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Recent Posts in Prenups Category
| July 16, 2010 |
| DISCOVERY in California Marital Proceedings - What Are Requests for Admission? |
| Posted By Thurman Arnold |
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Q. How do I use Requests for Admission in my dissolution proceeding?
A. Requests for Admission ("RFA's") can be a useful discovery tool in family law proceedings because they allow parties in divorce and partnership litigation to resolve issues one way or another so that no evidence need be introduced at trial by asking the other party to admit or deny something. This typically involves establishing that certain documents are genuine (i.e., a prenuptial agreement entered into before marriage or a transfer deed or promissory note or copies of documents where original are missing or destroyed). Once this document is admitted as genuine, no further foundational evidence needs to be offered to admit the item into evidence. Other uses include establishing that certain property belongs to the community estate, or that it is one party's separate property. In such situations no further evidence need be offered on the subject issue at any later hearing in order for the Family Court to take what was admitted to be established fact. Once something is established in this way, no contradicting evidence can be introduced to disprove it.
Requests for Admission are governed by California Code of Civil Procedure section 2033.010 and the statutes that follow with that code. We have provided some of the more important ones on our Family Code Statutes page.
You are entitled to ask a total of 35 RFA's as a matter of right. But you can ask as many as you need, as long as they are requested for a proper purpose, relevant, not overly burdensome, and you also have executed and supplied the Declaration for Additional Discovery required by CCP § 2033.050.
There is a Judicial Council form that you can use for RFA's, but it is not required. I will upload and link to that form shortly. I also intend to provide my own form that you can modify for your use on our California Family Law Form Library page.
Another important use for Admission's Requests is that you can combine them with Civil Form Interrogatories, Number 17.1, which requires the responding party to state all facts and evidence that they know of, and other relevant information, for each RFA which they refuse to admit. This can flesh out claims and defenses of the other party that you may be wondering about, and the evidence and witnesses which the other party claims will support them. The answers to these form interrogatories may also establish that a denial of an otherwise undisputed fact, or genuine document, was not in good faith.
One of the chief benefits of RFA's beyond putting to rest matters that are really not issues (and hence saving the time and money to otherwise prove or disprove them), is that a failure to admit them in good faith gives the Court discretion to award the asking party their legal expenses and costs in producing evidence on those same issues if the Court later decides at trial that they were not reasonably in dispute.
As with some other types of discovery (interrogatories and production requests) the responding party has thirty days to answer (plus five more if you serve them by mail). Make sure you always provide a proof of service signed by a nonparty with any type of discovery you serve.
If the other party fails to respond to your Requests for Admission, you are entitled to file a motion that the requests be deemed admitted. Other sanctions might be available, like a court finding no evidence challenging the proposed undisputed items may be offered by the other side in later proceedings.
The subject of objections to discovery is a complicated one for another day. Check our search engine to see if I 've written about it by the time you've landed here.
TWA
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| June 14, 2010 |
| Is a PRENUPTIAL AGREEMENT signed without an attorney ENFORCEABLE? |
| Posted By Thurman Arnold |
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Q. Before my wife and I married, she convinced me to sign a Prenup prepared by her brother, who is a Los Angeles divorce attorney. It says that I waive any right to property acquired with her earnings. It also says I had the opportunity to get legal advice but was choosing not to. At the time she had all the money and I couldn't afford an attorney. Besides, she told me she would be fair if we separated. Now, six years later, she says I have no rights to the house we bought soon after our honeymoon. A friend told me that since I didn't have an attorney at the time I signed it, the agreement cannot be enforced. Is this true?
A. Whether or not a Prenup - formally known as a premarital agreement - gets enforced is highly fact specific, so it is impossible for me to answer your question except in general terms. I would need more information and to look at the document carefully. I can give you some useful pointers, however.
California has adopted the UPAA (The Uniform Premarital Act) as Family Code sections 1600-1617. Prior to its adoption prenups were viewed by courts with suspicion, and they were much harder to enforce. One reason was that as a matter of public policy it was believed that prenuptial agreements undermined marriage and so promoted divorce. Today they are viewed as supportive of the marriage institution, particularly in cases of second marriages where many people won't remarry without one. Although we speak in terms of marriage, the UPAA applies equally to registered domestic partnerships.
Still, they are viewed somewhat technically and to be enforceable they must meet the requirements of the statutes. Family Code section 1612 speaks to what rights are properly altered by a Prenup. Subsection (a)(1) and (3) deal with property interests. As a starting point, there is no question but that a premarital agreement can waive interests in real property like residences.
The critical family code section dealing with enforceability is section 1615. Anybody considering a Prenup, or questioning its validity, should scan this statute. The chief defense to a Prenup is that it was not executed voluntarily. If you can prove that, it will be treated as void. If the agreement was signed as result of duress, coercion or undue influence it will likely not be enforced. The lack of an independent attorney can result in a finding that the agreement was not entered voluntarily.
If one expects a premarital agreement to be enforceable, there is simply is no safe reason for dispensing with legal counsel. Prenups should only and alwlays be drafted by qualified attorneys, and both parties must actually be advised about their legal effect, or they may not be worth the paper they are written on.
In all cases where my office drafts a premarital agreement, we will not proceed if the other party is unrepresented. In fact, where the other party lacks sufficient financial resources to do so, we insist that person select counsel and that our client pay for it. In my opinion it is a dangerous practice to deny a less financially empowered spouse or domestic partner the ability to access legal counsel in these situations.
The importance of having independent counsel in these matters is evident from the language of FC section 1615:
"(a) A premarital agreement is not enforceable if the party against whom enforcement is sought proves either of the following:
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(c) For the purposes of subdivision (a), it shall be deemed that a premarital agreement was not executed voluntarily unless the court finds in writing or on the record all of the following:
(1) 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.
(2) The party against whom enforcement is sought had not 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.
(3) The party against whom enforcement is sought, if unrepresented by legal counsel, 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...."
Notice how these provisions are almost shouting 'independent legal counsel.' It is rare to see a phrase repeated so often within the same code section.
So examine whether your agreement, and the required separate writing, seem to address these requirements. Also, check to see whether the other conditions for enforceability are met. There may be other reasons why your Prenup will not be enforced, as where undue influence was exerted to obtain your signature (notice the seven day waiting period, which is intended to overcome the social pressures where a wedding date is looming). But you would be ill-advised to embark upon a challenge to the agreement without legal counsel this time around; don't compound the problem.
A final comment: Setting aside the prenuptial agreement may only have a limited affect upon the status of the house. For instance, the rules relating to transmutations and reimbursements still apply. I have written about those elsewhere in this Blog, but if the house was acquired by your wife as her separate property independently of the Prenup it remains her separate property even if the agreement is voided. However, if there was a mortgage and it was paid down with her earnings during marriage the cancelation of the Prenup may benefit you because the community will thereby gain a Moore Marsden reimbursement right in the principal pay down and appreciation.
Again, seek out an experienced family law attorney. And, I always urge that people consider mediating these types of family law disputes.
T.W. Arnold
http://www.ThurmanArnold.com
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| April 23, 2010 |
| Do I need a COHABITATION AGREEMENT? |
| Posted By Thurman Arnold |
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Q. I am thinking about asking my girlfriend to move in with me. Should I be considering a Cohabitation Agreement and what would it say?
A. A lawyer's job is to give conservative advice that protects clients from both seen and unseen potential legal consequences relative to the circumstances that are unique to these client's lives. Family law attorneys are reminded every day that most nonlawyers never consider that their new (or old) relationship might one day breakup or dissolve and if so what the fallout might be in terms of property, debts, or even support obligations. People are particularly vulnerable for setting themselves up for future legal difficulties in the early stages of relationship. This is the time when they are least likely to seek family law legal advice but when they need it most.
I commonly encounter several sets of circumstances that justify executing cohabitation agreements, and which affect how they are written and what provisions to include:
1)
Protecting assets, income, and wealth of one party:
Where one partner brings into the relationship assets, debts, or an income stream which is proportionately greater than that of the other partner, the partner in the financially superior position may reasonably be concerned about protecting what they have. I call these "limiting agreements" because their aim is primarily to ensure that the other partner acquires no interest (or only specified interests) in property which is already owned or that is acquired during the relationship - typically through the use of joint bank accounts, joint borrowing, inheritances, or by just plain inadvertence.
Often one partner in these situations has a near zero net worth. The economic reality in our culture is that this is usually the woman, who may also be a custodial parent of a minor child and under economic pressure. The fact is that our culture values the contributions of partners quite differently depending upon whether that contribution is in the form of money, property, or services. People joke about being called 'domestic engineers' and we may talk about women not being employed 'outside the home.' Families are not merely emotional and social units, they are also economic units. Coupling enables people to specialize between themselves so that one person can devote a greater percentage of attention to the job marketplace, for instance, while the other can invest their energies in establishing and maintaining a stable and supportive home environment.
We act as though money is the more valuable contribution to relationship when this may not at all be true. Any sociologist will tell you that if we were to count the hours that most women spend taking care of the home (and especially children), which frees the man up to work for money, and then value this time at a reasonable rate, the economic worth of the non cash contributions by domestic engineers often exceeds the value of the wages earned outside the home by the working partner in most low to middle-high income partnerships (illustrated if you consider what it would cost some outside worker to perform these tasks).
Whether the monetarily disadvantaged partner is a man or a woman, this person's interest lies in avoiding limiting agreements or in having them crafted so that some level of financial protection exists. There are compromise solutions that can be achieved which afford these persons protections they would not otherwise have, which is good reason for obtaining guidance from a qualified attorney.
If partner A earns $50,000/year and partner B works part-time outside the home or not at all, such that his efforts at home help to free up partner A's time so she can devote her attention to competing successfully within the job marketplace, the partners' respective contributions in terms of hours may be the same. If it is similar on a fairness scale, then is it really appropriate that partner A should be solely entitled to a $10,000 savings account she accumulated during the cohabitation when partner B worked only in the home and so did not have access to the dollar wages that could be tucked away?
You don't need to agree with this philosophical analysis, although it is the modern view, but perhaps these examples make it clear that cohabitation agreements include moral, ethical, and fairness considerations which deserve attention. These can be negotiated and compromised in an even handed manner that is respectful of and sensitive to the dignity and relative contribution of both cohabitants. Truly, if two partners enter a relationship where the underlying assumption is that only the partner who works for wages is bringing value into it, this is not an auspicious beginning.
2) Protecting assets, income, and wealth of both parties: Many people who utilize cohabitation agreements have previously been married and divorced, and have ongoing responsibilities for children or aging parents. They cannot afford the economic consequences of another break up and they want the companionship and benefits of a committed relationship.
In many cases the partners may have substantially equal assets and liabilities, or their relative net worths may not be too disproportionate. Two-earner households are more common today than ever before.
I call this variety of cohab contracts 'roadmap agreements.'
In California persons who cohabit who are not married or who are not domestic partners have no rights or obligations between themselves under the Family Code, assuming they have no children together. Their rights or obligations, if any, are determined solely by contract - and if there is no written contract it becomes very difficult to determine what people intended at the time they acquired what they acquired or did what they did. All kinds of claims can be made about verbal promises, and verbal agreements are enforceable when a Judge believes they exist.
Unmarried partners who have not been protected by a written agreement have no right to claim an interest in the other partner's property accumulated during the relationship, and they have no inheritance or survivorship rights absent an existing will or trust. Common law marriage is not recognized in California, unless it was first established in another state which does recognize it.
There are very good reasons to carefully draft and execute cohabitation agreements beyond trying to exclude the other partner from making a claim if the cohabitation ceases. It may be helpful to create a template for how the relationship can be disentangled in an orderly and equitable manner once it ends; however, it can be very useful to have a roadmap about how certain activities should be handled even in an intact relationship. Knowing one's rights in advance and having a formula for confirming them is always a smart thing which can positively affect decision-making.
3) Creating Nonmarital Partnerships: Just as a cohabitation agreement can be designed to protect against creating unintended rights in the other partner, so too it can be positively used to create protections that would otherwise not exist under the law. These are generally called "pooling agreements".
If you create a business partnership or joint venture you do it with the expectation of generating profits, including the coequal sharing of an increase in the value of the partnership and whatever money is spun off and distributed from the partnership. Some people wish to do the same thing with their nonmarital cohabitation partnerships.
Is it any more wise to enter into a nonmarital cohabitation without any form of agreement than it is to enter a business partnership on a handshake? In these times lawyers must shake our heads in dismay when people proudly tell us that their word is their bond and that they make their deals on a handshake. While such sentiment is admirable, it is not realistic.
A cohabitation agreement can be used to specify what property and assets becomes joint and under what circumstances, what the proportionate joint interests are, what to do with debt, and what property is to become or remain separate as to one partner alone. It can be used to protect the partners in the event of death as to property that may be jointly owned but not jointly titled. It can create a structure for valuing and dividing assets that avoids litigation and high legal fees, not to mention hostility and resentment, upon termination of the joint living arrangement.
It can also be used to create certain rights and obligations of support under specified settings.
Whether family attorneys counsel a particular client to utilize a cohabitation agreement, as with prenuptial or premarital agreements, often depends upon who has - or who over time is anticipated to have - the larger economic power and financial resources in the relationship.
The obvious situation is where the economically better off person wants the security of the protections. The common assumption is that the person with wealth should always insist upon a cohab agreement, and that view is probably correct - the agreement, however, can become something much larger and more creative than simple property waivers.
Ironically, people with some degree of economic advantage often don't avail themselves of a cohabitation agreement because they feel embarrassed, uneasy, or frightened to ask the other about it, on the belief the other partner may be offended. In my experience people are only offended when the agreement runs in one direction.
If a woman with zero assets and little income seeks advice about how to structure her economic relationship with the man or woman she is about to move in with, a cohabitation agreement may or may not be in her best interest depending upon the terms. It may come as a surprise, however, to learn that she will probably be far better off in all situations with one than without.
If one participant in a joint living arrangement is obsessed with acquiring and keeping all of the marbles, you are headed for trouble anyway. For me it is always best to admit that there is an elephant in the room. By placing these concerns on the table there is a huge potential freedom to address them in ways which are ignored when there is no agreement. People can be guided into thinking about consequences they otherwise block out of their minds. This can nurture a positive beginning, rather than a beginning by default with neither person is talking about a multitude of what-if's. It provides an opportunity to honor both persons, and is not at all mutually exclusive with reasonable legal protections.
People rarely seek marital counseling outside the church or education before marrying. Similarly they rarely give much thought to how to structure their lives when they undertake living together outside of marriage.
Cohabitation agreements provide an amazing opportunity to consciously and mindfully embark upon a new relationship.
If you intend to share a household with a romantic partner other than only temporarily, my recommendation is that you always consider entering into a cohabitation agreement.
However, it is important that you locate counsel in your area who is not merely a traditional adversarial lawyer, because their resource toolbox for assisting you with all your issues tends to be relatively empty.
Thurman W. Arnold III
http://www.ThurmanArnold.com
4/23/10
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| April 07, 2010 |
| When I get MARRIED, how do I avoid my husband's DEBT? |
| Posted By Thurman Arnold |
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Q. Is it possible to avoid any of this debt liability?
A. Yes. First, your separate property doesn't become liable for a spouse's premarital debt simply by marrying. But community property as it comes into being does.
Secondly, to the extent you or your spouse will incur debt during marriage, prior to marriage both can agree to eliminate or restrict the creation of community property as between you. This is accomplished through a prenuptial or premarital agreement. Essentially you agree to restrict or eliminate the creation of community property in the first instance, since that will remain liable for debts incurred prior to (with some exceptions) and during the marriage, and so you can ensure that your separate property remains protected.
None of this applies to debts you jointly incur - the joint credit card, the jointly purchased car, or the jointly refinanced home. This is why creditors try to insist that both spouses sign loans.
But you can modify your behavior in order to protect yourself by not signing. It is possible to enter a post-nuptial agreement which achieves substantially the same thing, although it won't necessarily change the character of debt incurred prior to its signing but it may nonetheless eliminate future community debt by eliminating community property. Remember, as between the two of you, you cannot affect third party's rights who are not parties to your post marital agreement, and to do so may be considered a fraud upon creditors which means the agreement may be set aside and voided. |
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| March 06, 2010 |
| Is a WAIVER OF SPOUSAL SUPPORT in a PRENUP VALID? |
| Posted By Thurman Arnold |
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Q. Before I married we signed a prenup that says I waived any right to spousal support. Is this valid?
A. Maybe yes, maybe no. Sections 1612 and 1615 of the California Family Code impose important limitations on spousal support waivers effective 1/1/02.
Spousal support waivers absolutely require that the party waiving the right was represented by independent legal counsel at the time the agreement was entered into. Family Code section 1612(c). If a lawyer has not advised the party and signed off on the agreement, the waiver is unenforceable.
Even if a party was in indeed represented by independent counsel who advised the client and approved the prenup, the spousal support waiver will not operate "if the provision regarding spousal support is unconscionable at the time of enforcement." Family Code section 1612(c). Time of enforcement means when a party attempts to force the other party to adhere to the terms of the agreement, or is resisting a support request in divorce court.
Creative attorneys anticipate these potential bars to enforcement by carefully drafting the language of the prenuptial agreement, and by creating various scenarios within the support waiver. For instance, a straight waiver of spousal support is much less likely to be enforced than a conditional waiver of support. A conditional waiver might contain language that precludes the waiver if the party seeking support is gravely ill, unable to work, or receiving welfare benefits.
Lawyers drafting premarital agreements tend to charge moderate minimum fees because of the potential attorney malpractice exposure years down the road. Many attorneys won't handle them at all, or refuse to recommend that a party ever waive support and so they will not execute the agreement.
There are a number of other restrictions which must be overcome before a premarital agreement can be enforced. One is that at least seven calendar days must have passed between the date that a party was first presented with the agreement and then later signed it.
While you may be able to accomplish what both parties say they want are are willing to do before marriage in a prenup, you must retain legal counsel who is experienced in this area of the law or things may turn out differently than you expect down the road.
Once a wedding date is set, the earlier you get the agreement negotiated and signed the greater the likelihood it will survive objection or attack later.
If you already signed one and want to know whether it will be enforced for or against you, seek a family law expert immediately.
TWA
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| January 18, 2010 |
| Are my EARNINGS during marriage LIABLE for my spouse's PREMARRIAGE DEBTS? |
| Posted By Thurman Arnold |
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Q. Are my earnings liable for my spouse's debts incurred before marriage? A. Your earnings during marriage are not liable for your spouse's debt incurred before marriage so long as these earnings when received are held in a deposit account which is not also in your spouse's name, and as to which they have no right to withdraw funds.
Once these monies go into the common pot, however, they become available to satisfy debts incurred prior to marriage. Family Code section 911.
You earnings are liable for debts the other spouse incurs after the date of marriage, because the earnings are community property and debts incurred during marriage are community debts.
The only way to avoid this is by way a prenup or post-nup established before the debt is incurred (which agreement may limit or preclude the creation of community property). |
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| December 30, 2009 |
| My New Wife Works. Can this NEW MATE INCOME Be Used to Increase my CHILD SUPPORT? |
| Posted By Thurman Arnold |
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Q. I have two children from a previous marriage. I remarried two years ago, and my new spouse earns $8,500 month. While my hours have been reduced during this recession and my monthly gross averages $3,500. The ex is threatening to take me back to Court to increase child support based upon my new mate's income. Can she do this?
A. Of course ex-spouses can always take the other back to court, but that doesn't mean they will win. We call these support modification proceedings. In order to obtain a new order, she must prove there has been some material change of circumstances with regard to her needs, the childrens' needs, or your ability to pay a greater sum in support.
The key California statute on when and how new mate income can be considered is Family Code section 4057.5. The basic rule is that courts cannot consider new mate or nonmarital partner income in the context of making child support or support spousal orders. This means as a general proposition that your new wife's income of $8,500/month is not to be inputted into the support guideline formulas.
There are two exceptions where new mate income may need to be disclosed and where it can be considered in setting child support: 1) Where there are "extraordinary circumstances" that would cause the exclusion of this income to create an extreme or severe hardship to a supported child. However, if this hardship is shown, the court must first consider the effect of inclusion of new mate income on any other children including the new mate's children, and so that their interests trump the hardship to the child for which support orders are being sought. 2) By marrying somebody with high earnings, a spouse will pick up additional taxes based upon the other's income. Since as far as the IRS and California Franchise Tax Board (FTB) is concerned, you are liable under community property laws for one-half of your new mate's income, regardless whether you file jointly, the added tax consequences upon this additional income can actually be the basis for a downward decrease in child support (County of Tulare v. Campbell) since there is less after tax income available to you from which to pay support.
There are very few reported California appellate decision on new mate income or which explain how FC section 4057.5 is to be applied. In Marriage of Loh (93 CA4 325) a mother/former spouse convinced a trial court, based upon photos of the father's extravagant lifestyle (homes, cars, etc.) which were funded by his girlfriend's income and assets, to impute income to him for purposes of basing a child support award. The appellate court reversed, stating "Evidence of lifestyle, particularly a lifestyle subsidized by a new 'nonmarital partner', is not a cheap substitute for proper discovery of income reported on tax returns."
In a very recent appellate decision (Marriage of Knowles (Oct. 2009) 178 CA4 35) a trial court was reversed after it accepted the former wife's argument that the community property income and assets of both he and his new wife should be used to determine his income available for support. The trial court's mistake was include the half that belonged to the new wife, although it could have included just the half that belong to him. There was no evidence of extreme hardship that justified considering the new mate's half.
We’ve waited a long time for another case dealing with consideration of new-mate income under Fam C §4057.5. One of the few cases that has, In re Marriage of
Wood (1995) 37 Cal.App.4th 1059 is cited here, but it came down in 1995. Neither the statute nor the cases provide any definitive answer regarding what actually constitutes either an “extraordinary case” or an “extreme and severe hardship,” although Wood seems to say that new-mate income can be considered where one of the parents is voluntarily unemployed or underemployed.
Rather than arguing for NMI (new mate income), a party seeking to have income assigned to a person who has remarried or is living with a nonmarital partner may find more success by arguing that income should be imputed to that spouse on the basis that they have an earning capacity which is not being realized. For instance, if because your new spouse had sufficient income you chose to quit work or take a lower paying job it might appear you are shirking your support responsibilities. Rather than charging you with NMI, a trial court could find that you had the ability to earn X dollars a month and so charge you for this phantom income by making that the basis for a support award. Then, the community property (including your new mate's share) could be tapped to satisfy this obligation.
Incidentally, a California prenup can be an effective way to limit this exposure.
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