, perverted, unnatural, sinful conduct." Ironically, the response is similar to that filed by Deion's first wife Carolyn. Carolyn also accused Deion of adultery and "cruel treatment."

Pilar is requesting that the judge throw out the couple's prenuptial agreement and instead grant her most of the marital estate. As grounds for this request, Pilar alleges she was under duress when she signed the agreement. Prenuptial agreements, otherwise known as premarital agreements, must be carefully drafted in order to be enforceable in a California family courts.

California Family Code section 1615(a) states that a premarital agreement is unenforceable if not entered into voluntarily. A premarital agreement is presumed involuntary if the party had less than seven calendar days between the day the party was presented with the contract and advised to seek independent legal counsel and the time the party signed the contract. However, it is important to note that this rule does not apply to a party represented by legal counsel throughout the premarital agreement process. Therefore, if a judge concludes that Pilar was in fact under duress when she signed the premarital agreement, the judge is likely to find the agreement unenforceable.

A fundamental element of any contract formation is freely given consent of the parties. This consent is defeated if one of the parties enters into the contract under duress. Duress often appears in California law as a defense to any type of contract actions. It is crucial when drafting and executing premarital agreements to ensure no party signs the contract under duress.

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The "7-Day Rule" for Premarital Agreements Revisited and Reinterpreted

July 7, 2011

Premarital Agreements ("PMA") can be very tricky. As experienced San Diego family law attorneys, we work hard to keep up with changes to the PMA rules. The rules for "PMA's are contained in California Family Code Sections 1600-1617. In addition to parties essentially creating their own agreed upon law (within the boundaries set by the PMA Act) for what is to occur in the event a marriage ends, the rules and the courts interpretation of the rules are constantly changing.

PMA's may cover the following subjects:

• Property rights and obligations, property management and control, and disposition of property;
• Making wills, trusts or other arrangements to carry out the premarital agreement provisions;
• Life insurance ownership rights and disposition of death benefits;
• Choice of law; and
• Any other matter, including personal rights and obligations that do not violate public policy or statutes imposing criminal penalties.

Although PMA's may not limit child support, spousal support may be limited if certain conditions are met. One of the conditions for limiting spousal support in a PMA is the "7-Day Rule," which requires that PMA's be presented at least seven calendar days in advance of signing.

California Family Code §1615(a)(1) states that a PMA is not enforceable if the party did not execute the agreement voluntarily. §1615(c)(2) states that a PMA was not executed voluntarily unless the court finds that the party had not less than seven calendar days between the time that party was first presented with the agreement and advised to seek independent legal counsel and the time the agreement was signed.

The California Court of Appeal recently decided a case interpreting the "7-Day Rule" for PMA's. In the case In re Marriage of Cadwell-Faso & Faso, the Court of Appeal held that the seven-day waiting period mandated by FC §1615(c)(2) does not apply to parties who are represented by counsel.

In Faso, both parties wanted a PMA. In December 2005, Husband's attorney drafted the PMA. Husband provided it to Wife and advised her to obtain her own attorney, which she did. Wife requested her attorney prepare an Addendum to the PMA providing money to her in the event of divorce. Husband rejected four different versions of the Addendum. On May 17, 2006, Wife called off the wedding because they could not agree to terms for the PMA/Addendum. The parties subsequently spoke, agreed to terms, and Wife's attorney prepared a new version of the Addendum. The revised Addendum was faxed to Husband on May 19, 2006 and forwarded to his attorney. The parties signed both the PMA and the Addendum. Prior to signing, Husband was advised by his attorney that the Addendum was not enforceable because it was not being signed seven days after he received it (it was being signed 6 days after). Wife was not told this information. Wife signed the PMA/Addendum and married Husband believing the Addendum was valid. Husband signed the PMA/Addendum believing it was invalid.

Although the trial court condemned Husband's behavior finding that he "shrewdly" maneuvered Wife to the alter "in a manner that frustrated her desire to reach a mutually acceptable agreement," it ruled that the Addendum was unenforceable due to the seven day waiting period. The fifth version of the Addendum was not presented to Husband seven days in advance of signing.

Wife appealed and the Court of Appeal reversed, holding that the Addendum was enforceable and that the seven day waiting period only applies to unrepresented parties.

This reinterpretation (or clarification) of the Family Code is just one of the many pitfalls clients and their attorney's face when preparing, enforcing or disputing PMA's.

I do wonder if the decision would have been different if the trial court did not find that Husband was the "bad guy", who hid his belief the Addendum was invalid from Wife and shrewdly maneuvered her to the alter. Under different facts in a future case, the court very well may "clarify" the statute to arrive at a different result, particularly to protect a more innocent party. Also, this "represented party" exception to the seven day rule may not apply to PMA's signed prior to January 1, 1986, when the Uniform Premarital Agreement Act became effective.

Is the Spousal Support Waiver in Our Premarital Agreement Valid?

April 28, 2011

As a San Diego attorney, clients with premarital agreements often ask whether the spousal support waiver provision in their premarital agreement is enforceable. Whether my client wants to enforce the agreement or have it not enforced, the answer is - it depends.

The Premarital Agreement Act applies to premarital agreements executed after January 1, 1986. For a spousal support waiver to be valid, it must pass the "representation by counsel" and "not unconscionable" requirements.

If the party against whom enforcement of the spousal support waiver provision was not represented by independent counsel at the time the premarital agreement was signed, then the spousal support waiver is not valid. This means: (1) if the parties prepared the agreement themselves without legal counsel, the waiver is not valid; or (2) if Party A wants to enforce the waiver against party B, and Party A was represented by independent legal counsel but Party B was not, the waiver is not valid.

If the representation by counsel requirement is met, then the court determines as a matter of law whether the spousal support waiver is "unconscionable". Factors the court considers in making its decision include: (1) whether there was a fair, reasonable and full disclosure of the property or financial obligations; (2) whether the parties waived in writing any right to disclosure of property or obligations beyond what was disclosed; (3) whether a party did not or could not have had adequate knowledge of the other party's property or financial obligations; and (4) other current circumstances that make the waiver unconscionable at the present time.

Even if all these requirements are met, a court can set aside the entire premarital agreement if it was not executed voluntarily. Factors for whether a premarital agreement was voluntarily executed include: (1) if the agreement was first presented at least seven days before it was signed; (2) any duress, fraud, or undue influence; (3) whether both parties had capacity to enter into the agreement; and (4) any other factors the court deems relevant.

An example of other factors / current circumstances that might make a spousal support waiver unenforceable is if one party recently had an accident, is now paralyzed and cannot work or support himself or herself, the court could find the provision to be unconscionable.