Prenuptial, Postnuptial and Prenuptial, Postnuptial and Cohabitation - - PowerPoint PPT Presentation

Presenting a live 90‐minute webinar with interactive Q&A

Prenuptial, Postnuptial and Prenuptial, Postnuptial and Cohabitation Agreements

Strategies to Craft Enforceable Provisions and Attack or Defend the Agreement

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific THURSDAY, SEPTEMBER 22, 2011

Today’s faculty features: Christopher C. Melcher, Partner, Walzer & Melcher, Woodland Hills, Calif. Peter M. Walzer, Partner, Walzer & Melcher, Woodland Hills, Calif. Richard G. Kent, Partner, Meyers Breiner & Kent, Fairfield, Conn.

The audio portion of the conference may be accessed via the telephone or by using your computer's

• speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

Conference Materials

If you have not printed the conference materials for this program, please complete the following steps:

• Click on the + sign next to “ Conference Materials” in the middle of the left-

hand column on your screen hand column on your screen.

• Click on the tab labeled “ Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.

Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

Continuing Education Credits

FOR LIVE EVENT ONLY

For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:

• Close the notification box
• In the chat box, type (1) your company name and (2) the number of

attendees at your location

• Click the S

END button beside the box

Tips for Optimal Quality

S d Q lit S

• und Quality

If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-888-450-9970 and enter your PIN when prompted Otherwise please send us a chat or e mail when prompted. Otherwise, please send us a chat or e-mail sound@ straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance.

Viewing Qualit y

To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again press the F11 key again.

Thursday, September 22, 2011 1:00 pm – 2:30 pm EDT p p Strafford Publications

P P PRENUPTIAL, POSTNUPTIAL AND COHABITATION AGREEMENTS

5

PRESENTERS

 Richard G. Kent

Meyers Breiner & Kent Fairfield, Connecticut 203-255-9410

 Peter M. Walzer &  Christopher C. Melcher

Walzer & Melcher LLP Walzer & Melcher LLP Woodland Hills, California 818-591-3700 818 591 3700

6

OVERVIEW

 Differences between premarital agreements,

p g , postmarital agreements, and cohabitation agreements H t di d ti t th t

 How to discuss and negotiate these agreements  Structuring the agreement  Choice/conflict of laws for multistate or international  Choice/conflict of laws for multistate or international

couples

 Getting retained and paid

7

WHO NEEDS A PRENUP?

 A party who wants to protect separate assets, such

p y p p as family wealth from disputes on death or divorce.

 A party who has a professional practice or other

service business and wants to avoid or limit a service business, and wants to avoid or limit a community interest.

 The other party has substantial debt, or a support

• bligation from a prior marriage
• bligation from a prior marriage.

8

BENEFITS OF A PRENUP

 Promotes communication about finances and

expectations of each party before marriage.

 Provides certainty as to their rights and obligations

• n divorce
• n divorce.

 May increase trust about the other’s intentions.  May reduce chance of litigation on divorce.  May reduce chance of litigation on divorce.

9

WHAT A PRENUP CAN DO

 Keep premarital property off limits

p p p p y

 Fundamentally change the default rules re

community property or equitable distribution.

 Limit or waive spousal support/alimony.  Specify rights on death and to life insurance.

10

RISKS OF PROPOSING ONE

 Neither party appreciates an attorney’s intrusion

p y pp y into their idyllic expectations of love and marriage.

 The subjects of death and divorce are the antithesis

• f expectations of love and marriage
• f expectations of love and marriage.

 Agreements demonstrate a lack of trust.  Agreements dampen romance.

11

SOCIETAL VIEWS

 Premarital agreements place emphasis on the

g p p individual over the couple.

 May hurt women more than men.  The wealthy may have an advantage over the less

wealthy.

12

LEGAL ENVIRONMENT

 Marriage is a highly regulated institution, so there

g g y g , are limits on freedom of contract with respect to marital agreements.

13

HOW TO DISCUSS A MARITAL AGREEMENT

 ??

14

3 KEY ELEMENTS TO A PRENUP

 Timing  Disclosure  Independent Counsel

15

TIMING

 How far in advance must the agreement be

g presented?

16

DISCLOSURES

 What must be disclosed?  What must be disclosed?  Can the right to disclosure be waived?  Attach disclosures to the agreement so there is no

question what was disclosed.

 The disclosure should give meaningful information about

the party’s income assets and obligations the party s income, assets, and obligations.

 Serve disclosures while agreement is being negotiated

with sufficient time for review.

17

INDEPENDENT COUNSEL

 Does the attorney have to certify the agreement?

y y g

 Is an attorney certification a waiver of the attorney-

client privilege?

 Is the attorney “independent” if paid by the other

party?

 Can a party waive the right to counsel?  Can a party waive the right to counsel?  What is required to show that an unrepresented

party understood the prenup?

18

GENERAL LEGAL REQUIREMENTS

 Must be in writing and signed by both parties.

g g y p

 Statute of frauds exception?  Consideration not required (but is a good idea).  May agree on any matter regarding rights on death

• r divorce, not in violation of public policy.

19

PUBLIC POLICY LIMITS

 Child support.

pp

 Child custody.  Religious upbringing of children.  Support of a spouse during marriage.  Penalties for spouse not performing marital duties.  Unfaithfulness.  Immigration marriage?  Interspousal fiduciary duty?  Interspousal fiduciary duty?

20

BUILDING A STRONG AGREEMENT

 Avoid last-minute agreements.

g

 Allow for changes.  Do not include provisions which violate public

policy.

 Follow the law in your state (e.g., the Uniform

Premarital Agreement Act) Premarital Agreement Act).

21

STRUCTURING THE DEAL

 Create a real bargain.

g

 Is there incentive to challenge the agreement

because there’s nothing to lose?

 No contest clause?  Importance of recitals.

22

PROPERTY ISSUES

 No property vs. limited property rights during

p p y p p y g g marriage.

 Lump sum payment?  Payment for each year of marriage?  Waiver of property rights in loan proceeds.

Wai er of rights res lting from efforts of spo se

 Waiver of rights resulting from efforts of spouse

during marriage.

23

DEATH

 Clients often forget that the property provisions

g p p y p don’t just apply on divorce – they also apply equally at death. D th li t ll i t d t di i h it th th

 Does the client really intend to disinherit the other

spouse if the client dies while the marriage is intact?

 Life insurance can be provided as a means of

security.

24

RETIREMENT BENEFITS

 Federal law controls  Need to have waiver of those rights executed after

marriage.

25

SPOUSAL SUPPORT/ALIMONY WAIVERS OR LIMITATIONS

 Waiver vs. limitation?  Will the waiver be tested at time of execution of the

agreement or at time of enforcement?

 There may be a greater protection under the law for

spousal support rights than marital property rights.

 Include severability clause  Include severability clause.

26

ALIMONY CHOICES

 Allow court to set amount and duration, subject to

, j provisions in agreement.

 Limit duration of support payable based on length

f i ?

• f marriage?

 Cap the amount which may be ordered by the

court? court?

 Requiring a minimum amount is risky because

there may be no ability to pay.

27

CHOICE OF LAW

 Be aware of interstate and international law issues

when parties are living in separate places or where they contemplate moving. C l C lt ith l l l t

 Complex area. Consult with local counsel as to

whether the agreement would be enforceable in that jurisdiction.

28

ENFORCEMENT IN OTHER JURISDICTIONS

 Every state and country different.

y y

 Some countries do not honor premarital

agreements.

 Most countries have premarital regimes.  Advise client in writing to client you can only give

advice on the law of your state advice on the law of your state.

29

DEFENSES

 Unfairness is typically not a defense.

yp y

 Duress.  Unconsionability  Procedural: The agreement was presented in a one-

sided, take-it-or-leave-it fashion.

 Substantive: The terms are so one-sided as to shock

Substantive: The terms are so one sided as to shock the conscience of the court.

 Promotive of divorce?  Mistake of fact or law.

30

RECISSION

 Failure to comply with agreement.

p y g

 Does consideration have to be returned before

challenging the agreement?

31

BURDEN OF PROOF

 The burden of proof is typically on the party

p yp y p y challenging the agreement.

 California has a presumption of invalidity if certain

li i f t t bli h d preliminary facts are established.

32

OTHER TRIAL ISSUES

 Introducing a copy into evidence when the original

g py g is not available.

 What happens when a party claims that his or her

i t f d? signature was forged?

 Requesting a trial on the validity of the agreement

separate from the other issues in the case. separate from the other issues in the case.

33

AMENDING PRENUPS

 Not a good idea, especially if your state recognizes

g , p y y g interspousal fiduciary duties.

 Better to keep the prenup intact and do a postnup.

34

HOW POSTNUPS ARE DIFFERENT

 Treated with stricter scrutiny than prenups.

y p p

 In some states, any postmarital agreement in which

• ne party received property without consideration in

i t l t ti i d t b th an interspousal transaction is presumed to be the product of undue influence.

35

COHABITATION AGREEMENTS

 What rights do non-marital cohabitants have in your

g y state?

 Even if there are no rights, it is always good to have

l t ti t h t h t ill ill clear expectations as to what each party will or will not do/get.

 What happens if the parties have a cohabitation  What happens if the parties have a cohabitation

agreement and get married?

36

RETAINER AGREEMENT

 May include advice to client about the limits of

y prenups in the retainer agreement.

 Contact Chris Melcher for a sample prenup form at

@ l l h ccm@walzermelcher.com

37

HOW MUCH TO CHARGE

 These agreements involve a lot of risk.

g

 What is that risk worth to you?  Typical fee arrangements.

38

ETHICAL ISSUES

 Representing a party in litigating an agreement you

p g p y g g g y drafted?

 Unconsionable fee for preparing an agreement.  Conflict of interest.  Signing an agreement you feel is a terrible deal for

the client the client.

39

REFERENCE MATERIAL

 See Richard G. Kent’s

Prenup/Postnup: How They Work and Why You Might Need One and Why You Might Need One

40