Jan Cummins - Counselor at Law

650-342-2670

Q: Who needs a Marital Agreement and why?

Answer:

If there is a significant difference in the level of wealth or responsibilities between the two who are marrying, or if both parties have children from former marriages, a freely entered legal contract clarifying their respective financial commitments can be important. Marital Agreements are commonly known as prenuptial agreements, but they can also be postnuptial agreements, and as such are very useful as part of an integrated Estate Plan. “Prenups” are marital agreements that are created prior to marriage, in contemplation of marriage. “Postnups” are marital agreements that are created after marriage. Marital agreements generally only involve property, but they are still important as part of a good foundation for any marriage.

The main disadvantage of postnuptial marital agreements in the eyes of some is due to their doubtful enforceability in some aspects of the law, due to the strong public policy in favor of the sanctity and fiduciary nature of marriage. While a postnuptial agreement can have the same binding power on the parties in terms of property as a prenuptial agreement, some areas that infringe on spousal rights are enforceable in a prenuptial agreement, but probably not in a postnuptial agreement. Spousal support is a good example of such a right. This is because the heightened fiduciary requirements between spouses after marriage required by public policy make it necessary that all property or expectation of property, even separate property, owned by either of the parties must be fully disclosed to the other party, and neither party can negotiate away their right to be supported by the other in a consistent manner to the standard of living they have enjoyed together during marriage. The outcome of such a potential dispute is not certain, however. It is always according to the court’s discretion as to what is fair given the jointly available resources.

There are important conditions surrounding this positive endorsement for Marital Agreements in an estate planning context, however. They are: each spouse or potential spouse should be represented by independent legal counsel; and the Agreement must be limited to property rights and obligations, not to the more personal spousal rights. Negotiation of personal spousal rights are better handled in a Family Law context rather than an Estate Planning context.


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