The Premarital Agreement

Premarital agreements are one of the worst kinds of agreements that attorneys face. That is for two reasons. First, there is a very heavy emotional content that most future wives and some future husbands, feel is insulting and unfair. Second, for that reason, there is a special section of the California Family Code dealing with premarital agreements and the courts in California will do just about anything to keep from enforcing these agreements.

So, let’s begin a short analysis by looking at the attack forum. Because the Family Courts of California are not courts of general jurisdiction, but only courts of equity (do “what is best” for the party), despite the language of Family Code 1615(b), judges in those courts are not committed to enforce any agreement that is not “in the best interests” of the “marriage community”( or whichever party puts on the best show.) The language of the code puts it in terms of “unconscionability.” Yes, that is a real word. Virtually anything that does not amount to an equal split is presumed “unconscionable” unless proved to be conscionable, which is in the opinion of a single judge.

Once you understand that the forum considering these agreements is not all that “fair” to at least one of the parties, you get hit with the statute that controls this kind of agreement. California Family Code, Sections 1601 to 1617, which is the “Premarital Agreement Act,” is stated in the negative. While it says that these agreements must do certain things, it also says, throughout, that “A premarital agreement is not enforceable if . . .,” and “it shall be deemed that a premarital agreement was NOT executed voluntarily UNLESS . . .” That language sets up a very high standard that the agreement must meet.

I have one longtime client who happened to own a very lucrative business at the time of his divorce. He had paid tens of thousands of dollars for his premarital agreement. When he submitted that agreement in the divorce dissolution proceeding, the Judge paged through it, put it down and said, “I’m not going to enforce that thing. Take it up on appeal.” Of course, the actual “finding” was that the agreement was too vague and “unconscionable” to be enforced, which are the usual grounds for refusing to enforce the terms of premarital agreements. The legal language that communicates all of that is that “the law does NOT FAVOR premarital agreements.” What that means is that the burden to prove specificity and fairness is on the head of the party that is seeking to enforce the agreement.

There are many other aspects of the law of premarital agreements that make them a weak and risky solution to a serious problem. There are other solutions that involve separate property asset protection trusts that do not involve anywhere near the same level of risk.
Give me a call and we can discuss it.

Categories: Estate Planning