What Are the Requirements for a California Premarital Agreement?

In the recent case of Knapp v. Ginsberg, the Second District Court of Appeal clarified the requirements for an enforceable premarital agreement.

Before they married in 2004, appellant Brooke Knapp and her late husband, Grant Tinker, signed a premarital agreement (PMA) that in relevant part governed the ownership and testamentary disposition of their marital home, the Perugia property.

Respondents Larry Ginsberg and his law firm, Harris-Ginsberg LLP (collectively Ginsberg), represented Knapp in connection with the PMA and approved the PMA as to form on her behalf.

Non-attorney Sidney Tessler, Tinker’s longtime accountant and business manager, negotiated terms and approved the PMA as to form on Tinker’s behalf.

Although the PMA stated that Tinker had been represented by and consulted with independent legal counsel, no attorney signed on Tinker’s behalf.

Tinker did not sign a separate writing expressly waiving representation by independent legal counsel, as is required by Family Code section 1615 (“section 1615”) for unrepresented PMA signatories.

During the marriage, Tinker made several amendments to his trust and estate plan, some of which concerned the Perugia property.

After Tinker’s death in 2016, three of his adult children filed probate petitions to set aside two of the amendments, which they alleged were the product of Knapp’s undue influence. Meanwhile, Knapp sold the Perugia property and sought reimbursement from Tinker’s estate for the approximately $4 million she spent to pay off the mortgage, as provided in the PMA.

Knapp, the estate, and the children litigated Knapp’s and the children’s claims, all of which they ultimately resolved in a global settlement. The settlement’s provisions regarding the Perugia property were less favorable to Knapp than the PMA had been.

Knapp subsequently sued Ginsberg for legal malpractice in connection with the preparation and execution of the PMA. She alleged the PMA was unenforceable due to Ginsberg’s failure to ensure that Tinker signed a waiver of legal representation.

Ginsberg moved for summary judgment. He argued that Knapp’s claim was barred by the statute of limitations and that she was unable to prove the causation and damages elements of her claim because section 1615 was inapplicable, there was no evidence that Tinker lacked legal counsel, Tinker ratified the terms of the PMA via the trust amendments, and Knapp’s legal fees stemmed from the probate claims against her. The trial court granted the motion on the ground that Tinker ratified the PMA.

Knapp appealed, and the appellate court reversed. As the trial court recognized, there was a triable issue of material fact as to the threshold issue of whether Tinker satisfied the requirements of section 1615 when he executed the PMA.

If the factfinder determines that Tinker did not comply with section 1615, and the PMA was therefore not enforceable, the question becomes whether Tinker’s subsequent amendments to his estate plan could ratify the PMA and thereby rectify the statutory violation.

The trial court concluded they could and did, because contracts that are voidable for lack of due consent may be ratified by subsequent consent (Civil Code § 1588), and Tinker’s amended estate plans evinced that consent as a matter of law.

Knapp contended that this conclusion was in error. A premarital agreement that is not enforceable under section 1615 is void, not voidable, and accordingly cannot be ratified.

The version of section 1615 in effect at the time Knapp and Tinker executed the PMA provided in relevant part that a premarital agreement “is not enforceable if the party against whom enforcement is sought proves . . . That party did not execute the agreement voluntarily."

For the purposes of subdivision (a), it shall be deemed that a premarital agreement was not executed voluntarily unless the court finds in writing or on the record all of the following:

(1)       The party against whom enforcement is sought was represented by independent legal counsel at the time of the signing the agreement or, after being advised to seek independent legal counsel, expressly waived, in a separate writing, representation by independent legal counsel.

(2) The party against whom enforcement is sought had not less than seven calendar days between the time that party was first presented with the agreement and advised to seek independent legal counsel and the time the agreement was signed.

(3) The party against whom enforcement is sought, if unrepresented by legal counsel, was fully informed of the terms and basic effect of the agreement as well as the rights and obligations he or she was giving up by signing the agreement, and was proficient in the language in which the explanation of the party’s rights was conducted and in which the agreement was written. The explanation of the rights and obligations relinquished shall be memorialized in writing and delivered to the party prior to signing the agreement. The unrepresented party shall, on or before the signing of the premarital agreement, execute a document declaring that he or she received the information required by this paragraph and indicating who provided that information.

(4) The agreement and the writings executed pursuant to paragraphs (1) and (3) were not executed under duress, fraud, or undue influence, and the parties did not lack capacity to enter into the agreement.

(5) Any other factors the court deems relevant.

Section 1615 states that a premarital agreement “is not enforceable if the party against whom enforcement is sought proves . . . That party did not execute the agreement voluntarily.” (§ 1615, subd. (a)(1).)

 Family Code section 1615, subdivision (c)(2), provides that a premarital agreement is involuntary, and thus invalid, when an unrepresented party has had fewer than seven days to review the agreement.”

Family Code section 1615 renders ‘a premarital agreement’ unenforceable against a party who did not execute the agreement voluntarily, and further provides that an agreement is not voluntarily executed unless certain predicates have been established.

LESSONS:

1.         It is best practice in making agreements in family law matters that both parties are represented by attorneys.

2.         A premarital agreement that is not enforceable under Family Code section 1615 is void, not voidable, and accordingly cannot be ratified.

3.         A premarital agreement is involuntary, and thus invalid, when an unrepresented party has had fewer than seven days to review the agreement.