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A prenuptial agreement is an agreement entered into by a couple
before the wedding vows and a postnuptial agreement is an agreement
entered after the wedding vows. If a marrying couple does not
have a legally binding prenuptial or postnuptial agreement, later
on, if there is a divorce, the Family Code will control what
will happen to parties’ assets and debts. On the other
hand, a couple who has a valid prenuptial or a postnuptial agreement
can preset the distribution of their assets and debts in the
event of divorce. In short, prenuptial and postnuptial agreements
permit a couple to "opt out" of the Family Code, and
adopt a plan that personally suits their unique objectives and
needs.
The most significant difference between prenuptial agreements
and postnuptial agreements concerns the fiduciary or confidential
relationship the spouses have to one another, created by the
marriage under Sections 721(b) and 1100(c) of
the Family Code. After marriage both spouses stand as fiduciaries
to the other. As a result, each spouse has the duty of highest
good faith and fair dealing with the other spouse, and neither
spouse can take any unfair advantage of the other.
Included in this fiduciary relationship is the requirement
that both spouses provide the other with full disclosure of any
and all information pertaining to issues contained in the agreement.
Marital agreements, if challenged at a later date, impose on
the spouse defending the agreement a greater burden of proof
that the agreement is not unfair to the other spouse. By contrast,
there is no fiduciary relationship presumed between prospective
spouses, and accordingly, there is no presumption of undue influence
created by a fiduciary relationship if a prenuptial agreement
is later challenged.
As a result of the legal obligations imposed on married people
under the Family Code, postnuptial agreements are more difficult
to enforce. The disclosure requirements are more strict, and
it's against public policy to encourage divorce. Thus, a party
to a postnuptial agreement is likely to challenge it on the grounds
that he or she was coerced into signing it upon threat of divorce.
While having a postnuptial agreement is almost certainly better
than having no agreement at all in the event of divorce, they
are much more susceptible to being successfully challenged than
a prenuptial agreement. While Family Courts are prone to enforce
prenuptial agreements (especially well-drafted balanced agreements
in which both parties were represented by counsel), they are
inherently skeptical of postnuptial agreements.
Transmutation Agreements: One common example of a postnuptial
agreement is a “transmutation” agreement, where spouses
agree to change the character of a property from community to
separate or separate to community. For instance, if the husband
owned a house before marriage, (his separate property) and after
the marriage he wants to make the house a community asset, (he
and his wife own the house jointly), an agreement to effect the
change from separate to community is called a transmutation agreement.
The statutory obligations governing transmutation agreements
under the Family Code are very specific and rigid, and unless
all the conditions are met, an agreement can be set aside at
a later time.
© 2006 L.A Prenup Lawyer L.L.P,
All Rights Reserved. |
