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Premarital Agreement | PMA | Family Law | Estate Planning | Broaden Law LLP

PREMARITAL AGREEMENTS ARE PART OF YOUR ESTATE PLAN

What is a Premarital Agreement (PMA)?

A premarital agreement (“PMA”) is a written contract signed by fiances before marriage that become effective upon marriage.  If a couple does not have a PMA and gets divorced, unless they enter into a marital settlement agreement that provides otherwise, the California Family Code and California case law will determine how their assets and debts are awarded, and whether either is entitled to receive spousal support.  The Uniform Premarital Agreement Act (“UPAA”), codified at California Family Code section 1615 et seq. provides the legal framework for PMAs.

A typical PMA determines:

  • What will be considered “community property” vs. “separate property” during the marriage.
  • If spousal support can be awarded in a divorce, and how much a spouse can receive.

A PMA Comes First Before the Estate Plan

Some PMAs will provide that the couple will make their estate plan as soon as possible after marriage.  However, the PMA will still control how property is “characterized” notwithstanding what is written in the estate plan documents.  That makes it so one spouse can’t give away the other spouse’s separate property in his or her will.

Contests to the Validity of the PMA or the Estate Plan

The validity of a PMA or an Estate Plan document can be challenged for good cause.  There are a number of reasons why the court would decline to enforce a PMA in whole or in part, including that:

  • The PMA violates public policy by encouraging divorce.
  • The PMA violates California’s “no-fault” policy. (See Diosdado v. Diosdado (2002) 97 Cal. App. 4th 470, 474.)
  • One or both spouses didn’t give the other a fair, reasonable and full and disclosure of his or her income, assets and debts, and there was no voluntary and express waiver of the full disclosure requirement. (Family Code section 1615(a)(2)(A).)
  • One spouse waived the right to receive spousal support without being represented by independent counsel.
  • The party against whom enforcement is sought was not represented by independent counsel when the PMA was signed and there is no express waiver in a separate writing.
  • The party against whom enforcement is sought signed the PSA without at least seven calendar days from the time he or she was “first presented” with the PMA and advised to seek independent counsel to review it. [Family Code section 1615(a)(2)]

Estate Plan documents also have legal requirements that must be met for them to be enforceable.  The California Probate Code sets forth the requirements for a valid will in California.  Some reasons the court would find a will to be invalid include:

  • The person making the will (called the “testator“) was not of sound mind at the time the will was signed.
  • The testator signed the will under duress or undue influence.
  • The testator’s will was not signed by two disinterested witnessed before his or her death.
  • The testator made more than one will and at least one of them is not dated.

A PMA Significantly Affects Distribution of Your Estate

If you do not have a will or a trust, and you do not have a PMA that characterizes your property as separate vs. community property, your spouse or your children will have to take measures to have your estate characterized and might end up getting more or less than you intended.

A basic overview of California laws of intestate succession (i.e., the laws that say who your legal heirs are) serve the same function as a will by determining who inherits your estate:

1. Spouse:  A surviving spouse inherits all the community property and some or all of the other spouse’s separate property depending on if there are any children.

2. Children:  If you are survived by a spouse and one child, that child gets half of the separate property.  If you are survived by a spouse and two or more children, the surviving spouse’s share of separate property is reduced to one-third and the other two-thirds are divided among the surviving children.  If you are only survived by children, they inherit your estate equally.

3. Parents:  If you are only survived by your parents (and no children or spouse), they inherit your estate equally.

4. Siblings:  If you are survived by one or more siblings but no spouse, children or parents, your siblings inherit your estate equally.

5. Grandparents:  If you are survived only by grandparents but no spouse, children, parents or siblings, your grandparents inherit your estate equally.

6. Other relatives:  If you are survived by no immediate family or grandparents, your aunts and uncles, nieces and nephews inherit your estate equaly.

7. The State of California:  If there are no living relatives that survive you, the State of California will inherit your estate.

If you die without a will or estate plan but you do have a valid PMA that covers disposition of your assets, the court can distribute your assets pursuant to the PMA to the extent they cover such disposition.

What happens if my PMA states that the laws of California apply but I die in a different state?

The laws of California will control disposition of your assets. If your PMA does not specify which state’s laws should apply, the laws of the state where you die will apply.

How can my PMA work in conjunction with my estate plan?

By disclosing your assets and debts in a PMA, it is clear when one spouse dies whether certain assets are community or separate property. This is especially important for a person who has been married previously and wishes to leave certain assets for children from that previous marriage.  Transferring certain assets into a trust before marriage can also keep those assets from becoming comingled with community property during a subsequent marriage.

Can I disinherit my spouse in California?

In general, if not provided otherwise through a PMA or estate planning document, each spouse has a right to an equal one-half share of all community property (income and assets acquired during the marriage), except assets acquired through gift or inheritance by one spouse, which remain that spouse’s separate property.

Through a PMA, one spouse may waive his or her rights to the other’s estate. The validity of a PMA provision that waives a surviving spouse’s rights to the decedent spouse’s estate is tested under the UPAA. Therefore, if the PMA is found to be valid, the surviving spouse’s waiver provision should also be valid. (Estate of Gagnier (1993) 21 Cal.App.4th 124, 127-129.) Please note that an express, unambiguous waiver of the decedent spouse’s estate rights is required. Further, that waiver must be knowingly and voluntarily made. If the court finds any ambiguity surrounding this waiver, it will construe the waiver in favor of preserving the surviving spouse’s rights to the decedent spouse’s estate. (See generally, Jones v. Lamont (1897) 118 Cal. 499, 502.)

Many couples don’t realize that a PMA is part of an estate plan.  Most estate planning attorneys will ask if the couple has a PMA and will request it for the file.  Likewise, the family law attorney preparing a PMA needs to review a copy of  existing estate plan documents.  It is important to ensure the PMA and estate planning documents are consistent to avoid costly litigation.

The attorneys at Broaden Law LLP have valuable experience in both premarital agreements and estate planning.  Therefore, if you anticipate involvement in both areas, please contact us for a consultation.

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