It’s not uncommon for couples contemplating marriage – especially if they have children from previous relationships – to sign premarital agreements concerning the disposition of their individual and joint assets in the event of death or divorce.
But as with any legal document, the parties to the agreement are expected to read it and ensure they understand its terms before signing. That’s the lesson of a recent ruling by the California Court of Appeal (Eskra v Grace).
Brandy and Scott Eskra married in May of 2015. Scott had a nine-year-old daughter from a previous marriage.
Less than a month before their wedding, Scott told Brandy he wanted a premarital agreement. Scott and Brandy then engaged the services of separate attorneys to advise them as to the terms of the Agreement.
Accordingly, Brandy discussed the Agreement with her attorney on April 24. On May 1, Brandy and Scott met at Scott's attorney’s office and signed the 11-page document. Brandy’s attorney was not present.
The Agreement included language that terminated any and all rights Brandy would have to Scott's estate in the event of his death or if the couple divorced. It also stated that Scott and Brandy “acknowledge to each other that each does not now claim any right or interest in the present or future income, property, or assets of the other.”
Moreover, the Agreement deemed all property, regardless of when acquired, as separate property, including Scott's home where the couple resided. The Agreement precluded Brandy from being reimbursed for any contribution she made to their home.
A clause in the document stated that it “contains the entire understanding and agreement of the parties.”
Scott died in an accident three years after the marriage, without a will or trust.
After Scott's untimely death, Brandy filed a petition with the probate court seeking appointment as the personal representative of Scott's estate. Scott’s ex-wife filed an objection on behalf of Scott's minor daughter. Scott’s parents also petitioned to be appointed as personal representatives of the estate.
In the litigation that ensued, Brandy argued that she signed the Agreement by mistake. Brandy said that when Scott suggested the Agreement, she believed he had wanted to address only what would happen to their assets if they divorced and the inclusion of provisions relating to death “was news to her.” As such, she asked the court to set aside the Agreement's provision giving Scott’s assets solely to his daughter.
Brandy's attorney also testified that she and Brandy discussed the Agreement and Brandy believed that it was only to be operative only in the event of divorce. Prior to Brandy signing the Agreement, Brandy’s attorney sent an email to Scott’s attorney stating that Brandy believed the Agreement was intended to protect the couple’s separate property “in the event that the marriage ends in divorce, but not in the event that the marriage ends in death.”
Brandy's attorney even redacted certain clauses related to the death provision and she testified that she “intended to redact every clause that changed the nature of the marital property in the event of death” before the Agreement was signed by the parties.
Scott’s attorney's testimony, however, contradicted the Brandy's account of what Scott wanted included in the Agreement. Scott's attorney testified that when he asked Scott about the death provision after receiving Brandy's attorney's email, Scott confirmed he wanted the Agreement to apply in case of death as well as divorce.
The trial court found that while Brandy was mistaken in her understanding of the Agreement when she signed it, Scott was not; the Agreement's wording accurately reflected Scott's intent.
Because there was no evidence that Scott was mistaken about the contents of the Agreement, the trial court denied Brandy’s request to be appointed as personal representative of Scott’s estate, appointing Scott's parents instead. Brandy appealed.
The appellate court noted that Brandy was not claiming that she had misunderstood the legal effect of the wording of the Agreement. Instead, she said she simply did not know what was in the Agreement when she signed it because she did not read the final version.
The justices cited to California law that says “the risk of a mistake must be allocated to a party where the mistake results from that party’s neglect of a legal duty.” Here, Brandy had a legal duty to read the Agreement before she signed it, which she acknowledged she failed to do.
Further, there was no evidence Scott had known about and encouraged Brandy’s mistaken belief that the Agreement applied to divorce, not death. Even if he had, Brandy would still be bound by her legal duty to read the Agreement before signing it.
Based on the evidence, and Brandy's failure to read the final version of the Agreement before signing, the appellate court affirmed the trial court’s decision and awarded costs to Scott’s parents.
Premarital agreements can have complicated legal, financial, and even emotional consequences. They should not be signed without adequate legal advice, careful analysis, and a full understanding of their meaning – and certainly not in a rush.
By Jessica M. Stemple