In the high-profile divorce of Frank and Jamie McCourt, the ownership of the Dodgers hangs in the balance. Frank put his faith in a marital property agreement that he believed would result in him keeping the team. After a judge’s ruling that the agreement was not valid and enforceable, it’s as if there was never any such agreement and the parties are like any other in California trying to characterize particular property in a divorce. This leaves questions about how this marital agreement failed and how attorneys can avoid their clients’ agreements suffering the same fate.
A marital agreement is an interspousal agreement, executed during an intact marriage, that affects marital rights and obligations. The Family Code specifically permits spouses to alter the property rights of husband and wife prescribed by statute through the use of a marital property agreement. See Fam C §§721, 1500 (marital property agreement) and Fam C §§850-852 (transmutation agreement). Essentially, a marital agreement can change the character of property. This can be a very powerful tool. But, as with any other legal agreement, the marital agreement also must comply with general contract law, i.e., it must be the product of the free, mutual consent of the parties, communicated by each to the other. CC §1550.
The McCourt’s marital agreement was set aside for lack of mutual understanding on what it meant when it was signed. As NPR.org reports,
both sides gave differing accounts of what their intentions were when they signed the agreement, but one aspect was clear — neither of them read the agreement closely enough.
Indeed, the Judge’s tentative ruling, as reported by the Huffington Post, states that “[t]he parties had mistaken belief and no agreement as to the meaning of the agreement, the content of the agreement, and the effect of the (agreement) on their property and property rights.”
To confuse things further, there also seems to have been two conflicting versions of the agreement.
The McCourt case illustrates the wrong thing to do when preparing a marital agreement for a client. To get it right, always make sure your client reads and understands what he or she is agreeing to. Sounds obvious, but all the money involved in this situation didn’t buy some basic common sense.
For everything you need to know about marital agreements, including many drafting forms, go to California Marital Settlement and Other Family Law Agreements. To brush up on contract formation rules generally, check out California Law of Contracts.
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