March 03, 2010 /24-7PressRelease/
-- Responsible Drafting of Marital Property Agreements in California
The high-profile separations and/or divorces of the rich and famous sometimes offer lessons of what not to do when it comes to marriage. The split after 30 years of marriage between Los Angeles Dodgers owner Frank McCourt and his now estranged wife Jamie serves as an example of the importance of properly drafting and maintaining marital property agreements to protect personal property in the event of a divorce.
Dodgers Dynasty Challenged
Frank McCourt bought the Dodgers franchise in 2004. In the same year, he says then wife Jaime McCourt signed a postnuptial agreement in which she agreed to forfeit all ownership rights in the team upon divorce. In exchange, she would get sole possession of several Los Angeles properties the couple had previously purchased. Jamie filed for divorce last year after Frank McCourt fired her from her position as CEO of the Dodgers baseball team.
There have been accusations of insubordination and alleged affairs, but the current focus of the divorce is Jaime's claim that she is co-owner of the Dodgers, despite supposedly signing a postnuptial agreement to the contrary. She asserts that since the team was acquired during their marriage, it is a marital asset and therefore subject to the community property laws of California. The trial to decide the issue of ownership is set for May of this year.
For Love or Money
Partners typically use pre- and postnuptial agreements to determine ownership of assets upon dissolution of their marriage or civil union. Spouses and domestic partners negotiate prenuptial agreements before entering into a marriage or civil union, but may enter into postnuptial agreements at any time afterwards. Both pre- and postnuptial agreements are essentially contracts between couples seeking to resolve issues like support and property division before spousal death or divorce.
From an emotional perspective, pre- and postnuptial agreements may seem unromantic. From a logical perspective though, they allow both parties to responsibly manage and protect assets gained through both inheritance and years of hard work. These types of contracts are a necessity for anyone with significant assets. Couples should remember, however, that it is not enough to simply draft an agreement once and forget about it.
Draft Early and Review Often
Pre- and postnuptial agreements must follow certain guidelines to be considered legal documents that will be upheld if contested in court. In essence, they must be voluntary, conscionable and cannot violate public policy. Couples should ensure that the agreement protects each individual, their loved ones and their assets, both now and in the future. For these reasons, it is imperative that each party consult and retain separate and reputable family law attorneys immediately when they are ready to contemplate and draft an agreement.
Once spouses or domestic partners arrive at an amenable agreement, they can file it away for the time being. It is, however, advisable for couples to check in with their attorneys periodically to make sure that the agreement conforms to current best practices and offers the protections their assets require. This is especially true in community property states, such as California.
California is a community property state, which means that any property or other assets, as well as debts, acquired during a marriage are divided equally by the court during divorce if a couple cannot reach a settlement on their own. Exceptions may arise when a party can offer proof that an asset was acquired outside of the marriage or provide evidence of a written agreement stipulating that something is separate from the marital property. Length of the marriage or civil union may also be a factor in dividing property, regardless of pre or post marital stipulations.
For example, if one spouse or domestic partner is the primary earner, and the marriage or union was brief, then the assets attained during the relationship may be divided unevenly. In a long-term marriage, though, a court is likely to find that a spouse or partner is entitled to an equal division of the assets regardless of who was the higher wage earner. In these scenarios, the court may waive marital agreement provisions that require or prohibit spousal support.
Separate, but Equal
Under California law, Frank and Jamie McCourt's marriage would likely be considered long-term. In the strictest sense, the Dodgers are marital property, but a postnuptial agreement exists, signed by Jaime and expressly giving Frank sole ownership of the team in exchange for real estate. Come May, will Jaime be deemed a co-owner of the Dodgers? Or will this agreement be upheld as a fair contract between spouses wishing to have separate but equal property? The outcome could be in favor of either spouse in this scenario, only time will tell.
To maintain the security of their assets, couples should avoid blending or comingling of marital and separate property and funds. If either spouse or partner acquires gifts, inheritances or savings before the marriage or union, keeping this property separate will ensure that it will leave the relationship with its original owner. Also, adequate time to consider the contract before the wedding or union should be provided, as well as full disclosure of all assets and debts on both sides.
Unlike most legal bodies that focus on the letter of the law, California family law courts are more concerned with fairness and equity. It is crucial to responsibly draft a marital agreement that allows for the protection of personal property while still sufficiently supporting a spouse or partner if death or divorce occurs. When contemplating a pre- or postnuptial agreement in California, be certain to speak to a knowledgeable family law attorney who can help to ensure that any agreement is properly drafted and ultimately enforceable.
Article provided by Diamond Law Firm
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