A discussion of Pre-nups

[william3rd]

Well- it was that time of year again. The Annual State Bar Convention took place in Anaheim where we-those that attended- were able to hear about all of the cases that changed the law in the previous year or just get a general nuts and bolts session in.

I took a very interesting class on prenuptial agreements. According to the speakers, the majority of CA attorneys apparently are refusing to handle prenups these days because of the rapid changes in interpretation that are occuring and the chances of major liability arising years down the road. This is becoming an area where angels fear to tread.

For those of you outside of California, although the rules may be similar, you need to consult with an attorney licensed in your state of residence, preferably with malpractice insurance. And, by the way, her country of origin is irrelevent-unless you are trying to take advantage of preferable law and can show a nexus to the satisfaction of the Court- because this area of law is controlled by the STATE and its individual family code. You can not limit the jurisdiction where a dissolution is filed; it lands where jurisdiction is established   

So I will just touch on a few areas-

WHO needs a prenup?
The instructional staff felt that the average person probably doesnt need one. Here is a list that they gave-

You may need a prenup if-

You had a bitter prior divorce where you lost substantial assets-peace of mind for you
There are a series of trusts in place for children or parents or there is a family business involving other family members- concerns regarding future hostile and unwelcome partners
You have a net worth of over 1 million dollars- cash
You own a separate property house that is not paid off
One spouse is paying for the education of another spouse
One spouse has substantial debt from before the marriage
One spouse has a professional practice

You may not want a prenup because-

Prenups destroy intimacy
Prenups destroy trust
Prenups still require FULL disclosure of your finances
There are other methods less contentious that you can use.

Prenups are not all-encompassing and can be set aside. Prenups can not control fidelity, waive disclosure, set aside public policy, be illegal in content. Prenups can not deal with issues of child custody or child support. Prenups can be set aside if there is duress, inadequate notice, inadequate representation, inadequate disclosure, undue influence

And POST-NUPS are even worse. . . . .

[william3rd]

Post-nups require "consideration." And the "consideration" has to be real and not imagined.

See Marriage of Burkle for a real fun story in which a post-nup was upheld.
IN a nutshell, Burkle bought a whole bunch of supermarkets. His wife of 20 years, a lawyer, was afraid of his high-risk business decisions failing and damaging her finances and her law practice, so she wanted an agreement to protect herself.

Husband gave her over 100,000 in separate property cash for her forensic accountant to analyze all of the books and records. The agreement was signed.
Five years and about 300,000,000 later-due to husband's business gamble paying off, wife wanted a divorce and the agreement set aside.

The post-nup was upheld and the Court enumerated 11 factors to consider most important of which was the intention of the parties, the adequacy of FULL disclosure of assets and the benefit to be conferred.

Other methods to avoid a pre-nup/post nup-

revokable trusts-
separate property agreements
spotless record keeping throughout marriage
no borrowing against separate property for community benefits
using management services to operate rentals/stock accounts/etc.
valuations of major assets done at time of marriage

[Patrick]

Nice Post William.

I have a question-  When I looked into pre-nups about 11 years ago in California, I thought I remembered being told by a family law specialist that they cannot provide protection from alimony.  Since then, I've heard at least one story (2nd hand) of a California pre-nup that disallowed alimony.  Was this topic covered at all, and do you know if a prenuptial agreement can protect someone from having to pay alimony?

With alimony having the potential to be awarded permanently for marriages of over 10 years in California, I feel that this is another good reason to have a pre-nup, if it can actually protect someone from this.  I know a guy who's paying his ex permanent alimony after a marriage lasting 16 years.  He had put her through law school and she passed the bar while they were married, but she never worked after that.

[william3rd]

Practicing much more in family law these days, I can say the following-

spousal support can be the subject of a prenup.

Barry Bonds- prenup upheld by CA Supreme Court.


more recently, there was a statutory change in reaction to Bonds addressing fundamental fairness of prenup agreements.

Last year there was a case setting aside an otherwise valid prenup on the issue of spousal support saying that although it may be valid when signed there are situations where a spousal support provision will be set aside.

Now we get to fight over what the circumstances to set aside might be. 

Spousal support is generally half the length of the marriage these days. I am surprised that attorney income was not imputed to her. However, in the case of a high earner, that can happen.

Spousal support can be limited in a pre-nup. . . . but, after Court, who knows?

[Patrick]

Spousal support is generally half the length of the marriage these days. I am surprised that attorney income was not imputed to her. However, in the case of a high earner, that can happen.

I know another guy who actually filed for a separation from his wife after 9 years and 11 months thinking he was going to protect himself from permanent alimony if they do divorce in the future.  They're still together a year later, but they both cheat on each other (and have for a few years).  Isn't California wonderful???