In California, intended spouses may contract with one another on a variety of issues. California Family Code section 1612 lays out a list of these issues very clearly, which includes property rights, management and control of property, disposition of property upon certain events, estate-planning rights, life insurance ownership rights, and choice of law rights.
Further, the last item in the list contained in California Family Code section 1612 (a) states, “Parties to a premarital agreement may contract with respect to … [a]ny other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.” So, as the code makes clear, the ability of intended spouses to enter into agreements is code based and the variety of issues for which intended spouses can contract is very broad.
When parties are drafting a premarital agreement, generally the hope is that they will never have to actually use the agreement. The agreement is often done for peace of mind with the belief it will never actually come into play. But, this is not a reason to overlook the importance of drafting this document carefully. If a person is going to spend the time and money to create a premarital agreement, it should be done correctly. Doing it correctly means that, in the event of enforcement of the agreement – or in the event the spouses have to use the agreement – it should work. How does a person ensure the premarital agreement works or how does a person ensure the premarital agreement is enforceable?
California Family Code section 1615 explains how a premarital agreement becomes unenforceable. If one party is seeking to have the agreement NOT enforced, then that party must prove either (1) the agreement was not executed voluntarily OR (2) the agreement was unconscionable when it was executed AND the party was not given a full disclosure of the assets or debts of the other party, did not voluntarily and expressly waive in writing the right to the disclosure, and the party did not have, or could not have, adequate knowledge of the assets or debts of the other party. This section can be reduced to two warnings: (1) make sure the agreement is executed voluntarily and (2) make sure to provide full and adequate disclosures of all assets and debts, to ensure the agreement is enforceable in the future.
The final question becomes, what is proof that the agreement was executed voluntarily? Thankfully, the code explains this further in five separate pieces. First, as long as the court finds that the party against whom enforcement is sought was represented by independent legal counsel at the time of signing the agreement, or, after being advised to seek independent legal counsel, expressly waived, in a separate writing, representation by independent legal counsel. Second, the court must find that the party against whom enforcement is sought had no 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. Third, the court must find that the party against whom enforcement is sought, if unrepresented by legal counsel, was fully informed in writing of the terms and basic effect of the agreement as well as the rights and obligations he or she was giving up by signing the agreement, and was proficient in the language in which the explanation of the party’s rights was conducted and in which the agreement was written. This acknowledgment must be delivered to the unrepresented party and they must acknowledge receipt in writing. Fourth, the court must find the agreement and the other writings (wavier of counsel and acknowledgment of receipt of rights and obligations) were not executed under duress, fraud, or undue influence, and the parties did not lack capacity to enter into the agreement. The fifth, and last item, the court may consider “[a]ny other factors the court deems relevant.”
If you are interested in a premarital agreement, I have 3 tips to ensure the agreement is done well. First, give yourself time to complete the document. Do not wait until the month before your wedding. It will add a cloud to a special time and it may not be done correctly. Again, you want the agreement to work – so give yourself time to do it properly. I suggest a minimum of six months prior to the wedding date. Second, while hiring counsel for both parties is not required per the code, it is the best idea. This will ensure that both parties have their rights and obligations fully explained to them and they can ask questions or raise concerns, all covered by attorney-client privilege. And, blaming the attorney for a new revision is always a nice scapegoat! Finally, disclose, disclose, disclose. Oh, and disclose. It might seem tedious to gather information that you are sure the other party already knows; however, non-disclosure is a knife to the heart for your premarital agreement.
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