While the common name for such an agreement is the “prenuptial agreement” or “prenup,” the Family Code uses the term “premarital agreement,” which must be distinguished from the other domestic agreements (e.g., the cohabitation agreement (for couples intending to live together but who are not anticipating marriage), the marital agreement (between spouses not intending an end to the marriage), and the marital settlement agreement (between spouses contemplating the dissolution of their marriage)).
Under California’s version of the Uniform Premarital Agreement Act (Fam. Code sec. 1600, et seq.), parties anticipating marriage may enter into an agreement pertaining to any matter, including their personal rights and obligations, so long as the agreement is not in violation of public policy or a statute imposing a criminal penalty. (Fam. Code sec. 1610). The premarital agreement memorializes the parties’ intentions toward property they’ll bring into the marriage and their respective property rights during the marriage. The premarital agreement is unenforceable until marriage, and to be enforceable upon marriage, the mechanics and timing of its execution are as important as its content.
Creating an Enforceable Premarital Agreement
To create an premarital agreement that is enforceable, it must be:
In a writing signed by the parties. A premarital agreement shall be in writing and signed by the parties. (Fam. Code sec. 1611.)
Voluntarily executed. A premarital agreement is not enforceable if the party against whom enforcement is sought proves he or she did not execute the agreement voluntarily. (Fam. Code sec. 1615(a)(1).) To prove execution of the premarital agreement was not voluntary, the party against whom enforcement is sought (normally the party who will be disadvantaged if the premarital agreement is enforced) must decisively persuade the judge or commissioner that one of the following factors from Family Code section 1615(c) is true:
(i) he or she had less than seven (7) calendar days between the time he or she was advised to seek independent legal counsel and the time the agreement was signed;
(ii) he or she was not represented by independent legal counsel at the time he or she signed the premarital agreement or, after being advised to seek independent legal counsel, he or she did not expressly waive representation by independent counsel in a separate writing;
(iii) for a premarital agreement signed between January 1, 2002 and January 1, 2020, the party against whom enforcement is sought had not less than seven (7) calendar days between the time he or she was first presented with the final agreement and advised to seek legal counsel and the time the agreement was signed;
(iv) for a premarital agreement signed on or after January 1, 2020, the party against whom enforcement is sought had not less than seven (7) calendar days between the time he or she was first presented with the final agreement and the time the final agreement was signed, regardless of whether he or she is represented by counsel, although this factor does not apply to “nonsubstantive amendments that do not change the terms of the agreement” (Fam. Code sec. 1615(c)(2)(B));
(iv) the party against whom enforcement is sought, if unrepresented by counsel, was not fully informed of the terms and basic effect of the premarital agreement as well as the rights and obligations he or she was giving up by signing the agreement;
(v) the explanation of rights and obligations the unrepresented party relinquished was not memorialized in writing and delivered to him or her prior to signing the agreement;
(vi) the unrepresented party against whom enforcement is sought did not sign a separate document which indicates who provided the written explanation to him or her and declares he or she received the written explanation;
(vii) the unrepresented party against whom enforcement is sought was not proficient in the language in which the explanation of his or her rights was conducted and in which the agreement was written;
(viii) the premarital agreement itself, the written waiver of the right to independent counsel, or the separate document which declares the person against whom enforcement is sought received the written explanation of rights and obligations relinquished and indicates who provided it, must have been signed under duress, fraud, or undue influence, or while he or she lacked the legal capacity to sign (e.g., a minor, or found to have lacked the mental capacity, at the time of signing); or,
(iv) any other factors the judge or commissioner deems relevant to proving the premarital agreement was not signed voluntarily.
(Note: Prior case law states that the seven-day waiting period (between receiving the final agreement and signature) is not applicable when the party against whom enforcement is sought has been represented by an attorney from the beginning of the negotiations pertaining to the premarital agreement. (Marriage of Cadwell-Faso and Faso (2011).) The appellate court in Marriage of Cadwell-Faso and Faso determined that the seven-day rule was ambiguous on the basis that the trial judge could not tell whether the rule applied if the party against whom enforcement is sought was represented by counsel during the seven-day period. The Caldwell-Faso exception was the only exception to the seven-day waiting period to my knowledge. However, with the revision of Family Code section 1615, subdivision (c), effective of January 1, 2020, it appears the exception has been superseded by Family Code section 1615(c)(2)(b), at least for premarital agreements signed after that date. It remains to be seen whether the Caldwell-Faso exception to the seven-day waiting period applies to premarital agreements signed before January 1, 2020. Additionally, a statement in the recitals of the premarital agreement that the seven-day waiting period was satisfied, when in fact the waiting period was not met, will not save the premarital agreement from being involuntary and therefore unenforceable. (Marriage of Clarke and Akel (2018).) For these reasons, you should always retain an attorney for the negotiation through the execution of a premarital agreement and retain the attorney as far in advance of the intended date of marriage as possible because you may have to restart the seven-day waiting period.)
Not unconscionable when signed. As a working definition of unconscionability, an agreement or any provision within an agreement is “unconscionable” when it is so one-sided as between the parties signing it that no reasonable person would have signed it (i.e., accepted or agreed to be bound by it).
A premarital agreement is not enforceable if the party against whom enforcement is sought proves the premarital agreement was unconscionable at the time he or she signed it, and before signing it the party against whom enforcement is sought:
(i) was not provided a fair, reasonable, and full disclosure of the property or financial obligations of the other party;
(ii) did not voluntarily and expressly waive in writing his or her right to disclosure of the property or financial obligations of the other party beyond any disclosure that was provided; and,
(iii) did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.
Setting aside for the moment the content (property rights, support, payment of expenses, etc.) of a premarital agreement, let’s say a couple anticipating marriage enters into a premarital agreement, they marry, and then after several years of marriage one of them figures the marriage is dead and wants out of the relationship. He or she files a petition for dissolution of marriage or for legal separation. If one of the spouses would get a better deal were California law to apply rather than the premarital agreement which modified each party’s rights under California law, the enforceability of the premarital agreement may be tested in litigation or at the very least used by one of the spouses as a bargaining chip to a better outcome. This scenario happens frequently with a potentially long separate trial just on the issue of the premarital agreement’s enforceability. One of the parties ends up thanking his or her lucky stars that the written agreement was created in compliance with the law, voluntarily signed (executed), and not unconscionable.
Subject Matter of Premarital Agreements
Many people do not find out until divorce or legal separation that California community property law is based on the economic partnership of the parties and their fiduciary relationship with one another and to the community estate. When the marriage is dissolved, the judicial officer who has been assigned the divorce case is generally mandated by statute to divide the community property (assets and obligations) equally. This can be a rude awakening on top of any child and/or spousal support that must be paid.
By contrast, Mexico (EUM) which also operates under community property law brought to the Americas from Spain, requires at the time of marriage that the parties choose under which law their marriage will operate: either separate-property law or community-property law. Because divorce is so prevalent, California should take a hint from its southern neighbor and adopt a more facilitating system with which to modify the rights and obligations of the parties during marriage.
The premarital agreement normally identifies specific property (both assets and obligations) that each party will bring into the marriage, and the ownership and value of that property. In this manner, each party acknowledges his or her interest, if any, in the other’s property, so that any future dispute may be resolved by referring to the premarital agreement as persuasive if not conclusive evidence. The premarital agreement also allows the parties to mutually opt out of the California community-property system in part or entirely.
Family Code section 1612(a) provides a nonexclusive list of subjects that may be covered in a premarital agreement:
- The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located.
- The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property.
- The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event.
- The making of a will, trust, or other arrangement to carry out the provisions of the agreement.
- The ownership rights in and disposition of the death benefit from a life insurance policy.
- The choice of law governing the construction of the agreement (meaning which state’s law will apply or be superseded by the premarital agreement).
- Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.
Regarding the last bullet point about agreements in violation of public policy, any provision in a premarital agreement which modifies the right of a child to child support is unenforceable. (Fam. Code sec. 1612(b).)
Under Family code section 1612(a), every premarital agreement that I have ever negotiated has transmuted one or more property rights and/or obligations which otherwise would be determined differently under California law if the parties divorce, legally separate, or either dies. Under Family Code section 850, a transmutation is the spouses’ agreement to modify property rights such that community property becomes the separate property of either spouse, separate property of either spouse becomes community property, or the separate property of one spouse becomes the separate property of the other.
In addition to the mechanics and timing requirements for enforcement of the overall premarital agreement, under Family Code section 852, the following specific requirements must be satisfied for a transmutation to be enforceable:
- Must be in writing and include an “express declaration.” A transmutation of real or personal property is not valid unless made in writing by an “express declaration” that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected. To satisfy the express-declaration requirement, “a writing signed by the adversely affected spouse must expressly state that the character or ownership of the property at issue is being changed.” (Estate of McDonald (1990).) A deed of real property, for instance, from one spouse to the other is not a transmutation unless it is fulfills the express-declaration requirement. (Marriage of Bonvino (2015).) Another example is a life-insurance policy purchased with community funds by the spouse and insuring his own life and naming the other spouse as the beneficiary and owner of the policy, fails to transmute the policy from community property to separate property because the express declaration requirement was not satified. (Marriage of Valli (2014).)
- Unenforceable against third parties without notice. A transmutation of real property is not effective as to third parties without notice thereof unless recorded.
(Note: A gift between spouses of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used solely or principally by the spouse to whom the gift is made and that is not substantial in value taking into account the circumstances of the marriage does not require a writing expressly declaring the transmutation. (Fam. Code sec. 852(c); see Marriage of Steinberger (2001).) A transmutation does not affect the law governing characterization of property in which separate property and community property are commingled or otherwise combined. (Fam. Code sec. 852(d).) Finally, the above specific requirements do not apply to or affect a transmutation of property made before January 1, 1985; the law in effect at the time the transmutation was made is applicable and continues to apply. (Fam. Code sec. 852(e).))
In short, the specific requirements must be satisfied to create a transmutation. “Section 852 imposes formalities on interspousal transmutations for the purpose of increasing certainty in the determination whether a transmutation in fact occurred. . . .” (Fam. Code sec. 852, Law Rev. Comm. Com..) In other words, the transmutation statute “blocks efforts to transmute marital property based on evidence — oral, behavioral, or documentary — that is easily manipulated and unreliable.” (Marriage of Benson (2005).)
Providing for or Waiving Spousal Support in a Premarital Agreement
California courts are relatively generous in providing sufficient spousal support and for a relatively lengthy period, so the higher wage earner between a couple anticipating marriage may desire some certainty as to the amount of spousal support to be paid should the marriage fail to endure. My experience has been that providing for spousal support in a premarital agreement really means either limiting spousal support to an amount and/or duration less than one’s spouse might obtain were he or she to request an order of spousal support in the Superior Court. A waiver of any spousal support whatsoever is common provision in a premarital agreement. As with the general requirements for creating an enforceable premarital agreement and the specific requirements for transmuting property, for a provision limiting or waiving spousal support to be enforceable, additional formalities must be complied with:
- The party against whom enforcement of the spousal support provision, including a waiver of spousal support, in a premarital agreement is sought must have been represented by counsel at the time the premarital agreement was signed. Any provision in a premarital agreement regarding spousal support including, but not limited to, a waiver of it, is enforceable if the party against whom enforcement of the spousal support provision is sought was not represented by independent counsel at the time the agreement containing the provision was signed (Fam. Code sec. 1612(c).) There is no wiggle room here: for a spousal support provision, including a waiver of spousal support, in a premarital agreement to be enforceable, each party must be represented by counsel at the time of signing.
- The spousal support waiver cannot be unconscionable at the time of enforcement. Any provision in a premarital agreement regarding spousal support including, but not limited to, a waiver of it, is not enforceable if the spousal support provision is unconscionable at the time of enforcement. (Fam. Code sec. 1612(c).), which normally occurs during the course of a divorce proceeding or a proceeding for a legal separation. The judge or commissioner decides whether the provision is enforceable. Traditionally, in the law of contracts, the issue of unconscionability is limited to its presence at the time of the parties sign the contract, not at the time of enforcement. This is true of premarital agreements, too: the entire premarital agreement and all of its specific provisions are analyzed for unconscionability in hindsight looking to the time the parties signed it. However, spousal support provisions in a premarital agreement are also analyzed for unconscionability at the time a party seeks to enforce or invalidate the spousal support provision. This adds a layer of protection against gamesmanship to avoid the duty of supporting one’s spouse with a provision that is so one-sided at the time of enforcement that a reasonable person would never have agreed to the spousal support provision had he or she known it would be so unfair in the future.
A spousal support waiver was unenforceable in premarital agreements prior to 1994 when the Uniform Premarital Agreement Act took effect. (Marriage of Melissa (2013).) Now, a spousal support waiver in a premarital agreement is not unenforceable in and of itself. In a fairly recent case, the spousal support waiver was unconscionable at both the time of signing and at the time of enforcement. (Marriage of Facter (2013).) This finding was based on:
(i) the great disparity in the parties’ respective incomes at the time of execution of the premarital agreement; and,
(ii) the inability of the party against whom enforcement was sought to achieve the marital standard of living after the marriage.
Because the spousal support provision was unconscionability and therefore unenforceable, the trial judge in Facter severed it from the other provisions in the premarital agreement and enforced the remainder of them.
Amendment and Revocation of a Premarital Agreement
After marriage, a premarital agreement may be amended or revoked only by a written agreement signed by the parties. (Fam. Code sec. 1614.)