A Premarital

Finally, in all but a few states, premarital agreements may limit or eliminate the court's ability to order spousal support in the event of a divorce. While this has been the rule in most states for many years, a California Appellate Court opinion approved such a waiver for the first time in March, 1998. That case was appealed to the California Supreme Court which unanimously held that such waivers did not per se violate public policy and were enforceable. In re Marriage of Pendleton and Fireman, supra. Although the Court left for another day the permissible parameters of such waivers, it accepted them as viable provisions in premarital agreements.

The Legislature was disturbed by Pendleton and Fireman and limited its effect through an amendment to Fam. Code §1612 effective January 1, 2002. That statute now provides that no waivers or limitations of spousal support are enforceable unless the party against whom they are to be applied was represented by independent counsel at the time the agreement containing the provision was signed. In addition, the limitations are unenforceable if they are unconscionable at the time of enforcement. When combined with the other limitations that the Legislature placed on premarital agreements, waivers are going to be much harder to enforce.

To be enforceable in any state, the terms of the agreement should be very clear. If you want certain property to remain separate and not subject to division upon divorce, you should list that property precisely and provide that it will remain the separate property of the spouse who owned it prior to marriage and that the other spouse will have no interest in it.

The agreement should deal with all foreseeable issues relating to that property, for example:

  • If the owner spouse spends time during the marriage working on the property, will the community property receive an interest by virtue of those efforts?
  • What if the nonowner does the same?
  • If the owner spouse uses his or her earnings during marriage to maintain or improve separate property, will the community property be entitled to reimbursement for those funds?
  • If a loan is taken out to improve separate property, will the community property get an interest because of that?

It is best that all of these types of issues be dealt with in the agreement. A mere statement in the agreement that this property is and will remain the separate property of the owner spouse does not cover these types of related issues.

The agreement should not attempt to limit either spouse's obligation to pay child support or determine who will have custody of children should the marriage break up. Those types of restrictions are contrary to public policy in all states and are unenforceable. Worse yet, these types of provisions can affect the entire agreement and lead a court to question all of the terms of the agreement.

Other proper provisions for consideration in a premarital agreement include the following:

  • Treatment of premarital debts;
  • Division of living expenses during marriage;
  • Payment of expenses for children of a former marriage;
  • Life insurance on one or both of the spouses;
  • Payment of taxes on joint earnings and separate earnings;
  • Whether amendments may be made orally, or just in writing;
  • Treatment of property purchased or acquired in joint names; and
  • Choice of law, whereby the parties agree which state's law will apply. This becomes crucial if they move to a different state after signing the agreement.

One of the major uses of a premarital agreement is to provide that the earnings and accumulations of each of the spouses will be the separate property of the acquiring spouse. Without the agreement, the rule is the opposite.

Not all provisions that parties may want to include in a premarital agreement are enforceable. Being contracts, premarital agreements must have a "lawful object.” A contract is unlawful if contrary to an express provision of law, contrary to policy of express law, or otherwise contrary to good morals. (Civ. Code §1667.) An agreement which is deemed to have an unlawful purpose or to contravene California public policy will not be enforced. In Diosdado v. Diosdado (2002) 97 Cal.App.4th 470, 118 Cal.Rptr.2d 494, for example, an agreement which imposed a substantial monetary penalty if the husband was unfaithful was invalidated.

Premarital agreements are very flexible documents. They can be, and should be, drafted to meet the specific needs of the parties, now and in the future. They can be drafted to change over time. For example, assume that a recently divorced wife had to fight to obtain the residence and is nervous about remarrying and later having to do so again if the marriage isn't successful. The agreement might provide that her new husband will obtain no interest in the residence during the parties' first ten years of marriage. Thereafter, he might acquire an interest at the rate of 5% a year such that by their 20th wedding anniversary, he would have acquired a 50% interest in the residence (or 2.5% per year with 50% interest on the 30th anniversary). The point is that these agreements need not be an all or nothing proposition. They should be drawn to recognize that terms that are fair during the parties' first five years of marriage may not be fair after 25 years.

One should remember that premarital agreements are one of the few types of agreements that people enter into that are very likely to be challenged. This is in part because most of these agreements have no time limits. An agreement that may be fair when the parties are 30 or 40 years old, may not be fair when they are 60 or 70, or at least may have results that the parties would not have desired when it was entered into many years before. Likewise, an agreement that there will be no spousal support may be reasonable when both parties are employed and there are no children. But time has a way of changing expectations and realities. Thus, the agreements are often unfair when the marriage ends and the spouse who is hurt by the agreement will feel that he or she has nothing to lose by challenging it.

If you have any questions relating to pre-marital agreements be sure to contact the family law attorney’s at Fischer & Van Thiel LLP. They are experts in the field of family law and ready to help you wade through and understand the issues related to pre-marital agreements.

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