V. AGREEMENTS BETWEEN SPOUSES

Question 1

A. Prenuptial Agreements

What can prenups do?

Answer 1

(a) Disposition of property upon seperation, divorce, death occurrence or non-occurrence of any other event
(c) Modification or elimination of spousal support
(d) Determining the management rights of property
(e) Defining what property will be SP and what property will be CP
Including: exchanging each spouse’s reciprocal interest in future CP income so that such income will be SP
Exception: Cannot convert currently help SP into CP, Only spouses can do this.
(f) Choice of law to govern construction of the agreement (g) Any other matter not in violation of public policy
Limitations: Parties CANNOT contract with respect to:
child custody or limiting child support
The wife would forfeit all CP if she filed for divorce

Question 2

requirements

What must a spouse CHALLENGING A PRENUP prove to invalidate it?

Answer 2

in writing and signed, consideration not requried

(Note: the challenger has the burden of proof)

a. The party against whom enforcement is sought did not execute it voluntarily OR
b. The agreement was unconscionable when signed AND each element of the following three-point test is met: (disclosure problem)
1. NO FAIR DISCLOSURE: The party arguing against the agreement was not provided a fair and reasonable disclosure of the property and financial obligations of the other party.
2. RIGHT TO DISCLOSURE NOT WAIVED: The party arguing against the agreement did not give a written waiver of the right to disclosure.
3. NO ADEQUATE KNOWLEDGE: The party arguing against the agreement did not have adequate knowledge of the other party’s property or financial obligations.

more about fraud (the signed one was not the same one as discussed) than duress

Question 3

B. Partition and Exchange agreements (P/E)

A spouse CHALLENGING A P/E AGREEMENT must prove:

Answer 3

Partition and exchange agreements convert current or future CP into SP

Requirements:
signed wiritng. Consideration is not required.
Limitation: Void with respect to the rights of a creditor whose rights are intended to be defrauded by it.

A spouse CHALLENGING A P/E AGREEMENT must prove:
same as prenup
(Note: the challenger has the burden of proof)
a. The party against whom enforcement is sought did not execute it voluntarily OR
b. The agreement was unconscionable when signed AND each element of the following three-point test is met: (disclosure problem)
1. NO FAIR DISCLOSURE: The party arguing against the agreement was not provided a fair and reasonable disclosure of the property and financial obligations of the other party.
2. RIGHT TO DISCLOSURE NOT WAIVED: The party arguing against the agreement did not give a written waiver of the right to disclosure.
3. NO ADEQUATE KNOWLEDGE: The party arguing against the agreement did not have adequate knowledge of the other party’s property or financial obligations.

Note: A partition agreement does not have to divide the CP into equal shares

Question 4

CONVERSION AGREEMENT

A spouse CHALLENGING A CONVERSION AGREEMENT must prove:

pros and cons

Answer 4

C. Conversion agreements:
Conversion agreements CONVERT SP into CP

Requirements:
1. Writing, signed by both spouses. Consideration is not required.
2. Identifying the property being converted, and specifying that this property is being converted into the spouses’ CP.

Limitations:

1. Must be made during marriage with respect to existing SP
2. Must alter the characterization of the property immediately
3. Does not affect the rights of a existing creditors

A spouse CHALLENGING A CONVERSION AGREEMENT must prove:
a. The challenging spouse did not sign the agreement voluntarily
OR
b. did not receive a fair and reasonable disclosure of the legal effect of converting property to community property.

Note: the disclosure requirement cannot be waived. but the statute sets out a strongly worded disclosure statement that, if conspicuously included in the agreement, creates a rebuttable presumption of a fair and reasonable disclosure.

pros: Favorable tax treatment. 
cons:
1. The newly created CP is immediately subject to a just and right division 
2, lose creditor protection 
3, lose the power of disposition

Question 5

D. Community Property Survivorship Agreement

Answer 5

Community Property Survivorship Agreements state that CP WILL BECOME PROPERTY OF THE SURVIVING SPOUSE.

Requirements:

1. In writing, and signed by both spouses
2. Containing a phrase like: “with right of survivorship” or “will become the property of the surviving spouse

limitations:
can be revoked by delivering a signed written revocation to the other spouse

Question 6

E. Cohabitation agreements

Answer 6

(NOT BETWEEN SPOUSES)
Cohabitation agreements outline the PROPERTY RIGHTS OF UNMARRIED COHABITANTS.
Requirements:
in writing, signed by both parties

Limitations:
standard contract limitations

Note: cohabitants do not have a right to statutory maintenance
All rights derive solely from their cohabitation agreement.

Question 7

VI. PUTATIVE MARRIAGE

After Homer marries Marge, he moves to Shelbyville and marries Mindy. He then earns $100. Who owns what portion of that $100?

What happens if Marge divorces Homer?
Homer and Mindy signed a prenuptial agreement. Is it enforceable?

Answer 7

Mindy: half
Homer and Marge: the other half
**so long as Mindy actinide good with and without knowledge of the impediment

Mindy has no property rights if she knew that Homer was married to Marge

impediment removed so Homer and Mindy’s marriage becomes valid informal marriage

yes; only to the extent necessary to avoid an inadequate result

Question 8

VII. MANAGEMENT RIGHTS

Homer bought a house before marriage, and he and Marge now live in it as husband and wife. Homer used CP to purchase a ranch. Homer is listed on each deed. Marge is not listed on either. Will Homer be able to mortgage these two properties without Marge’s approval?

Answer 8

A spouse has SOLE MANAGEMENT over
1, her sole SP
2, The property that would have been that spouse’s SP if she was single (wages and income from her SP)

If title to a CP asset is taken in only one spouse’s names, there is a PRESUMPTION that the asset is sole management CP

sole management gives that spouse the power to manage, control , transfer, encumber, or dispose without the other spouse’s consent

Exception: Homesteads
SP home: no, homestead
CP ranch: yes; SMCP presumption

Spouses have JOINT MANAGEMENT over:
property purchased with CP, and commingled SMCP

If title to a CP asset is taken in both names, there is a PRESUMPTION that the asset is JMCP

Question 9

VII. MANAGEMENT RIGHTS

CREDITORS’ RIGHTS

Creditors’ powers to collect debts INCURRED DURING MARRIAGE are a bit more complicated:

Answer 9

Creditors of debts INCURRED BEFORE MARRIAGE can collect from:
Property that the debtor spouse has management rights over. Namely, the debtor spouse’s SP and SMCP, and all JMCP

For NON-TORTIOUS DEBTS incurred during the marriage (credit card debts, debts stemming
from contractual obligations), creditors can collect from:
Property that the debtor spouse has management rights over. Namely, the debtor spouse’s SP and sole management CP, and the spouses’ joint management CP.
NOT the non-debtor spouse’s SP or SMCP

Exceptions:

1. If one spouse acted as the agent for the other spouse, then both spouses are personally liable. If both are personally liable, the creditor can reach all of their property. Note: one does not act as an agent solely by reason of the marital relationship.
2. Both spouses are personally liable for necessaries (rent, medical bills), but not attorney’s fee for divorce

For TORTIOUS DEBTS incurred during the marriage, creditors can collect from:
The tortfeasor’s SP
and all CP
The only protected property is the other spouse’s SP

EFFECT OF DIVORCE: LIABILITY ATTACHES TO PROPERTY, NOT PERSONS. If joint management property is subject to a liability because of Marge’s non-tortious debts during the marriage, and Homer gets that joint management property in the divorce decree, that property remains subject to the liability even after divorce.