New Law Gives Lawyers Pause to Draw Up Prenuptials
By AMANDA BRONSTAD
Family law attorneys are declining to draft prenuptial agreements because of a new state law that can alter terms of spousal support and exposes them to greater risk of malpractice claims.
The law, which went into effect Jan. 1, was intended to protect the rights of spouses who unwittingly waive spousal support and to require full disclosure of assets by both parties. But now that it is in effect, attorneys who write the agreements say the law places an unfair burden on them and their clients, who now stand to lose more in a divorce.
“If the agreement is thrown out, and the client has to pay X amount of dollars, what will they do?” said Fred Silberberg, a Century City family law attorney. “They will sue me and say, ‘You didn’t draft it properly, and that’s why I got stuck footing the bill.’ That’s what attorneys are afraid of.”
Under the law, drafted by Sen. Sheila Kuehl, D-Los Angeles, a prenuptial agreement is valid only if the future spouse signed the agreement after receiving the advice of a lawyer. It also must be written in the native language of the parties and signed at least seven days before the wedding.
What concerns family law attorneys is a clause in which spousal support outlined in a prenuptial could be deemed invalid if it is “unconscionable at the time of enforcement,” or if the court finds it to be unfair at the time of the divorce.
That means the courts can change the amount of spousal support if it is determined to be unfair in light of the paying partner’s income. Before, the amount of spousal support remained as agreed no matter what the change in financial circumstances.
Lawyers also are concerned they might be sued for malpractice if it is found their clients did not make a full accounting of assets in the prenuptial.
Eugene Trope, a family law attorney with Trope & Trope in L.A., said clients would insist they made complete disclosures of their assets, and that the prenuptial agreement is valid, but the truth comes out when the couple breaks up.
“If you represent the spouse with a lot of money, you won’t be thrilled with the law because it creates more hoops,” said Debra Frank, a family law attorney in Century City. “But if you have a spouse who didn’t have money and generally is coerced into signing these things at the last minute, it’s much better.”
The law was drafted partly as a result of a state Supreme Court decision involving the divorce of San Francisco Giants outfielder Barry Bonds and his wife Sun.
Bonds, who earned $106,000 in 1988, the year they married, was making $8 million a year when they divorced. Under the couple’s prenuptial agreement, Bonds was to pay Sun spousal support based on the lower income.
Bonds’ ex-wife contested the prenuptial agreement. The Supreme Court ruled in favor of Bonds, even though Sun did not have an attorney present before their wedding and claims she was pressured to sign the agreement. Without the prenuptial, she would have received half of Bonds’ earnings under California law.
That led Kuehl to draft legislation to alter the prenuptial rules.
“Even though the parties may waive spousal support and enter into an agreement, it may not have a binding effect in the future, particularly if there’s been a change in assets,” Frank said.
While all prenuptial agreements drafted after the law went into effect are subject to its requirements, the “unconscionable” clause covers all prenuptials.
Some attorneys said the new law places an unfair burden on the drafters of prenuptial agreements to defend themselves and their clients in court.
“Now people won’t draft these things because this legislation doesn’t give you any guidelines as to what it is the court will look at to determine if the agreement is unconscionable,” Silberberg said.
But not all family law attorneys agree.
“In any prenuptial agreement you have to explain to the client that there’s some uncertainty in the law,” Frank said.
Kuehl said the burden of proof should be on the drafter of the prenuptial agreement rather than the person who unwittingly waived his or her rights to financial support.
“I will trade the protection of a potential spouse who is about to waive all his or her property and support rights for the protection of an attorney,” she said. “I would suggest that clients whose attorneys refuse to draft these things find another, more competent attorney.”
L.A. divorce attorneys said greater wealth has increased demand for prenuptial agreements, even as disputes have become more common. Silberberg said battles over prenuptial agreements are more common in L.A., where partners of vastly different economic background often marry.
The costs of prenuptial agreements have almost doubled because of the risks. Two years ago, a prenuptial agreement could go for $5,000 to $10,000. Some attorneys charge $25,000 to draft one, Silberberg said.
*Purpose: Amendment to Sections 1612 and 1615 of the Family Code regarding premarital agreements
– The agreement must not be held “unconscionable,” or vastly unfair, at the time of the divorce
– The party who did not draft the agreement must be represented by independent counsel, or have waived the right to counsel in writing
– The agreement must be signed at least seven days prior to the wedding
– The agreement, and rights associated with it, must have been presented to the party who did not draft the agreement in his own language