Character of Property: Agreements that Alter the Character of Property

Question 1

What are the two types of agreements to alter the character of property?

Answer 1

1. Agreements made before marriage (“Pre-marital Agreement”)

2. Agreements made during marriage (“Transmutation”)

Question 2

What is the general rule re: pre-marital agreements?

Answer 2

-Premarital agreements can limit property rights and, within limits, support obligations (to each other)

Typical premarital agreement –> provides that earnings made during marriage are SP

Question 3

Does a pre-marital agreement require consideration?

Answer 3

No

Question 4

What is the rule re: SOF and pre-marital agreement?

Answer 4

For pre-marital agreement, there must be a WRITING signed by BOTH PARTIES

EXCEPTIONS: Oral premarital agreement may be enforced when:

1. executory promise was fully executed (promisor has actually performed his promise); OR
2. the promisor is ESTOPPED to assert SOF (promisee relied to her detriment on the oral premarital agreement)

Question 5

May pre-marital agreements limit or waive property rights?

Answer 5

Yes.

Question 6

May pre-marital agreements limit or waive spousal support?

Answer 6

Pre-marital agreements that limit or waive spousal support are not per se unenforceable

Question 7

What is the rule re: pre-marital agreements and promoting divorce?

Answer 7

pre-marital agreements may not promote divorce.

Result –> provision providing spouse positive incentive to seek divorce is unenforceable.

Question 8

What is the rule re: pre-marital agreements and voluntariness?

Answer 8

Pre-marital agreements must be VOLUNTARY.

Parties must:

1. UNDERSTAND what they are giving up; and
2. have had TIME for deliberation

Question 9

When is a pre-marital agreement unenforceable?

Answer 9

A pre-marital agreement is not enforceable if it:

1. promotes divorce
2. is not voluntary
3. is unconscionable

Question 10

When is a premarital agreement unenforceable for unconscionability?

Answer 10

A pre-marital agreement is unenforceable for unconscionability if:

1. it was unconscionable when executed; AND
2. the burdened party did not have adequate disclosure of the other party’s wealth

Question 11

In a pre-marital agreement, when is a waiver of death rights enforceable?

Answer 11

A waiver of marital death rights is enforceable if it satisfies EITHER:

1. the family code; or
2. the probate code

Question 12

What is a “transmutation”?

Answer 12

“Transmutation” = agreement during the marriage to change status of property from

1. SP –> CP
2. CP –> SP
3. One spouse’s SP –> other spouse’s SP

Question 13

What is requires to effect a transmutation?

Answer 13

1. must be in writing;
2. must expressly declare change in ownership;
3. must be consented by spouse whose interest is adversely affected

EXCEPTION –> there is no writing requirement for gifts of a personal nature that is are insubstantial in value taking into account the financial circumstances of the marriage

Question 14

In a divorce, is a statement in a will binding as to character of property when one party is arguing there was a transmutation?

Answer 14

NO

Question 15

In a divorce, is a statement in an intervivos trust binding as to character of property when one party is arguing there was a transmutation?

Answer 15

No, unless there is an UNAMBIGUOUS indication that a transmutation was intended

Question 16

What is the rule re: presumption of undue influence and transmutation?

Answer 16

There is a rebuttable presumption of UNDUE INFLUENCE when one spouse gains an advantage over the other in a property transaction.

RESULT –> the spouse who gains the advantage has the burden of rebutting the presumption by a preponderance of evidence

REASONING —> spouses owe each other highest good faith and fair dealing