Premarital Agreements

Question 1

What is the purpose of a premarital agreement

Answer 1

Allows couples to opt out of community property law (most commonly providing that each spouse’s earnings during marriage are their own SP)

Question 2

Premarital Agreements Pre-1986

Answer 2

General Rule: Waivers of all spousal support are not enforceable, but you are allowed to provide for the minimum 14 months and then waive

An economically inferior spouse (in addition to asking for spousal support) can challenge a Premarital Agreement based on (at the time of signing)
(1) Undue Influence,
(2) Fraud, or
(3) Duress.

Question 3

Estate of Nelson

Answer 3

Pre-1986

H wealthier, older, more sophisticated, W is 22 year old pregnant secretary who signed premarital agreement waiving all spousal support

Holding: this is invalid

Takeaway: example of undue influence

Question 4

Marriage of Dawley

Answer 4

W was educated and sought legal counsel before executing the agreement, even though she faced unplanned pregnancy, H agreed to provide spousal support for first 14 months

Holding: this is valid

Takeaway: example of no undue influence

Question 5

1986 Premarital Agreement Act (1986-2002)

Answer 5

No retroactive application

Writing Requirement
i. Premarital agreements must be in writing and signed by both parties
ii. Can only be amended or revoked by writing signed by both parties

Contract Law
i. Consideration not required
ii. Terms must be stated with sufficient certainty to be an enforceable contract
iii. Statute of Frauds applies:
1. Parol evidence IS NOT admissible to establish the substance of the agreement
2. Parol IS admissible to interpret existing terms
iv. Promissory Estoppel applies when party seeking enforcement performed their part of the bargain and irretrievably changed position by doing so

Hall v. Hall
H orally tells W that if she marries him, she can live in house until she dies but has to quit her job, apply for social security when she turns 62, pay him $10K. W agrees and does all of that

Holding: W performed her part and in doing so irreparably changed her position, so court gives effect to their oral agreement

Premarital Agreement cannot include:
1. Anything that violates public policy
2. Child Support
3. Condition that agreement is void if one spouse cheats

Question 6

Defenses Against Enforceability of Premarital Agreements (1986-2002)

Answer 6

1. Agreement was not executed voluntarily at time of signing (fraud, coercion, or lack of knowledge)
   Bond factors:
   - Did the parties have time to consider the agreement (proximity of execution and wedding)
   - Is there surprise from presentation of the agreement (were terms discussed or was person blindsided)
   - Presence or absence of independent counsel and opportunity to consult independent counsel
   - Is there inequity of bargaining power (age and sophistication)
   - Did parties disclose their assets
   - Did parties understand the intent/purpose of the agreement
2. Agreement was unconscionable when executed
   - Party arguing against enforcement of the agreement has the burden of showing all of the below:
   a. Prior to execution, spouse was not provided with fair and reasonable disclosure of property or financial obligations in agreement, AND

b. Spouse did not voluntarily waive, in writing, right to disclosure of property and financial obligations, AND

c. Spouse did not have actual knowledge, or reasonably could not have acquired adequate knowledge, of the property or financial obligations

Absence of one factor will save an otherwise unconscionable contract (it is enforceable)

Question 7

Why did the legislature implement the 2002 Premarital Agreement Act?

Answer 7

Legislation attempted to make it harder to waive spousal support

Subjects of Premarital Agreements – Same as 1986, except restrictions on waiving support

Question 8

Requirements of Valid Premarital Agreements (2002-Present)

Answer 8

1. Legal Counsel Requirement:
   Waiver or limitation of spousal support will not be enforced unless independent legal counsel represented the party against whom enforcement is sought at the time the PMA was signed

Okay if right to independent legal counsel was waived in a separate writing
a. Must be fully informed re terms and effect and rights given up
b. Must receive writing describing rights given up and obligations undertaken
c. Must be proficient in language of that written explanation
d. Must execute document, on or before signing, declaring receipt of written explanation and who provided it
e. Must be done without undue influence, fraud, or duress

7-Day Requirement
a. If not represented by counsel, need at least 7 days between receiving agreement and signing (Marriage of Hill & Ditmer)
b. If both parties are represented by independent counsel, this requirement is not applicable (Marriage of Cadwell-Faso & Faso)

2. Unconscionability Requirement:
   Agreement must not be unconscionable at the time of enforcement (time of divorce), even if the party had independent legal counsel
   a. If unconscionable at time of divorce, waiver will not be enforced
   b. Would likely be unconscionable if wealthy spouse pays nothing to economically inferior spouse

Question 9

Retroactivity (2002-Present)

Answer 9

Legislature was silent as to retroactivity of 2002 amendment (whereas 1986 has no retroactivity)

General Rule: the family code applies retroactively unless it deprives someone of a vested right without due process
1. Unconscionability of spousal support waiver can be considered at the time enforcement/divorce is applied retroactively
a. Can still look at the time of signing to determine unconscionability
2. Requirement that parties have independent counsel to waive support is NOT applied retroactively
3. 7 Day Waiting Requirement not applied retroactively

Marriage of Rosendale
Couple both represented by counsel. Agreement signed before wedding. W waives right to support. W gets in accident and has a lot of health problems. Upon divorce, unclear whether she will be able to support herself. Agreement was signed before 2002, divorce was after 2002.

Holding: at time of divorce, it would be unconscionable to give effect to the waiver. Court applies unconscionability requirement retroactively

Takeaway: can look at time of divorce for unconscionability even if signed prior to 2002