Wednesday, February 18, 2015

Differences between Post-Nuptial Agreements, Prenuptial Agreements, and Marital Settlement Agreements

I am often asked about the differences in different types of agreements in California Family Law.

Although the differences between Prenuptial agreements and Post-Nuptial agreements may seem minor, there are actually significant differences that can affect the validity and enforceability of the agreements.    I will details the differences within this article.

Prenuptial Agreements.   These are done by parties before the marriage.     Since the parties are unmarried when these documents are drafted and executed (signed), the parties are dealing as most unrelated parties would in most business transactions.    In other words, there is NO fiduciary duty to the other party to be "fair" as would occur with married parties.    Although the parties generally need to see the draft document no less than seven (7) days before the marriage (Unless represented by lawyers as a result of recent case law), the parties can waive alimony, community property rights, inheritance rights and other rights.     There still should be honest disclosure by the parties as well as an understanding of rights in the document for it to be enforceable, but the requirements are less demanding that those of a Post-Nuptial agreement.

Post-Nuptial Agreement.    These are done by married persons after they are married.     Also, these agreements need to be done before  divorce or legal separation are contemplated.     Family Code Section 721 imposes a fiduciary duty between both parties to be fair and to fully disclose all assets, liabilities, and business prospects between each other.    It is important for both parties to be represented by their own attorneys so they understand they have full disclosure, the agreement is reasonable, and the parties understand what they are signing for the agreement to be enforceable in the event of divorce or separation.

Marital Settlement Agreements.    There seems to be confusion that people can draft marital settlement agreements (MSA's) before the parties have contemplated divorce, filed for divorce and without attorneys.     While attorneys are not required for MSA's, a key difference is that an MSA is drafted and signed in contemplation for divorce, and usually after the parties have filed for divorce or separation and are using the MSA as a contract "in place of" a formal stipulated judgment.      Full disclosure is still required and the parties still owe a fiduciary duty to each other, however the agreement generally may be "uneven" or unfair" and still enforceable as long as the parties make the division knowingly and without duress or coercion.

THE BOTTOM LINE.    Many people try to make "agreements" while contemplating divorce or separation, before an action is filed and without lawyers or without proper, fiduciary disclosure.   They are surprised and upset when they find out the agreements are generally unenforceable because the parties made the agreement without the proper disclosures and without the proper representation or interpretation.     It is best if you first consult a competent Family Law Attorney or Divorce Lawyer that can advise you.      Kevin J. Kensik 310-891-2300, 310-704-0879.

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