Altering Character of Assets

Question 1

Altering Character of Assets Generally

Answer 1

1. statutory characterizations control absent agreement otherwise
2. CA allows parties to opt out of statutory CP and SP characterizations by agreement
3. scope: can opt out as to particular assets or all acquisitions
4. timing: agreements can be made before or during marriage
   i. agreement before marriage governed by Uniform Premarital Agreement Act
   ii. agreement during the marriage that changes the character of an asset (transmutation)
   a. by gift (gifting mother’s inherited jewelry) or
   b. by agreement
5. consideration: not required for a premarital agreement or transmutation

Question 2

Written Premarital Agreement

Answer 2

1. premarital agreements must be written and signed by both parties
   i. no consideration needed
2. oral premarital agreements are generally invalid
   i. evidence of an oral premarital agreement is generally barred by the writing requirement
3. exception 1: executed oral premarital agreement
   i. if an oral premarital agreement is fully performed, the oral premarital agreement is enforceable
   ii. the performance must be some other act, marriage alone is not sufficient performance
   iii. a party can offer the performance of either party as evidence of the valid agreement
   a. ex. W agrees to marry H if H changes her to be his life insurance beneficiary, H does so and they marry, but H then changes the beneficiary to S and dies; W can offer H’s performance (of naming W as beneficiary or any actions) as evidence of the oral agreement
   i) note: W could not offer her own performance bc mere act of marrying is insufficient
4. exception 2: estoppel
   i. an oral premarital agreement is valid if there is foreseeable detrimental reliance
   ii. foreseeable detrimental reliance allows evidence of the oral agreement to be entered
   iii. W will leaves property to nephew. H agrees that he will make no claims against estate of W if they get married.
   iv. Independent eyewitness testimony about the oral agreement is admissible

Question 3

Defense to Premarital Agreement- not signed voluntary

Answer 3

i. a premarital agreement is not voluntary and unenforceable unless signing party was:
a. given at least seven days to sign, and

b. either:
i) was represented by independent legal counsel at time of signing, or
ii) waived legal counsel in a separate writing, or
iii) was fully informed in writing of the terms and basic effect of the agreement
a) writing must be in a language they are proficient in
b) signing party must execute a document declaring they got the information and who provided it

Question 4

Defense to Premarital Agreement– unconscionability

Answer 4

i. agreements other than spousal support: premarital agreements are unenforceable if:
a. provision is unconscionable when made, or
b. no full and fair disclosure of other party’s property or financial obligations, or
c. full and fair disclosure not waived in writing, or
d. challenging party had inadequate knowledge of other party’s property or financial circumstances

ii. spousal support: a premarital waiver of spousal support is unenforceable only if:
a. provision is unconscionable at time of enforcement, OR
i) may have been fair at time it was signed, but if one party gets super rich later, may be unconscionable later.
b. challenging party not represented by independent counsel at time of signing
i) i.e. can be unconscionable even if represented by legal counsel

iii. note: by statute, unconscionability is a matter of law to be decided by the court, not decided by jury

Question 5

Transmutation of Marital Agreement – Writing Agreement

Answer 5

1. before 1985: oral transmutations were permitted, whether by express or agreement-in-fact (rationale: spouses do not act together) BUT changed because messy in divorce proceedings.
2. after 1985: transmutations must:
   i. be written and signed by adversely affected spouse
   ii. expressly state that a change in ownership is being made
3. sole exception: gifts of tangible personal property not substantial in value taking into account the circumstances of the marriage
   i. bar: usually inherited jewelry
4. usual exceptions to the writing requirement do not apply (ex. estoppel, partial performance, statute of frauds)

Question 6

Transmutation of Marital Agreement – Writing Agreement - Limitations

Answer 6

1. statements in wills or revocable trusts regarding the character of property is not admissible as evidence of transmutation in proceedings commenced before death of testator or settlor
   i. ex. H’s will stating “I have no property” cannot be used in divorce proceedings