California Pre/Post Marital Agreements – September 2006 Summary

Legal Developments

Court of Appeal Upholds Postmarital Agreement in Burkle II

The viability of postmarital agreements was greatly enhanced by In re Marriage of Burkle [Burkle II] (2006) 139 Cal.App.4th 712, 139 Cal.App.4th 712, 43 Cal.Rptr.3d 181.  There, the parties had been separated for approximately five years when they agreed to attempt a reconciliation, provided the wife sign a postmarital agreement.  She was represented in the negotiations by a respected CFLS and had available to her a preeminent forensic accounting firm and a private investigator.  In the agreement, she waived all of her future community property rights in exchange for one half of $60 million in agreed upon community property plus $1 million per year.  Parties reconciled, but separated again four years later, during which time the husband had competed two fantastically profitable grocery store mergers.  All of the wife's challenges to the agreement using traditional Haines/fiduciary duty defenses were rejected.  The many implications of this opinion are covered in the appropriate Law & Strategy discussions.  Questions 1, 2, 14, 30, 144, 159, 162, 166, 178, 412, 413, 414, 420, 422, 423, 424 and 432.

Rosendale dismissed by Supreme Court

In a case decided in June 2004, a Court of Appeal explored the parameters of permissible waivers left open in Pendleton and Fireman and held that waivers of spousal support are unenforceable if they are unconscionable at the time of enforcement. In In re Marriage of Rosendale (2004) 119 Cal.App.4th 1202, 15 Cal.Rptr.3d 137, two represented parties agreed to a waiver of spousal support in a pre-Pendleton and Fireman premarital agreement. Eight years later the wife was grievously injured. In a subsequent dissolution initiated by the husband, a trial court upheld the waiver as it predated the amendment to Fam. Code §1612 that required that this factor be considered. The Court of Appeal reversed, holding that irrespective of whether Fam. Code §1612 could be applied retroactively, common law still required that waivers of support not be unconscionable. The Supreme Court granted review on October 13, 2004, but after briefing dismissed the appeal on its own motion holding that the amendment to Fam. Code §1612 was retroactive. The Court of Appeal opinion was not ordered republished, hence it is no longer authority, nor is the Supreme Court’s dismissal order. Although technically the issue of the retroactivity of Fam. Code §1612 has not been decided, anyone aware of the dismissal of Rosendale has a good idea of what the Supreme Court thinks. Question 1.

Merely Showing that the Paying Spouse had Separate Property Available at Some Time is Insufficient Basis to Require Reimbursement to the Community

In re Marriage of Sherman (2005) 133 Cal.App.4th 795, 35 Cal.Rptr.3d 137, interpreted Family Code §915(b) and Family Code §920(c) and held that to secure Family Code §915 reimbursement, the spouse seeking reimbursement must show that the paying spouse had nonexempt separate income available when community property funds were used to make a particular support payment within the previous three years.

"[T]he correct interpretation of section 920, based on its plain language, requires a court to treat each support payment as a separate obligation or debt. To secure reimbursement under section 915, a party must show the other spouse had nonexempt separate income available <<at the time>> that spouse used community funds to make a particular support payment. A spouse has a right to use community funds to make a support payment if nonexempt separate income is not available to him or her to use for that purpose." (Ibid.)

Questions 71, 73, 85-88, 103-106, 126, 128, 138, 139, 184, 213, 215-218, 280, and 282-285.

UFTA Applied to Void California Property Transactions Associated with a Nevada Marital Dissolution

In Filip v. Bucurenciu (2005) 129 Cal.App.4th 825, 28 Cal.Rptr.3d 884, the UFTA was applied to void California property transactions associated with a Nevada marital dissolution and property settlement agreement. The spouses argued that the California courts were required to give Full Faith and Credit to the Nevada judgment. The California court agreed that the judgment was entitled to the same deference it would be accorded in the rendering state. Because a fraudulent settlement agreement may be attacked in Nevada, it may also be attacked in California. Questions 125, 136, 166, 395, 396 and 400.

Updated Product Features

Language Added to Strengthen Waiver of Career Goodwill

Where the parties waive their rights in the intangible assets celebrity, career or executive goodwill a sentence will be added stating "To the extent that either of us have developed and/or enhanced any type of career, executive and/or celebrity goodwill during marriage, we agree that no such goodwill exists and that said earning potential shall be [Husband]'s or [Wife]'s separate property." Question 340.

New Options to Specify Treatment of Either Spouse’s Career Goodwill if Not Waived

You may now specify the terms for treating any celebrity, executive or career goodwill, including that which pre-existed the marriage. You may specify valuation of this intangible asset by an excess earnings approach, by a formula, or by stating an agreed upon amount. New Questions 345-375.

Upgraded User Interface

Lawgic's user interface now incorporates the latest version of Java, which improves both stability and appearance. You will notice a new title initialization progress bar as answer files are loaded. If your mouse has a wheel you will now be able to use the wheel to scroll. More questions are now visible at one time in the Navigator. In general you will see a greater consistency of font and dialog box appearance. Before Lawgic is launched the system is checked for misplaced or corrupted files, and the user is alerted if corrections are needed. The consistency and function of accelerator and shortcut keys has also been improved. Finally, there is now a direct link to the Lawgic web site on the menu bar labeled Connect.