Unit 8: Pre-Nups And Separation Agreements

Front 1

Background on Pre-nups

Back 1

• Based on K law, plus special duties of disclosure and fair dealing.
• Starting point for deciding post-marital stuff is usually executing the parties' K.
• Can, with a will, determine what happens at death.
• Historically frowned upon, no K should contemplate possibility of divorce. Became enforceable in 70's-80's, started with high wealth couples. Now broader range of people use.

Front 2

Functions of Pre-nups

Back 2

• Reduce chance/cost of litigation.
• Define property and other rights.
• Allocate marital assets.
• Plan for property distribution on death or divorce.
• Avoid or alter the effect of statutes
• BUT... CANNOT bind the court on child-related issues (support, visitation, custody)

Front 3

Three Forms of Marital Agreements

Back 3

1. Pre-nup: in contemplation of marriage
2. Post-nup: in contemplation of divorce
3. Separation Agreements: in contemplation of agreed upon agreed upon separation

Front 4

UPAA Approach (Uniform Premarital Agreement Act)

Back 4

• 27 states including FL; applies only to pre-nups
• Treats them as ordinary K's, reduces high burdens of disclosure and conscionability required by CL approach.
• MUST be: in writing, marriage = consideration, effective upon marriage, revocation or amendment must be in signed writing.

Front 5

Alimony under UPAA

Back 5

• If recipient of alimony would be on welfare with what K provides, court will require a minimum amount.
• Can EXPRESSLY waive right to support.

Front 6

Unenforceable Prenups UPAA

Back 6

• Not voluntary
• Product of duress or fraud
• Were unconscionable when entered into (financial disclosure issue, right to disclosure not waived, no actual knowledge of other party's hidden financial/property info)

Front 7

Elements of a Valid Prenup (Most States Require)

Back 7

1. Voluntary
2. Informed
3. Tolerably fair so as not to violate public policy (look at timing and overall fairness, change in circumstances that would make it unfair)

Front 8

Duress or Overreaching (undermines voluntary element)

Back 8

• Must impede the party's free will. Ex: man demands prenup as a condition of marriage from W already pregnant.
• Consider timing and the situation around the timing. Ex: would canceling the planned ceremony lead to hardship, emotional stress?
• Absence of or no time to use counsel
• Disparities in party sophistication

Front 9

Confidential Relationship

Back 9

MAJORITY RULE: parties to a pre-np are in a confidential, fiduciary relationship. More disclosure obligations, fair dealings obligation, can affect enforceability. More scrutiny where found.

Without, not obligated to disclose financial info but must respond truthfully to inquiries.

Front 10

Mallen (minority rule on CR and prospective spouses)

Back 10

Pre-nup held enforceable where H did not disclose full financial details, because no CR between prospective spouses. (MINORITY).

Front 11

Hollett (majority rule on CR, duress/overreaching)

Back 11

H had W excite pre-nup 47 hours before big wedding, no time to reflect or have attorney review. W challenged it later. HELD: Parties to a pre-nup have a confidential relationship. Courts will more closely scrutinize than other agreements, considered W's embarrassment in postponing the wedding. Unenforceable. Note: probably not unconscionable in UPAA state; would fail ALI state 30 day requirement.

Front 12

ALI Approach to Pre-nups

Back 12

Rebuttably presumed good faith if executed 30 days before marriage, both parties advised to seek counsel

Front 13

Post-Nuptual Agreements

Back 13

• Negotiate agreements after the wedding but before marital discord sets on path to divorce. Where no statutory guidelines courts treat like pre-nups.
• BUT...must also have CONSIDERATION. Staying married or domestic tranquility not enough; someone giving up their career or more tangible stuff. Reconciliation in the face of divorce might be.

Front 14

Bratton (Consideration requirement)

Back 14

Post-nups are not void per public policy as long as consideration. None found here. H was giving half his estate, but nothing from W. Held: Remaining in the marriage insufficient because they weren't having marital difficulties, reconciliation was not a meaningful act. Promise to forego a career as a dentist illusory because she had taken no steps to become a dentist.

Front 15

Friedman (minority view; separate standards for pre vs. post-nups)

Back 15

Less scrutiny applied to post-nups in these states. Here, CA.

Front 16

Separation Agreements

Back 16

• The bulk of fam. law practice today is drafting these. Allows negotiation of property settlements, support, etc.
• 2 distinct aspects: 1) the agreement declares the physical separation of the spouses, 2) contains rights and obligations of parties
• Can be annulled/rescinded for reconciliation.
• Must be VOLUNTARY: question where DV
• Void if obtained by fraud or duress

Front 17

UMDA Section 306

Back 17

• Reflects modern consensus on separation agreements
• Courts deferential to agreements, greater willingness to enforce than pre and post-nups.
• Provisions are binding EXCEPT those on child support issues. Terms can be incorporated into the divorce decree.

Front 18

Incorporation or Merger into Divorce Decree

Back 18

When SA court approved, can either be incorporated or merged into divorce decree. Effects future enforcement and modification.

• I: Remains contractually binding. Can be enforced/modified via court or general K principles.
• M: Become fully part of the judgment, cannot be K enforced but court can enforce through contempt of court. Can be modified by court order.

Front 19

Modification of SA's

Back 19

• Most states allow provisions prohibiting future modification. Courts will enforce even where changed circumstances.
• Absent this, and if NOT merged to the decree, can be modified in accordance with K principles.

Front 20

Voiding an SA

Back 20

• Courts occasionally deny enforcement where fraud, duress, or unconscionable; usually binding.
• Look for overreaching, concealment of assets, behavior inconsistent with fair dealing requirements of CR (continued until formal dissolution).
• Did the spouse have counsel?
• Was it totally one-sided?

Front 21

Thornhill (Voiding an SA for unconscionability)

Back 21

Court noted large amount of assets but no counsel for W, her unsophisticated understanding of financial matter, repeated statements that she did not understand settlement details, failure to provide W with interest on H's obligation which was spread over lengthy period. Held: Unconscionable even w/o fraud, duress, or concealment of assets.