II. ALTERING THE CHARACTER OF ASSETS BY AGREEMENT

Question 1

California has always allowed the parties to opt out of the CP and SP characterizations by what?

Answer 1

Agreement

Question 2

Can an agreement to opt out of community property be for particular assets of all acquisitions?

Answer 2

Yes

Question 3

When can agreements to opt out of community property be made?

Answer 3

can be made before marriage (and thus governed by the Uniform Premarital Agreement Act) or be made during the marriage

Question 4

What is the result of changing an asset’s character from SP to CP or vice versa?

Answer 4

A transmutation

Question 5

Is consideration required for a premarital agreement or for transmutation during marriage?

Answer 5

No

Question 6

What are the two avenues to make a transmutation of property?

Answer 6

By gift or agreement.

Question 7

H gives jewelry inherited from his mother to W on her birthday. Is that community property or separate property? why?

Answer 7

The jewelry is W’s SP property by transmutation.

Question 8

What is required for a premarital agreement generally?

Answer 8

Premarital agreements must be in writing, signed by both parties.

Question 9

Are oral premarital agreements valid?

Answer 9

Generally No.

Question 10

What are the exceptions when a oral premarital agreement is valid?

Answer 10

1. Where oral agreement is executed (fully performed)

2. Estopple based on detrimental reliance.

Question 11

To induce Winkie to marry him, Hobie orally agrees to name her as beneficiary of his $100,000 life insurance policy. The parties marry, and Hobie changes the beneficiary designation to make Winkie the beneficiary. Later, after a heated argument, Hobie changes his policy to make his sister Sue the beneficiary. Hobie dies shortly thereafter. Winkie now sues Sue, offering proof of the oral agreement; Sue contends that evidence of the agreement is barred by the writing requirement for premarital agreements.
Winkie argues that her marrying Hobie in reliance on the agreement is sufficient performance of the oral contract to make it an exception to the writing requirement. Is she correct? Why or why not?

Answer 11

No, Marriage alone is not sufficient performance to make it an exception to the writing requirement because that would eliminate the writing requirement in every case.

Question 12

To induce Winkie to marry him, Hobie orally agrees to name her as beneficiary of his $100,000 life insurance policy. The parties marry, and Hobie changes the beneficiary designation to make Winkie the beneficiary. Later, after a heated argument, Hobie changes his policy to make his sister Sue the beneficiary. Hobie dies shortly thereafter. Winkie now sues Sue, offering proof of the oral agreement; Sue contends that evidence of the agreement is barred by the writing requirement for premarital agreements.
Winkie argues that evidence of Hobie’s actions is still admissible to prove the existence of a premarital agreement as to the insurance. Is she correct?

Answer 12

Yes, By naming her as beneficiary, Hobie did what he promised and acted consistent with the existence of a contract. This conduct substitutes for requirement of writing. The oral agreement was fully executed.

Question 13

Wanda (who is single) executes a will leaving all of her property to her nephew Norman. Wanda later meets Howie. Howie agrees that if Wanda marries him, he will make no claim against Wanda’s estate at the time of Wanda’s death. They marry. Wanda dies, and Howie brings a claim for his share of the will against Wanda’s estate (which he would otherwise get under California’s omitted spouse statute).
In probate court, evidence of Howie’s oral promise is offered by independent witnesses. Howie argues that the evidence is inadmissible because of the premarital agreement writing requirement. Is the evidence admissible?

Answer 13

Yes, Wanda relied on Howie’s promise, and he is now estopped from asserting the writing requirement.

Question 14

In a premarital agreement, what can parties agree to?

Answer 14

Everything except for child support which is prohibited by statute.

Question 15

There are two defenses to enforcement of a premarital agreement, what are they?

Answer 15

1. Not signed voluntarily

2. Unconscionability

Question 16

When is a premarital agreement involuntary? (ie how can the party not challenging the agreement show it was valid?)

Answer 16

A premarital agreement shall be deemed not voluntary (and thus unenforceable) unless court finds that party challenging agreement:

i. Was represented by independent legal counsel at time agreement signed (or waived in separate writing); AND
ii. Was given at least 7 days to sign; AND
iii. If not represented by independent counsel, was fully informed in writing (in language in which party proficient) of terms and basic effect of agreement. Party must execute document declaring that they got information and identifying who provided it.

Question 17

Provision in premarital agreement regarding spousal support is unenforceable on one of two grounds: What are the grounds?

Answer 17

Party challenging was not represented by legal counsel at time signed or provision is unconscionable at the time of enforcement (even if party represented by independent counsel)

Question 18

If it is an agreement for anything else (besides spousal support) what are the elements to prove the agreement is unconscionable?

Answer 18

Agreement unenforceable if unconscionable when made AND (i) no full and fair disclosure of other party’s property or financial obligations; (ii) right to disclosure not waived in writing; and (iii) party
challenging had no adequate knowledge of other party’s property or financial circumstances.

Question 19

Who decides the question of unconscionability?

Answer 19

the court, not the jury.

Question 20

Before 1985, were oral transmutations permitted?

Answer 20

Yes

Question 21

After 1985 were oral transmutations permitted?

Answer 21

No

Question 22

After 1985 what was required to have property transmuted?

Answer 22

After 1985, must be (1) in writing; (2) signed by spouse whose interested is adversely affected; and (3) must explicitly state that a change in ownership is being made.

Question 23

Do the usual exceptions to the statute of frauds rerirement, (estopple or partial performance) apply to transmutations after 1985?

Answer 23

No.

Question 24

What is the only eception for tranmutions that Usual exceptions to the writing requirement (statute of frauds) (e.g., estoppel, partial
performance) apply to?

Answer 24

gifts of tangible property of personal nature (e.g., inherited jewelry) which “are not substantial in value taking into account the circumstances of the marriage.”

Question 25

2/10 - $15K painting paid for with SP funds, given as gift to other spouse; is there a transmutation to community property of the wife? Why or why not?

Answer 25

No, because it has not been reduced to writing.

Question 26

Hal owns AT&T stock worth $80,000; Wendy owns Exxon stock worth $20,000. Over breakfast one day in late 1984 or early 1985, Hal says, “I think it would be a good idea for all of our stock to be owned as CP.” Wendy says, “Great!”
If conversation took place in 1984, what result?
If conversation took place in 1985, what result?

Answer 26

In 1984: valid oral transmutation agreement and all stock community property

after 1985:the oral agreement is not valid and each retains their stock as separate property

Question 27

H executes will that says “I own no SP. All of my property, real and personal, is CP of my wife and me.” H & W get divorced. In proceedings, H claims that some of his assets are SP. W procures Xerox copy of H’s will, saying it shows a transmutation. Is H’s will admissible in divorce proceeding as evidence of a written transmutation agreement?

Answer 27

No, By statute, in any proceeding commenced before the death of the person who made the will or created a revocable trust, a statement in a will or revocable trust as to the character of the property is not admissible as evidence of transmutation