Before planning any wedding, start early on the Agreement.
By Scott N. Weston (California)
How much time does it take to make a Premarital Agreement “voluntary”? By “voluntary,” we mean how much time must pass before parties are deemed to have considered the meaning of the agreement, to have had the opportunity to obtain legal representation and have given careful, mature thought to enter into the Agreement?
The most common misconception of attorneys and parties alike is that the rule in California, commonly referred to as the “7 day rule,” requires the parties to sign the Agreement 7 days before the wedding. Oddly, the rule has nothing to due with the proximity of the signing of the Agreement to the wedding date. In large part, we have the baseball home-run king, Barry Bonds to thank for this misunderstanding.
Barry Bonds and his fiancée, Sun (whose native language was Swedish) signed their Premarital Agreement in Arizona on the eve of their wedding. Barry had two lawyers and Sun had none. The wedding was an impromptu affair in Las Vegas, where they flew with a few friends immediately after they signed the Agreement. Years later, Sun Bonds challenged the Agreement claiming she did not have counsel, did not understand it and did not voluntarily enter into it. The trial court upheld the Agreement, as did the California Supreme Court, (in August, 2000) reversing the Court of Appeal, which found that their Agreement was invalid because it was subject to strict scrutiny since Sun was not represented by counsel.
The California Legislature reacted promptly within 5 months of the Bonds decision by introducing in January, 2011 its “anti-Bonds” legislation. It modified Family Code Section 1615, which under subsection (c) describes the circumstances under which an agreement can be challenged on the grounds that it was not entered into voluntarily. Specifically, the 7 day rule found in Family Code Section 1615(c)(2) provides “The party against whom enforcement is sought had not less than seven calendar days between the time that party who was first presented with the agreement and advised to seek independent legal counsel and the time the agreement was signed.”
Noticeably absent from this language is any mention of the timing between signing the Agreement and the wedding. But over the last ten years, practitioners have been left guessing about the true meaning of this hopelessly ambiguous language. Can parties sign the Agreement within 7 days of their wedding? Does 7 days have to pass between the time the FIRST draft is disseminated to the parties even if there are multiple drafts thereafter or must the parties wait until 7 days after the FINAL draft is disseminated? If the parties are ready to sign the final draft, but change a typographical error or change some language or numbering of the provisions of the agreement, but not the substance of the agreement, must they wait another 7 days before signing? Can the parties sign on the 7th day or must they wait until the 8th day to sign? The nightmare that has ensued in many cases is that multiple drafts of agreements have been exchanged and negotiated between counsel for months and months, with many different 7 day periods having been waited upon before no further changes (substantive or not) have been made and the parties have signed having waited out the final 7 day period before doing so.
Earlier this year, after almost ten years of this quandary, practitioners received some clarity from the first case to examine the 7 day rule. In IRMO Cadwell-Faso, the court was asked to consider whether the 7 day rule applies when both parties are represented by attorneys from the outset of the negotiation of the agreement. Not surprisingly, the Appellate Court commented that section 1615(c)(2) was ambiguous as to whether it was confined to unrepresented parties only, or whether it applies to parties who are represented by independent counsel from the outset.
The facts were that Faso’s attorney first drafted the Agreement in December, 2005 and sent it to Caldwell-Faso and advised her to obtain independent legal counsel. Caldwell-Faso hired an attorney and between March and May, 2006, Caldwell-Faso proposed 4 different revised agreements to husband through their counsel, all of which were rejected. On May 17, 2006, Caldwell-Faso faxed Faso a goodbye letter along with her 4 unsigned drafts stating she was not marrying Faso because they could not reach an agreement. On May 18, 2006, Caldwell-Faso’s attorney prepared a 5th revised agreement. Caldwell-Faso faxed it to Faso on May 19, 2006 and Faso forwarded it to his attorney on May 22, 2006. The parties and their attorneys met at the office of Faso’s attorney on May 25, 2006. At that meeting, Faso’s attorney inserted the word “reasonable” before “actual health care needs” which Faso agreed to pay during Caldwell-Faso’s lifetime. Despite the fact that Caldwell-Faso had the 5th revised Agreement only six days and he made a substantive change the day of signing, the parties signed the agreement and married two days later.
The Trial Court invalidated the Agreement due to the parties’ failure to comply with the 7 day rule. The Appellate Court reversed. It examined the legislative history of the amended FC1615, finding that the legislature was concerned about the Bonds circumstance where one party is unrepresented by counsel. It desired that parties have at least 7 days to either have that amount of time to locate and consult with independent legal counsel or to at least consider the Agreement for that amount of time. The Appellate Court concluded that the 7 day rule does not apply when both parties were represented by counsel from the outset.
While it is comforting to finally have this decision on the books, not all of the ambiguities of the seven-day rule have been answered. For instance, what if Faso-Caldwell had not had counsel under the above facts, would the Court have invalidated the Agreement, even though the first draft was sent six months before the final draft was signed? Would the parties have had to wait seven more days after Faso’s attorney inserted “reasonable” to the final draft before signing the Agreement in order to comply with the 7 day rule?
My practice pointer has been and will continue to be to always advise clients to start early on the Agreement before planning any wedding, each have independent counsel, fully disclose assets, liabilities and income, and document all negotiations and drafts of the Agreements. Close all the loopholes and do not leave an out for either party to argue about whether they acted voluntarily or signed under duress.
A Certified Family Law Specialist by the State Bar of California’s Board of Specialization, Scott N. Weston has more than 20 years of experience representing celebrities and high net worth clients in family law matters, particularly the enforcement of premarital agreements, child support and spousal support, custody and complex property division and business valuation.