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self-study / Family Law

Litigating prenuptial agreements: validity and scope (part 2)

Diana P. Zitser

Founder, Zitser Family Law Group, APC

family law (certified)

1901 Avenue of the Stars, Ste 1100

Email: diana@zitserlaw.com

Southwestern Univ School of Law

Diana is a certified specialist in family law by the State Bar of California, Board of Legal Specialization, and the founder of Zitser Family Law Group, APC. The focus of her firm is dedicated exclusively to family law.

Brandon Johnson

Associate, Zitser Family Law Group, APC

family law (certified)

1901 Avenue of the Stars, Ste 1100

Email: brandon@zitserlaw.com

Loyola Law School

Brandon has worked on all types of family law matters, ranging from divorces to adoptions.

Carly Timm-Bijold

Law Clerk, Zitser Family Law Group, APC

Carly is a graduate of Loyola Law School and has been with the firm since 2017.

In part 1 of this 2-part series we discussed the minimum legal requirements of prenuptial agreements and the involuntary execution of prenups. Here in part 2, we will discuss when a prenup is unconscionable when executed without adequate knowledge. We also will discuss attacking the validity of a prenup and what can and cannot be resolved by a prenup.

Unconscionable When Executed Without Adequate Knowledge

The second theory under which the spouse against whom enforcement of the prenup is sought can invalidate a prenup is that the prenup was unconscionable when it was executed and, before execution of the prenup: that spouse was not provided a fair, reasonable, and full disclosure of the property or financial obligations of the other spouse; that spouse did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other spouse beyond the disclosure provided; and, that spouse did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other spouse. Fam. Code Sec. 1615(a)(2). It is important to emphasize that this second theory can only invalidate a prenup if the spouse against whom enforcement of the prenup is sought proves every part of the second theory; if any one of its parts is unproven, the entire theory fails. Id.

A simple way for a person seeking to defend the validity of a prenup to refute the second theory is to show that the spouse against whom enforcement of the prenup is sought did voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other spouse beyond the disclosure that was provided before the execution of the prenup. Fam. Code Sec. 1615(a)(2)(B). As an example, in the opinion of Hill, discussed above, the appellate court noted that the spouse against whom enforcement of the prenup was sought had waived this right in the prenup. IRMO Hill and Dittmer, 202 Cal. App. 4th 1046, 1053 (2011). Yet this defense still requires both the existence of such an express written waiver and refuting any claims made by the spouse against whom enforcement of the prenup is sought that would establish that they made the waiver involuntarily. Id.

Another simple way for a person seeking to defend the validity of a prenup to refute the second theory is to show that the spouse against whom enforcement of the prenup is sought was provided a fair, reasonable, and full disclosure of the property or financial obligations of the other spouse. Fam. Code Sec. 1615(a)(2)(A)

For example, in the opinion for Howell, discussed above, the appellate court noted that the trial court had found that the spouses had made fair, reasonable, and full disclosure of their assets and liabilities when the spouse against whom enforcement of the prenup was sought had failed to identify any assets or debts that the other spouse failed to disclose within the disclosures attached to the prenup. IRMO Howell, 195 Cal. App. 4th 1062, 1080 (2011).

As another example, in the opinion for In re Marriage of Facter, in affirming the trial court's decision that a waiver of spousal support in a prenup signed in 1994 was invalid and otherwise reversing the trial court's determination that the prenup was invalid, the appellate court stated that, while the unconscionable waiver of spousal support in the prenup rendered the prenup unconscionable when it was executed, a fair and reasonable disclosure had been provided, since, though a home held by the parties in joint tenancy was not listed in the disclosures of separate property, it "would have been rather odd to list a home held in joint tenancy as one's separate property", the prenup disclosed the existence of the home elsewhere, and the spouse against whom enforcement of the prenup was sought did not claim that the other spouse had failed to disclose any other asset. IRMO Facter, 212 Cal. App. 4th 967, 971-91 (2013).

If neither of these first two methods are available, it is still possible for a person seeking to defend the validity of a prenup to refute the second theory by showing that the spouse against whom enforcement of the prenup was sought had or reasonably could have had an adequate knowledge of the property or financial obligations of the other spouse. Fam. Code Sec. 1615(a)(2)(C). Though it does not appear that this argument has been tested in an opinion published in California, in the unpublished opinion for In re Marriage of Matheson and Armour, where the appellate court reversed the trial court's judgment that an agreement signed in 2001 was a valid prenup because it did not meet the minimum legal requirements for a prenup, the appellate court quoted the trial court's findings, including a finding that the spouse against whom enforcement was sought had not carried their burden to show that the agreement was not unforceable under this theory, noting that, though the parties disclosures had included their assets "down to their dish towels and linens" but not their financial obligations, the spouse against whom enforcement was sought could have reasonably had adequate knowledge of this information before he signed the agreement because he had had almost one year to consider the agreement before he signed it and presented no evidence that he requested additional disclosures. IRMO Matheson and Armour, A154210 (Cal. App. 1st Dist., June 3, 2020). Such an argument might successfully defend the validity of a prenup in the future.

If none of those options are available, the last way for a person seeking to defend the validity of a prenup to refute the second theory is by showing that the prenup was not unconscionable when it was executed. An issue of unconscionability of a prenup is decided by the courts as a matter of law. Fam. Code Sec. 1615(b). A question of unconscionability involves both procedural unconscionability, which focuses on the manner in which the contract was negotiated and the circumstances of the parties, and substantive unconscionability, which focuses on the actual terms of the agreement. American Software, Inc. v. Ali, 46 Cal. App. 4th 1386, 1390 (1996). Facts indicating procedural inequality include oppression, arising from inequality of bargaining power and the absence of real negotiation or a meaningful choice, and surprise, resulting from hiding the disputed term. Id. at 1391. The analysis relating to substantive unconscionability focuses on whether the allocation of risks or costs are so overly harsh or one-sided and not justified by the circumstances in which the agreement was made, with the result that it "shocks the conscience." Id. An example for defending the validity of a prenup against claims of unconscionability when it was executed comes from the published portion of In re Marriage of Miotke, where the appellate court upheld orders based on a valid prenup and summarized the trial court's findings, including a finding that the prenup was not unconscionable when it was executed, noting that, though the spouse against whom enforcement of the prenup was sought was not working at the time she signed the prenup, her earning history had been similar to the other spouse's, and, though she had fewer assets that the other spouse, she did have a net worth of $107,000 including a condo in Siberia and stock from her former employer. IRMO Miotke, 35 Cal. App. 5th 849, 855 (2019). As these facts and findings demonstrate, establishing that the spouses had at least somewhat similar incomes, assets and debts at the time a prenup was executed can be a way to defend a prenup from claims that it was unconscionable when it was executed.

Attacking the Validity of a Prenup

As is described above, in California, the spouse seeking to enforce a prenup has the burden to establish that it meets the minimum legal requirements for prenups. IRMO Cadwell-Faso, 191 Cal. App. 4th 945, 956 (2011). This means that showing that a prenup does not meet these minimum legal requirements is often the easiest way to attack the validity of a prenup. An example of this way to attack the validity of a prenup comes from the opinion of In re Marriage of Clarke & Akel. In Clarke, in affirming the trial court's determination that a prenup signed in 2008 was invalid, the appellate court determined that the spouse against whom enforcement of the prenup was sought did not execute the prenup voluntarily because, though he had prepared the initial draft of the prenup himself, he was unrepresented by independent legal counsel while the other spouse was, he had not been advised to seek independent legal counsel until two days before the prenup was signed, the other spouse's attorney had included significant provisions in the final draft of the prenup that were not part of his initial draft, and he was not presented with the final draft of the prenup until one day before the prenup was signed. IRMO Clarke & Akel, 19 Cal. App. 5th 914, 918-22 (2018). The appellate court in Clarke also determined that the spouse against whom enforcement of the prenup was sought did not execute the prenup voluntarily because there was no document signed by him declaring that he received an explanation that fully informed him of the terms and basic effect of the prenup as well as the rights and obligations the he was giving up by signing the prenup, and stated that, without this necessary advisement and waiver, even the portions of the prenup that he had drafted himself and could be said to have received more than seven days before the signing of the prenup were executed involuntarily. Clarke, 19 Cal. App. 5th at 922.

As is also described above, if the spouse against whom enforcement of the prenup is sought is not able to attack the validity of a prenup by showing that it does not meet the minimum legal requirements, it becomes their burden to establish that the prenup is invalid either because they did not execute the prenup voluntarily for other reasons or because the prenup was unconscionable when it was executed and, before execution of the prenup: that spouse was not provided a fair, reasonable, and full disclosure of the property or financial obligations of the other spouse; that spouse did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other spouse beyond the disclosure provided; and, that spouse did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other spouse. Fam. Code Sec. 1615(a). The standards and considerations that the courts will apply when someone attacks a prenup on these grounds and many significant opinions addressing them are described in detail above. From these one can deduce that some arguments that might be used to successfully attack the validity of a prenup on these grounds are: that the spouse against whom enforcement of the prenup is sought was subjected to threats or forced to sign the prenup; that they expressed reluctance to sign the prenup; that they were not very sophisticated educationally or professionally; that they requested disclosures that were not given; that the other spouse had significant property and/or debts of which the spouse against whom enforcement is sought later became aware which were not properly disclosed when they did not waive disclosures and reasonably could not have had an adequate knowledge of such property and/or debts; that the spouses had completely disparate incomes, assets, and/or debts at the time a prenup was executed; that the idea of a prenup was not discussed until shortly before a wedding that had been extensively planned and for which many guests who could not change their plans without difficulty had been invited; and that the prenup itself was long and complex.

There may also be other ways to attack the validity of a prenup. One potential example comes from the opinion of Sturm v. Moyer. In Sturm, a man who owed a $600,000 judgment debt got married around 2014 with a prenup that provided that their income, assets and debts would remain separate but included clauses that provided that they would open a joint account for the payment of their living expenses and, in the event that the man's debts lapse or otherwise become unenforceable, the parties earnings and assets purchased therewith would be retroactively treated as community property. Sturm v. Moyer, 32 Cal. App. 5th 299, 303-04 (2019). The creditor sued the couple, asking the courts to set aside the prenup as an attempt to fraudulently transfer the man's community property interest in his new spouse's earnings. Id. The trial court dismissed the suit, and the creditor appealed. Id. at 305. The appellate court reversed the dismissal, deciding that the Uniform Voidable Transactions Act could apply to a prenup which was made with the actual intent to hinder, delay or defraud a creditor, as the one in Sturm appeared to be. Id. at 307-15. Though this holding was made in the context of a creditor's suit, it is possible that it could be extended to apply to a divorce proceeding if the spouse against whom enforcement of a prenup was sought can prove that the other spouse entered into the prenup with the intent to defraud a creditor and that the spouse against whom enforcement of the prenup was sought was not themselves complicit in this fraud.

What Can and Cannot Be Resolved by a Prenup

If a prenup was signed before Jan. 1, 1986, any provisions of the prenup that encourage or promote divorce or separation, including any such provisions that affect the way a divorcing couple's marital property will be divided, are void as against public policy. IRMO Dawley, 17 Cal. 3d 342, 349-50 (1976); IRMO Dajani, 204 Cal. App. 3d 1387, 1389 (1988); IRMO Melissa, 212 Cal. App. 4th 598, 606 (2012) (as modified).

Though prenups signed after Jan. 1, 1986 usually affect the way a divorcing couple's marital property will be divided, to affect a spouse's right to reimbursement for their contributions of separate property, the prenup must include an express written waiver of that right by that spouse. Fam. Code Sec. 2640. This is necessary even if the prenup includes a provision stating that a property acquired with separate funds would be deemed to be community property, as the character of the property does not affect the right to reimbursement. IRMO Carpenter, 100 Cal. App. 4th 424, 426-29 (2002).

In addition to affecting the way a divorcing couple's marital property will be divided, there are many other ways a prenup can affect a family law proceeding in California. Under California law, prenups signed after Jan. 1, 1986 can also affect the ownership rights in and disposition of the death benefit from a life insurance policy, the choice of law governing the construction of the prenup, and any other matter, including the spouses' personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty. Fam. Code Sec. 1612(a).

Though prenups signed after Jan. 1, 1986 can have a very substantial impact on a variety of issues, their scope is not unlimited. A prenup cannot mandate that any of the spouses' children will be reared in a particular faith, limit the courts' power to make orders relating to custody of a minor child consistent with the child's best interests, or adversely affect a child's right to child support. IRMO Weiss, 42 Cal. App. 4th 106, 117-18 (1996); Puckett v. Puckett, 21 Cal. 2d 833, 839 (1943); Fam. Code Sec. 1612(b), 3011, 3020, 3040. Though the courts have not specifically examined whether or not a prenup could make one spouse pay liquidated damages to the other in the event that they are sexually unfaithful or make one spouse give up their rights to their community property if they use illicit drugs, it is likely that a court would hold that they cannot, as the courts have previously held that provisions such as these in agreements made after marriage violate California's public policy favoring no-fault divorce. Diosdado v. Diosdado, 97 Cal. App. 4th 470, 496 (2002); IRMO Mehren & Dargan, 118 Cal. App. 4th 1167, 524-25 (2004).

If a prenup was signed before Jan. 1, 1986, it cannot include a waiver of a spouse's right to spousal support, also known as alimony. IRMO Higgason, 10 Cal. 3d 476, 485 (1973); Melissa, 212 Cal. App. 4th at 603-12. If a prenup was signed after Jan. 1, 1986 but before Jan. 1, 2002, it can, though it is possible that circumstances existing at the time of enforcement of a waiver of spousal support might make enforcement unjust. IRMO Pendleton and Fireman, 24 Cal. 4th 39, 41-54 (2000); Howell, 195 Cal. App. 4th at 1069-77; Facter, 212.Cal. App. 4th at 980-84; Miotke, 35 Cal. App. 5th at 861. If a prenup was signed after Jan. 1, 2002, it can affect a spouse's right to spousal support, including a complete waiver of that right, but, in order to be enforceable, the spouse against whom enforcement of the spousal support provision is sought must have been represented by independent counsel at the time the prenup was signed and the provision must not be unconscionable at the time of enforcement. Fam. Code Sec. 1612(c).

California's laws and public policy relating to prenups have changed dramatically over the last 40 years, and this has had a lasting effect on the ways the validity of a prenup can be attacked or defended and what aspects of a family law proceeding can and cannot be affected by a prenup. Though these changes have likely helped prenups to become more and more popular as the public becomes more aware of the power a prenup can have, it has also created a complex web of requirements, limitations, and exceptions that can be difficult for the inexperienced to navigate. If you are ever facing a situation involving a prenup, do remember to seek the legal guidance of a certified family law practitioner who knows and understands this complex area of the law. 

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