Cohabitation and premarital agreements

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Class NameInstructor NameDate, Semester

Family Law for the Paralegal2nd Edition

Wilson

Chapter 2:Cohabitation and Premarital

Agreements

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LEARNING OBJECTIVESAfter this lecture, you should be able to:

Cont.

Define cohabitation.

Identify various kinds of documents cohabiting partners can use to create and protect their rights.

Explain what a cohabitation agreement is.

2.1

2.2

2.3

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Cont.

Identify forms of relief potentially available to cohabiting partners if their relationship terminates.

Describe the nature and purpose of a premarital agreement.

Identify commonly accepted legal requirements for a valid premarital agreement.

2.4

2.5

2.6

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2.7

2.8

2.9

List the kinds of provisions a basic premarital agreement contains.

Identify trends regarding the enforceability of premarital agreements.

Describe the paralegal’s potential role with respect to cases involving cohabitation and premarital agreements.

Learning ObjectiveAfter this lecture, you should be able to:

2.1 Define cohabitation.

2.1 What is Cohabitation?

• Cohabitation is broadly defined as two unmarried persons living together commonly in an intimate relationship.

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• It differs from marriage in several respects:– Parties do not have to satisfy any legal requirements to

cohabit.– Cohabitation can be terminated without legal process.– There is no presumption of parentage when a child is

born to a female partner in a cohabiting couple (and hence no duty of child support or right to visitation).

– If the relationship terminates, division of property may be based on an agreement of the parties or based on equitable relief provided by the courts.

– Following termination, absent an agreement to the contrary, there is no duty of support.

How Does it Differ From Marriage?2.1

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2.2Identify various kinds of documents cohabiting partners can use to create and protect their rights.

• What are some of the documents cohabiting partners may use to create and protect their rights?

– Health care proxies– Durable powers of attorney– Wills– Deeds reflecting joint ownership of property with

rights of survivorship– Life insurance policies– Trusts– Beneficiary designations on retirement accounts etc.– Joint partnership agreements– Cohabitation agreements

Documents to Create and Protect Their Rights2.2

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2.3 Explain what a cohabitation agreement is.

• A cohabitation agreement is an agreement between two unmarried individuals who live or intend to live together, defining their intentions, rights, and obligations with respect to one another while living together and upon termination of their relationship.

• A cohabitation agreement is a contract and the sole consideration for the agreement must not be “meretricious sex” (prostitution or sexual relations outside of marriage).

• Cohabitation agreements allow parties to privately identify, negotiate, and reach agreement with respect to their expectations, both financial and personal.

Cohabitation Agreement2.3

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• Cohabitation agreements are similar to premarital agreements in some respects but are usually not as comprehensive.

• See Paralegal Application 2.1 on pages 27 and 28 of the text for a description of common provisions of cohabitation agreements

• Cohabitation agreements may include provisions about expectations of the parties regarding their relationship but an individual provision of a cohabitation agreement (or an entire agreement) may be held unenforceable if it violates a law, constitutional right, or strong public policy (such as a provision that a party who gets pregnant agrees to have an abortion).

Cohabitation Agreement (con’t)2.3

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2.4Identify forms of relief potentially available to cohabiting partners if their relationship terminates.

• For background, see Case 2.1 Marvin v. Marvin (1976) on pages 29-32 of the text which popularized the term “palimony” = a court-ordered allowance paid by one cohabitant to another after their relationship terminates.

• Without abandoning the strong public policy favoring marriage, the Marvin court endorsed the now widely held principle that when the facts warrant it, the courts should fashion appropriate equitable remedies for cohabitants to avoid hardship or injustice.

Forms of Relief2.4

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• See Exhibit 2.2 on pages 33-35 of the text.

• Express contract: The parties articulate an agreement.

• Implied-in-fact contract: The court infers the parties’ intentions from their conduct and the surrounding facts.

• Quasi-contract/Implied-in-law contract: The court creates the contract to avoid unjust enrichment of one party at the expense of the other (based on quantum meruit).

Major Legal Basis for Granting Relief2.4

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• Purchase money/Implied/Resulting trust: The court creates a trust when one party contributes the funds for purchase of a property and title is held in the other party’s name.

• Constructive trust: The court imposes a trust on an asset of a party who wrongfully obtained the asset. The trust is for the benefit of the wronged party.

• Implied partnership/Joint venture: The court creates a partnership based on the conduct of the parties and distributes the assets and liabilities of the partnership based on principles of fairness.

• Putative spouse doctrine: The court provides relief to a person who reasonably believed he or she entered a valid marriage.

Major Legal Basis for Granting Relief2.4

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2.5Describe the nature and purpose of a premarital agreement.

• A premarital agreement is an agreement made by two persons about to be married defining for themselves their respective rights, duties, and responsibilities in the event their marriage terminates by death, annulment, separation, or divorce.

• See Case 2.2 Posner v.Posner (1970) on pages 36 and 37 of the text for context. “With divorce such a commonplace fact of life, it is fair to assume that many prospective marriage partners…might want to consider and discuss…and agree upon…the disposition of their property and …alimony rights…in the event their marriage, despite their best efforts should fail….A tendency to recognize this change in public policy…is clearly discernible.”

Premarital Agreement2.5

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• Postmarital agreements: Postmarital agreements are agreements made by two people already married to each other who want both to continue their marriage and also define their respective rights upon separation, divorce, or death of one of the spouses (banned in a small minority of states).

• Separation agreements: Separation agreements are agreements made between spouses in anticipation of a divorce or legal separation, concerning the terms of the divorce or legal separation and any continuing obligations to each other.

Premarital vs. Postmarital2.5

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2.6Identify commonly accepted legal requirements for a valid premarital agreement.

• The requirements for a valid contract

• The requirement of procedural fairness

• The requirement of substantive fairness

Requirements for Premarital Agreements2.6

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• There must be an offer.

• The offer must be accepted (generally in writing).

• The parties must have the legal capacity to contract in terms of age and mental competence. (An affidavit of competency may be warranted.)

• The subject matter of the contract must be legal.

• There must be consideration for the contract (a bargained-for exchange of something of value).

• There must be a “meeting of the minds” (a shared understanding of the terms and conditions of the contract).

Requirements for Valid Contract2.6

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• The requirement of procedural fairness refers to fairness in the negotiation and execution of the agreement.

• Examples of procedural fairness include the following:– Representation by independent counsel (One attorney

cannot reasonably represent the interests of both parties.)

– Adequate disclosure of assets and liabilities (Did the parties have, or should they have had, knowledge of each other’s worth such that each could make an informed decision?)

– Sufficient time to negotiate and review the agreement prior to execution (The states vary with respect to what constitutes an appropriate time.)

– Absence of fraud, duress, or undue influence in the negotiation and execution of the agreement

Requirements of Procedural Fairness2.6

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• The requirement of substantive fairness refers to fairness in the specific terms of an agreement.

• Examples:– Is the division of property per se unfair or unconscionable– Is an agreement to waive alimony/ spousal support fair

• The states vary with respect to whether fairness will be measured only at the time of execution or also at the time of performance (the “second look” approach).

• Most courts will not enforce the agreement if its terms are so unfair to one of the parties that they are unconscionable (they “shock the conscience of the court).

Requirement of Substantive Fairness2.6

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2.7List the kinds of provisions a basic premarital agreement contains.

• Agreements vary in length and formality but generally they include the following basic components:

– A Preamble (introductory segment)– A definition of separate property and how it will be treated– A definition of marital property and how it will be treated– A statement of the rights each party will have to spousal

support if the marriage terminates in a separation or divorce or a waiver of those rights

– A provision relating to death benefits or a waiver thereof– General provisions (severability, governing law, etc.)– Schedules of assets and liabilities (may be attached as Exhibits)

• See Exhibit 2.3 Sample Premarital Agreement on pages 45-53 of the text for a model agreement.

Provisions In A Premarital Agreement2.7

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• The parties cannot agree to engage in criminal activity.

• Although they may include child-related provisions, the parties may not bargain away their children’s rights to child custody and support.

• They should be advised not to include terms that tread on constitutional rights (to have and raise children, to freedom of religion, etc.) that may taint the entire agreement.

• They may not agree to prosecute or not defend a divorce action.

• As non-spouses, they may not waive ERISA governed pension rights in the agreement

“Red Flags” in Premarital Agreement2.7

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2.8Identify trends regarding the enforceability of premarital agreements.

• The Uniform Premarital Agreement Act (UPAA) approach (adopted in whole or in part in about half the states) is designed to create uniformity and increased enforcement of premarital agreements through application of ordinary contract principles.

• The UPAA approach generally favors enforcement unless the party against whom enforcement is sought did not execute the agreement voluntarily OR the agreement was unconscionable when it was executed AND before execution, the party against whom enforcement is sought was not provided fair and reasonable disclosure, did not waive in writing such disclosure, and could not reasonably have had adequate knowledge of the property and financial obligations of the other party.

Three Primary Approaches To Enforceability Of Premarital Agreements2.8

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• The traditional fairness approach treats premarital agreements as contractual agreements between people who bear a special fiduciary relationship to each other and therefore holds them to a higher standard than contracts between strangers dealing at arm’s length.

• This is essentially a fairness approach. Several states have adopted the “second look” or “second glance” doctrine to determine if the terms of an agreement that may have been fair at the time of execution (when the parties executed the agreement) remain fair at the time of performance (when the parties are getting divorced and the court is being asked to actually enforce the terms).

Enforceability of Premarital Agreements2.8

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• The contemporary freedom to contract approach treats premarital agreements as basic contracts. People are free to make “bad bargains” and a person cannot avoid performance of a contract simply because it seems unfair, unreasonable, or to his or her disadvantage. Absent fraud, misrepresentation, or duress, agreements will be enforced unless enforcement will bring about an unconscionable result.

• See Case 2.3 Simeone v. Simeone (1990) on pages 56-57 of the text for an example of a case in which the court applied this approach.

Enforceability of Premarital Agreements2.8

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2.9Describe the paralegal’s potential role with respect to cases involving cohabitation and premarital agreements.

• The paralegal’s role will largely depend on whether the case involves negotiation and execution or enforcement of an agreement.

• Typical tasks may include: – Participating in client meetings and taking notes– Gathering necessary information and documents– Researching governing law– Researching forms of agreements– Drafting and reviewing agreements– Preparing related correspondence– Making arrangements for obtaining affidavits of competency– Drafting discovery requests– Preparing exhibits for use in negotiation, at trial, etc.

Paralegal’s Role2.9

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• For more detail on specific tasks the paralegal may perform, see:

• Paralegal Application 2.2 Gathering Information in a Cohabitation Case on pages 32 and 33 of the text

• Paralegal Application 2.5 In Anticipation of an Agreement – Tasks for the Attorney and the Paralegal on page 43

• Paralegal Application 2.7 Information Gathering Needs If a Premarital Agreement is Challenged in a “Second Look” Jurisdiction – Tasks for a Paralegal on page 55.

Paralegal’s Role2.9

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Cont.

Chapter Summary

2.1

2.2

2.3

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Define cohabitation.

Identify various kinds of documents cohabiting partners can use to create and protect their rights.

Explain what a cohabitation agreement is.

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Cont.

Chapter Summary

2.4

2.5

2.6




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Chapter Summary

2.7

2.8

2.9




Health & Medicine

Cohabitation and premarital agreements