Placing a Premium on Careful Premarital Practices
Premarital agreements are ice water on romance, which is one reason they are often put off to the last minute. Sometimes, a couple waits too long and their premarital agreement, or prenup, must become a postnuptial agreement.
Seven-Day Waiting Period
Under California law, there must not be “less than seven calendar days between the time that party was first presented with the agreement and advised to seek independent legal counsel and the time the agreement was signed.” (Family Code §1616(c)(2)).
Although it seems simple to count “seven calendar days,” confusion can occur. The seven days begin the day after the agreement is received by opposing counsel. The parties should sign the agreement on the eighth day. To ensure there is a record of the receipt of the final version of the agreement before the first day of the seven day waiting period, both parties should acknowledge receipt of the agreement in writing and attach a copy of the signed acknowledgments to the agreement. In Cadwell-Faso and Faso (2011) 191 Cal.App.4th 945, 119 Cal.Rptr.3d 818 the court held that the seven-day waiting period mandated by FC §1615(c)(2) does not apply to parties who are represented by counsel at the outset.
Execution of the Agreement
When there are issues relating to a party’s competency or understanding of the agreement, it is ideal to retain the services of a private judicial officer to preside over the execution of the agreement. The judicial officer can then ask the parties whether each had an opportunity to review the disclosures well in advance of receipt of the final version of the agreement, whether each understands the terms of the agreement, and whether either of them was under any duress to sign the agreement. Additionally, a reporter should be present to make a record of the testimony. In some cases, counsel may feel more comfortable videotaping the signing of the agreement. Under all circumstances, the signatures of the parties must be notarized. Furthermore, the date on the document is critical to counting the days between the date the document is “first presented” and the date it is signed.
Exchanging the Agreement with Counsel
Because California Family Code section 1615, subdivision (a)(2)(A) requires “a fair, reasonable, and full disclosure of the property or financial obligations of the other party,” provide evidence both as to the date on which the financial data were finalized and when the disclosure was delivered to the other party. This date should be well before the first day of the seven-day waiting period for signing the agreement. In theory, this precludes any dispute as to whether one of the parties would have negotiated different terms if he or she had known the nature and extent of the disclosure well in advance of the date on which the agreement was presented.
Both Parties must be Represented by Counsel
The revisions to the premarital agreement statute in California make it difficult for unrepresented parties to enter into premarital agreements. The requirements are set forth at Family Code section 1615, subdivision (c)(1) as follows: The party against whom enforcement is sought was represented by independent legal counsel at the time of signing the agreement or, after being advised to seek independent legal counsel expressly waived, in a separate writing, representation by independent legal counsel.
Family Code section 1615, subdivision (c)(3) further requires:
[I]f unrepresented by legal counsel, [the party] was fully informed of the terms and basic effect of the agreement as well as the rights and obligations he or she was giving up by signing the agreement, and was proficient in the language in which the explanation of the party’s rights was conducted and in which the agreement was written. The explanation of the rights and obligations relinquished shall be memorialized in writing and delivered to the party prior to signing the agreement. The unrepresented party shall, on or before the signing of the premarital agreement, execute a document declaring that he or she received the information required by this paragraph and indicating who provided that information.
Record the Agreement
A premarital agreement may be recorded with the county recorder’s office. Generally, parties do not record their entire premarital agreement because they have a desire to keep their personal information private. A memorandum of the agreement containing selected provisions that summarize the basic terms of the agreement provides notice to creditors that the party’s income and property is separate property and may not be subject to garnishment or execution, and permits real property to be sold without the necessity of obtaining the spouse’s consent. The purpose of including the basic terms of the agreement in the memorandum is to have a record of the agreement in the event the original and duplicate originals are lost. The basic terms should include the acknowledgment that disclosures were provided, the purpose for which the agreement was entered into, and executory provisions.
California law relating to premarital agreements continues to evolve. Because the law relating to these agreements is changing and agreements are subject to challenge, it is incumbent on the family lawyer to follow the existing rules and establish routines to preserve the integrity of the document execution process.
For more information on the value of a premarital agreement, contact the expert Los Angeles family lawyers at Walzer Melcher LLP today.