Altering the Character of Assets by Agreement

Question 1

Premarital Agreements and SoF

Answer 1

General rule: PMAs require a writing signed by both parties.

An oral premarital agreement may be enforced when:
- Fully Executed (that is, the promisor has actually performed their promise), or
- Estoppel (The promisor is estopped to assert the Statute of Frauds because the promisee has relied to their detriment on the oral PMA)

Question 2

What can PMAs Regulate?

Answer 2

Parties can agree to just about anything.

Limiting or waiving spousal support is not per se unenforceable (but can be if unconscionable).

Parties cannot agree to limit either party’s contribution to furnish child support (prohibited by statute).

Question 3

When are Premarital Agreements Unenforceable?

Answer 3

Provisions that provide a spouse with a positive incentive to seek a divorce are unenforceable.

PMA not entered into voluntary. To be voluntary, a Court must find that the challenging party (1) was represented by counsel (or waived that right in writing), (2) had at least seven days to review and sign the agreement, and (3) If unrepresented, was fully informed in writing of the terms and basic effect of the agreement.

Unconscionable Spousal Support Agreements are unenforceable on one of two grounds: (1) The challenging party was not represented by independent legal counsel at the time the agreement was signed, or (2) the provision is unconscionable at time of enforcement (even if the party had independent legal counsel at the time of signing).

Other unconscionable agreements are unenforceable if: (1) it was unconscionable when made, (2) full and fair disclosure of other party’s property or financial obligations was not made, (3) the right to a disclosure was not waived in writing, and (4) the party challenging did not have adequate knowledge of the other party’s property or financial circumstances.

Question 4

What is a Transmutation?

Answer 4

When the character of an asset is changed (e.g., from SP to CP, or CP to SP) by agreement during the marriage

Question 5

Writing Requirement for Transmutations

Answer 5

Before 1985: oral transmutations were permitted, whether by express agreement or agreement-in-fact.

After 1985: a transmutation must (1) be made in writing, (2) expressly declare that a change in the ownership of property is being made, (3) have the consent of the spouse whose interest is adversely affected.

NOTE: Exceptions of estoppel and part performance do not apply. Extrinsic evidence is not admissible to interpret the transmutation agreement.