Avoiding Costly Mistakes When Preparing a Post Marital Agreement
By Adam R. Gardner , JD
Most people think that the absence of a pre-marital agreement and hearing a wedding officiate utter the words "you may kiss the bride" means that you have lost your chance to make an agreement with your spouse concerning a variety of marital issues. They are mistaken.
A post-marital agreement is an agreement entered into by spouses during marriage that seeks to alter or amend spouses' rights and responsibilities to one another, as opposed to a pre-marital agreement which is entered into by the two parties before marriage.
In arguably the most famous case to deal with post-marital agreements in California's history, those of Frank and Jamie McCourt, the judge in the case issued a Statement of Decision on December 7, 2010 in which he concluded that the three post-marital agreements between the couple were invalid and unenforceable.
Although the ink has not yet officially dried on the Statement of Decision - each party, for example, has the right to file an appeal - there are valuable, practical lessons that can be learned in terms of the "how to" of preparing postnuptial agreements. If you find yourself in the predicament of wanting to put together a post marital agreement, the following five lessons-gleaned from the results of the McCourt case will hopefully improve the chances of your agreement being valid and enforceable, both of which will help you save time and money in the long-run.
In the McCourt case, it seemed that the parties were torn between two places of residence: Massachusetts, where the parties lived for the majority of their married lives; and California, where they moved in 2004 in conjunction with the purchase of the Los Angeles Dodgers.
Indeed, one of the post marital agreements at issue in the McCourt case was conditional upon Jamie and Frank becoming residents of California. This suggests that the agreement was predicated on the possibility that Jamie and Frank would never become residents of California which meant the agreement would never become effective. The multi-state elements at issue in the McCourt trial added unnecessary confusion to the case.
The lesson here is, prior to preparing a postnuptial agreement, a person should ask him or herself: What is the "end game"? What do I really want to accomplish with the agreement? Where will I be living in the foreseeable future? What state's laws do I want to apply to the validity and enforceability of my post marital agreement? Focusing on the "end game" helps a person and his or her attorney determine if a post-marital agreement is a viable idea.
Clearly and Consistently State it. In the McCourt case, the judge went to great lengths to explain that an attempt to change the character of property during the marriage - for example, from community property to one's separate property - must be clear from the words in the post-marital agreement itself. In this regard, a California court will not examine evidence that is outside of a post-marital agreement's "four corners."
Moreover, your spouse must unambiguously understand your desire to change the character of property from the agreement itself so that there is a "meeting of the minds." The Judge found that absent in the McCourt case. For example, six original copies of a post-marital agreement were executed in the case, yet "Exhibit A" in three such copies said one thing while the other three were completely inconsistent.
This important lesson suggests that you clearly and consistently articulate your intentions to change the character of property in the post marital agreement itself and that your intentions are clear and easy to understand by your spouse. In sum, make sure that you and your spouse are on the same page (pun intended). This will increase the likelihood of a court finding a "meeting of the minds" between you and your spouse should your agreement become a subject of dispute in court.
The amount of funds the McCourt's spent on litigating the validity and enforceability of their post-marriage agreements in 2010 may have been better spent on each of them retaining separate and independent counsel prior to when the agreements were executed in 2004. Separate and independent counsel would have likely made sure that it was abundantly clear in the post-marital agreements as to how the Los Angeles Dodgers were to be characterized (community property or separate property). That simple factor remained at the heart of the entire trial.
The lesson: Retain separate and independent counsel who you know will look out for your interests exclusively. Don't run the risk of not having your interests fully protected by "sharing" an attorney with your spouse.
When hiring counsel, don't be afraid to ask him/her the tough questions such as:
In the McCourt matter, the attorneys who prepared the post-marital agreements at issue were not California attorneys who specialized in family law. A multitude of family law issues come into play in preparing a post-marital agreement, not always known to general law practitioners.
The Lesson: It is worthwhile to make sure that your attorney has the knowledge and expertise to handle such an postnuptial agreement.
In the McCourt matter, six original copies of the same post-marital agreement were executed. "Exhibit A" to three of those six original copies were subsequently changed out and amended after Jamie signed all six and Frank signed the first three.
Which one of these six agreements is the operative one: All of them, the first one, or the last one? What happens when changes are made to half of the original agreements signed by one party, but not the other? If only a few words are different between original copies, the party who seeks to disavow the post marital agreement has a good claim to assert that a "meeting of the minds" did not occur. That is what happened in the McCourt case.
The Lesson: Try to minimize the number of original executed post-marital agreements and have counsel for the both of you decide how many originals will be executed (though I recommend one). Also, determine who will be in charge of retaining the original. If anybody requests that more than one original be executed, make sure he/she has a good reason.
Article by attorney Adam R. Gardner
After considering some of the lessons learned in the McCourt's post marital agreement fiasco, you can see how important it is to make sure that you proceed with caution and use an attorney skilled in these sorts of things. For more information on what to consider when getting a divorce, check out the following articles: