MARITAL SETTLEMENT AGREEMENTS
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What's A Marital Settlement
Through a "marital settlement" agreement ("MSA,"
sometimes referred to as "marital termination" agreement),
spouses (or registered domestic partners) seeking a legal separation,
dissolution or judgment of nullity attempt to resolve their
contested disputes and claims. A comprehensive marital settlement
agreement usually provides for all of the following:
Characterization of property interests and characterization
and division of the community estate (assets and debts);
Adjustment of reimbursement claims and income tax issues;
Payment of child support, spousal support and attorney fees
Child custody and visitation; and
Certain waivers and indemnification agreements between the
Separate Attorneys Advisable
Independent legal representation for the respective spouses
is not a formal "requirement." But, to narrow the
possible grounds to void the agreement, each spouse should have
the benefit of independent legal advice during the negotiation,
drafting and execution stages. Courts are likely to carefully
scrutinize marital settlement agreements affecting substantial
rights and obligations when one party represents themself. (see
Ca Fam § 2122; see Ch. 16).
At the very least, an unrepresented spouse should be encouraged
to seek independent legal advice before signing; and, if he
or she declines such advice, should be asked to sign an acknowledgment
verifying he or she voluntarily and knowingly rejected that
advice and understands the drafting attorney only represented
the other spouse.
Exchange of statutorily-required "preliminary" and "final" "declarations of disclosure"
(Ca Fam § 2100 et seq.) is an essential step toward the
consummation of an effective MSA and entry of judgment thereon.
An exchange of prescribed "preliminary" disclosure declarations is mandatory and nonwaivable (Ca Fam
And, unless excused by the court for good cause, "final" declarations of disclosure must be exchanged before or at the
time the parties enter into an agreement resolving property
or support issues (Ca Fam § 2105(a)). While, subject to
statutory conditions, the parties may stipulate to a waiver
of the final declarations of disclosure, the waiver does not
limit their underlying fiduciary disclosure obligations--i.e.,
it simply amounts to a representation that those disclosures
have been made (see Ca Fam § 2105(d)).
Typical Contents Of A
Marital Settlement Agreement
Since the facts and circumstances of each case vary, where
the issues involved include, custody, visitation, support, property
division, debt division, or other similar issues, a marital
settlement agreement should be carefully drafted to meet the
needs of the particular parties involved.
Here are some of the typical contents of an MSA:
Identity of parties and recital of facts (including statistical
facts of the marriage).
Identity of property, distribution of community estate,
and confirmation of separate property.
Provision for payment of debts and adjustment of reimbursement
Custody of children and visitation rights.
Child support, including provision for medical, dental,
and special educational or other needs (if any); and, if
applicable, including agreement as to the support of adult
Spousal support (including, as applicable, provisions
for life insurance, survivor annuities, and the like); or
waiver of spousal support.
Attorneys' and experts' fees and costs.
Effect of reconciliation.
Judicial action contemplated.
Waiver of rights, including rights in deceased spouse's
Modification, revocation or termination.
Costs of enforcement.
Execution of related documents.
Acknowledgments (e.g., of independent legal advice or
that independent representation was voluntarily and knowingly
Choice of law.
Execution by parties.
Execution by counsel.
Limitations On Validity
Of A Marital Settlement Agreement
Marital settlement agreements "occupy a favored position"
in California law. Generally, therefore, an MSA that is "not
tainted by fraud or compulsion or is not in violation of the
confidential relationship of the parties is valid and binding
on the court." However there are some limitations which
must be kept in mind when drafting an MSA.
Child Support: Marital settlement agreements
cannot abridge the parents' mutual statutory child support obligation
or impinge on the court's jurisdiction to award child support.
Child Custody: Marital settlement agreements
cannot limit a court's exercise of custody jurisdiction over
the minor children of the marriage.
Religious Upbringing: To the extent a marital
settlement agreement purports to prescribe the religious upbringing
of the parties' minor children, it is probably unenforceable.
[Marriage of Weiss (1996) 42 Cal.App.4th 106, 114-115, 118,
49 Cal.Rptr.2d 339, 344-345, 347]
Damages: A marital settlement agreement is
unenforceable as violating the public policy underlying California's
no-fault dissolution laws to the extent it requires one spouse
to pay damages to the other. [See Marriage of Mehren & Dargan
(2004) 118 Cal.App.4th 1167, 1171-1172, 13 Cal.Rptr.3d 522,
524-525; Diosdado v. Diosdado (2002) 97 Cal.App.4th 470, 474,
118 Cal.Rptr.2d 494, 496-497]
Law Prohibiting Promotion Of Dissolution Or Altering
Legal Relations Don't Apply: Once the marriage has
truly broken down and is beyond redemption from a social standpoint,
the limitations against contracts "promoting dissolution"
and/or "altering legal relations" do not apply. Indeed,
marital settlement agreements dividing property and otherwise
settling the parties' rights and obligations for dissolution
purposes are regarded favorably under California law since they
advance the strong public policy favoring settlement over litigation.
Spousal Support Waivers: There is no prohibition
against a waiver of postdissolution spousal support. If the
spouses separate by agreement, neither owes the other a duty
of support unless they otherwise agree (Ca Fam § 4302);
and any right to support after dissolution exists, if at all,
only under the terms of the judgment. Thus, a voluntary, knowing
and intelligent waiver of support in a marital settlement agreement
will be enforced according to its terms.
But Note: A MSA provision waiving
spousal support after a "lengthy" marriage will
probably receive close judicial scrutiny (Marriage of Moore
(1980) 113 Cal.App.3d 22, 27, 169 Cal.Rptr. 619, 622); and
is subject to set-aside if induced through fraud, duress,
mistake or other recognized grounds for relief. [See Marriage
of Olsen (1994) 24 Cal.App.4th 1702, 1706-1707, 30 Cal.Rptr.2d
Fiduciary Obligations Of The Parties Must Be Respected: The "confidential relationship" between spouses carries
attendant fiduciary obligations in intraspousal transactions
and in the management and control of the community estate (Ca
Fam §§ 721(b), 1100(e)). All "confidential relationship"/fiduciary
duties (including broad disclosure obligations) continue postseparation
until the community estate is distributed and support and professional
fee issues are resolved. [Ca Fam §§ 2102, 1100(e)]
Compliance With General Contract Law: Subject
to limited statutory exceptions, marital settlement agreements
(like all spousal contracts) must comply with general principles
of contract law. The contract law defenses include (among other
things) mistake, failure of consideration, unlawfulness of the
contract and prejudice to the public interest (Ca Civil §
1689). Other general contract concepts which may be relevant
in drafting or enforcing a marital settlement agreement are:
Voluntary And Knowing Consent: Each party's
consent must be voluntary and knowledgeable, given free of
fraud, undue influence, duress, menace, or mistake. [Ca Civil
Lawful Objectives: As mentioned above, the
major limitations on the "object" of a marital settlement
agreement are that it cannot derogate from the statutory child
support duty or divest the court of child support or child
Consideration: As a general rule, marital
settlement agreements must be supported by sufficient consideration.
[Ca Civil §§ 1550, 1605-1615] However, this requirement
is usually easily satisfied; it is enough that the parties
have given their mutual promises and assent. [Ca Fam §
Community Property Pension
Private ("ERISA"), Government, And Church
State court orders dividing community property interests
in private ("ERISA") pensions are enforceable against
the plan and may require the plan to make payments directly
to a nonemployee former spouse (or other "alternate payee"),
provided the order is established as a "Qualified Domestic
Relations Order" (a "QDRO").
QDROs are likewise binding on government and church plans.
[See 26 USCA § 414(p)(11)]
But Note - Not Applicable To Domestic Partnerships: California law cannot change federal law and thus can have
no effect on ERISA. Consequently, notwithstanding Ca Fam
§ 297.5, registered domestic partners are not eligible
for a QDRO in a dissolution community property division
(ERISA does not recognize domestic partners as "alternate
The MSA should explicitly require the property division judgment
to be reduced to a QDRO and to be promptly submitted to the
plan administrator. (But so as not to burden the plan administrator
with unrelated matters, it is advisable to reduce the QDRO
to a separate order)
The parties should stipulate to a reservation of jurisdiction
pending a determination that the state court order qualifies
as a QDRO; and the MSA should provide that the parties may
obtain a modification of the pension division order in the
event the plan administrator determines the order is not a
QDRO (thus allowing the parties a "second chance"
at obtaining a QDRO).
Additionally, pending entry of a QDRO, counsel for the nonparticipant
("alternate payee") spouse should inquire of the
plan administrator whether the IRS has made an attempt to
levy on the participant spouse's interest in the plan. An
intervening IRS levy to recoup the participant spouse's tax
delinquencies will be enforceable against the participant's
full interest in the plan--including the nonparticipant spouse's
community property interest. [See In re McIntyre (9th Cir.
2000) 222 F.3d 655, 660; United States v. Sawaf (6th Cir.
1996) 74 F.3d 119, 124-125]
Federal Civil Service Retirement Benefits:
Federal law fully respects community property interests in
Federal Civil Service Retirement System ("CSRS")
benefits, and divorced spouses of federal employees are eligible
for survivor annuities if a court order or court-approved
property settlement so provides. [1984 Civil Service Retirement
Spouse Equity Act, Pub.L. 98-615]
MSA provisions dividing community property interests in CSRS
benefits must clearly distinguish between retirement benefits
and death and survivor benefits. Under 5 USCA § 8341(h)(1),
a deceased employee's former spouse will receive a survivor
annuity "if and to the extent expressly provided for
. . . in terms of any decree of divorce or annulment or any
court order or court-approved marital settlement agreement
incident to such decree." Applicable regulations additionally
require that the court order state either that the former
spouse is entitled to a survivor annuity or direct the employee
to provide the former spouse with such an annuity; and further
make clear that employee retirement benefits do not include
survivor annuities. [See 5 CFR §§ 838.1003, 838.1004(c)(2)]
Failure to differentiate between retirement and death benefits
in the MSA therefore can result in the nonemployee former
spouse losing valuable rights otherwise intended.
State Public (STRS, PERS, JRL, CERL) Pension Plans:
As with private pension and retirement benefits, community
property interests in state public employee retirement plans
(under the State Teachers' Retirement System Defined Benefit
Program or Cash Balance Benefit Program, the Public Employees'
Retirement System, the Judges' Retirement Law, the County
Employees Retirement Law, or similar public employee benefit
plan enactments) must be disposed of in a marriage dissolution
or legal separation proceeding in a manner that will ensure
each party receives his or her full community property share
(Ca Fam § 2610). Generally, upon the nonemployee spouse's
agreement, the family court must divide the community interest
in the plan into two separate member and nonmember accounts,
to be administered separately; and the nonmember's account
becomes payable when he or she is eligible to "retire"
as defined by the applicable law. [Ca Fam § 2610(a)(3);
see Ca Educ § 22650 et seq. & § 27400 et seq.
(STRS); Ca Govt § 21290 et seq. (PERS); Ca Govt §
75050 et seq. (JRL); and Ca Govt § 31685 et seq. (CERL,
applicable only if adopted by county board of supervisors)]
STRS, PERS, JRL and CERL community property division orders
are enforceable against the plan only if made in compliance
with the statutes governing the respective plans. Marital
settlement agreements providing for division and payment of
community property interests in these benefits must therefore
follow the statutory requirements. Note carefully that the
applicable statutes all provide that any retirement benefit
in the particular plan that is not explicitly awarded by the
judgment shall be deemed the exclusive property of the member
spouse. [Ca Educ §§ 22652(b) & 27402(b) (STRS);
Ca Govt § 21290(b) (PERS); Ca Govt § 75050(b) (JRL);
Ca Govt § 31685(b) (CERL)]
Pursuant to the Uniformed Services Former Spouses' Protection
Act (USFSPA, 10 USCA § 1408), state courts are fully
empowered to divide military retirement pay as community property;
and state court domestic relations community property division
and support orders are fully enforceable against the military.
Although the USFSPA grants state courts the power to divide
military retirement pay, its language is still preemptive
regarding the limits of state court jurisdiction. State court
authority to treat military retirement pay as community property
extends only to the military member's "disposable retired
pay" as defined by the Act. [10 USCA § 1408(c)(1);
Mansell v. Mansell (1989) 490 U.S. 581, 588-589, 109 S.Ct.
Further, of the "disposable retired pay" subject
to the court's jurisdiction, only a maximum of 50% can be
ordered payable for support and a property division. (The
court's order cannot exceed the 50% limit even with the member's
consent.) [10 USCA § 1408(e)(1)]
Once pension benefits mature (whether a private or public
benefit plan), the court cannot, over the nonemployee spouse's
objection, order the nonemployee spouse to defer receipt of
his or her community property interest in the benefits until
the employee spouse actually retires. The choice as to when
community property payments in a matured pension should commence
is a valuable property right which belongs to the nonemployee
spouse. [Marriage of Gillmore (1981) 29 Cal.3d 418, 424-425,
174 Cal.Rptr. 493, 496-497; Marriage of Cornejo (1996) 13
Cal.4th 381, 383, 53 Cal.Rptr.2d 81, 83]
By the same token, like any other property rights in a dissolution
action, the nonemployee spouse's right to commence receiving
his or her share of a matured pension (i.e., "Gillmore
rights") may be bargained away in a MSA. However, an
effective waiver of "Gillmore rights" is narrowly
construed: The MSA on its face must manifest the parties'
clear intention that the employee spouse has full control
over the date payments to the nonemployee spouse shall begin.
[Marriage of Crook (1992) 2 Cal.App.4th 1606, 1612, 3 Cal.Rptr.2d
Waivers Of Surviving Spouse
Rights Under Ca Probate § 141(a)
As of January 1, 1985, any marital contract provision affecting
rights of the surviving spouse on the death of the other spouse,
as specified in Ca Probate § 141(a), is invalid unless
it satisfies Ca Probate §§ 140-146. [Ca Probate §
Waivable Rights In Post-1984 Agreements: Pursuant
to Ca Probate § 141(a), "surviving spouse" rights
to any of the following may be waived (in whole or in part)
by marital contract:
Intestate succession: Property that would pass from
the decedent by intestate succession. [Prob.C § 141(a)(1)]
Prior testamentary disposition: Property that would
pass from the decedent by testamentary disposition in a will
executed before the waiver. [Ca Probate § 141(a)(2)]
Probate homestead: The right to a probate homestead
(Ca Probate § 6520 et seq.). [Ca Probate § 141(a)(3)]
Exempt property set-aside: The right to have exempt
property set aside (Ca Probate § 6510). [Ca Probate §
Family allowance: The right to a probate family allowance
(Ca Probate § 6540 et seq.). [Ca Probate § 141(a)(5)]
"Small estate set-aside": The right to
have an estate set aside under Ca Probate § 6600 et seq.
("small estate set-aside to surviving spouse and/or minor
children"). [Ca Probate § 141(a)(6)]
Election to take against will: The right to elect
to take community or quasi-community property against the
decedent's will. [Ca Probate § 141(a)(7)]
"Omitted spouse" rights: The right to take
the statutory share of an omitted ("pretermitted")
spouse (Ca Probate § 6560). [Ca Probate § 141(a)(8)
Estate representative appointment: The right to be
appointed as personal representative of the deceased spouse's
estate (Ca Probate §§ 8420, 8461). [Ca Probate §
Interest in property passing by nonprobate transfer:
An interest in property that is the subject of a nonprobate
transfer on death under Ca Probate § 5000 et seq. [Ca
Probate § 141(a)(10)]
Nothing in Ca Probate §§ 140-147 affects or limits
the waiver or manner of waiver of rights other than those referred
to above, including but not limited to the right to property
that would pass from the decedent to the surviving spouse by
nonprobate transfer (i.e., joint tenancy assets, Totten Trust
accounts, or payable on death accounts). [Ca Probate §
Also - unless the agreement otherwise provides, a waiver governed
by Ca Probate §§ 140-146 of "all rights"
in the property or estate of a present or prospective spouse
(or a "complete property settlement" entered into
after or in anticipation of separation, dissolution or nullity
of marriage) is a waiver of the rights described in Ca Probate
§ 141(a). [Ca Probate § 145]
Formalities Required: The § 141(a) waivers
(above) are effective only if in writing and signed by the surviving
spouse (the spouse against whom the waiver operates). [Ca Probate
§ 142(a)]. In addition, validity of the waiver requires
compliance with normal contract rules, e.g., contractual capacity
and valid consent; and its enforcement against the surviving
spouse is subject to ordinary contract defenses (unsound mind,
duress, fraud, undue influence, etc.). [Ca Probate § 142(c)]
However, lack of consideration is not a defense to enforcement.
[Ca Probate § 142(c)(1)] Also - a minor intending to marry
has the capacity to make a valid § 141(a) waiver; but the
waiver takes effect only upon the marriage. [Ca Probate §
"Absolute" vs. "Discretionary"
Enforcement Of The Waiver: Depending upon the underlying
circumstances, a waiver subject to Ca Probate §§ 140-147
is enforceable either "as of right" or in the court's
A valid waiver under Ca Probate § 142 is enforceable as
a matter of right unless the surviving spouse proves either
of the following [Ca Probate § 143]:
Inadequate Disclosures: A "fair and reasonable
disclosure" of the deceased spouse's property or financial
obligations was not provided to the surviving spouse prior
to signing of the waiver . . . unless such "fair and
reasonable" disclosure was itself waived by the surviving
spouse after advice by independent legal counsel. [Ca Probate
Absence Of Independent Counsel: The surviving spouse
was not represented by independent legal counsel when he or
she signed the waiver. [Ca Probate § 143(a)(2)]
Even if the surviving spouse waiver is not enforceable "as
of right" (above), it may be enforceable in the court's
discretion. [Ca Probate § 144] Discretionary enforcement
requires a finding of either of the following (Ca Probate §
Fair And Reasonable: At the time it was signed, the
waiver made a "fair and reasonable" disposition
of the rights of the surviving spouse. [Ca Probate §
Knowing Relinquishment Of Rights: he surviving spouse
had, or reasonably should have had, an adequate knowledge
of the deceased spouse's property and financial obligations
. . . and the deceased spouse complied with the "confidential
relationship" standard of care under Ca Fam § 721(b).
[Ca Probate § 144(a)(2)]
Unconscionability: Notwithstanding findings
under § 144(a)(1) or (a)(2), the court has discretion to
refuse enforcement on "unconscionability" grounds.
[Ca Probate § 144(b)]
Specifically, if after considering all "relevant facts
and circumstances," the court finds enforcement of the
waiver pursuant to Ca Probate § 144(a) would be "unconscionable"
under the circumstances existing at the time enforcement is
sought, it may (i) refuse enforcement, (ii) enforce the remainder
of the waiver without the unconscionable provisions, or (iii)
limit application of the unconscionable provisions to avoid
an unconscionable result. [Ca Probate § 144(b)]