Community Property and Prenuptial Agreement

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It is amazing the nonsense that some people think up. (Remember the trustee
who wanted to argue that transfers to a revocable living trust (RLT) are
fraudulent. Somebody smartly pointed out that the probate code makes
property in a living trust reachable by the settlers creditors.) That would
be a great case to have, but the client should not have to pay for attorneys
to defend frivolous lawsuits. Besides being absurd on its face, there is
very strong argument that making a pre nup fraud is against public policy as
deterring marriage.
If you have any questions or concerns, please contact me.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com

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I strongly agree with Patrick's analysis, but you should know that some
Trustees AND THEIR COUNSEL have been thinking about challenging pre-nuptial
agreements as fraudulent transfers, i.e. a means of parting with property
for less than fair consideration. In their thinking, married couples should
not be allowed to have anything other than community property. This idea
seems nuts for property which does not yet exist (at the time the pre-nup is
written - obviously BEFORE the marriage), but that is their position, so be
aware of it.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.

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Dennis:
I think the best way to analyze pre nups and CP law is to think of our CP law the same way one thinks of intestate succession. For intestate succession, your property will pass according to some default rules in the probate code unless you, using the appropriate formalities, specify otherwise. The same applies to the creation of CP. If you marry, property acquired during marriage will in most instances become CP, but if you write a prenup you can change those rules.
I cannot imagine a court taking the position that ones creditors had an expectancy based on your prospective marriage to the person with assets and therefore have a future right to those assets if you marry. To put it another way, creditors can only collect against someones SP and their CP. If there is no CP, then they have only SP.
Post nups and marital settlement agreements are a different animal. They try to turn CP that a creditor has a right to, into SP that they can
I dont think there is any need to record a prenup and privacy is a very good reason not to. Creditors need to prove the existence of CP to collect against the non-debtor spouses interest in the property. Unless the title says it is CP (which it sometimes does for step up at death purposes), they make the assumption at their own risk.
If you have any questions or concerns, please contact me.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com

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Family law guys:
my understanding is a prenup cannot be a fraudulent conveyance, as no one has to give away their income to a prospective spouse, or the prospective spouse's creditors.
Can you guys comment?
prenups do also affect the means test. The income of the nonfiling spouse is not community property. However, the amount contributed is still income for calculating CMI.
Don't you family law guys still record prenups to give the world notice?
dennis

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Mark;
If tax debt is only H's tax debt and it is more than 50% of the total debt,
then there is no means test as it is a non-consumer case. You didn't say
how much tax debt H has, but if it is over $100,000, (as it often is) even
if Wife's debt is included then it is still a non-consumer case.
I'm not sure that a prenup is binding to 3rd parties such as a Trustee, or
creditors so I would analyze the case under normal community property
standards. A prenup, even if binding to 3rd parties, under fraudulent
transfer laws could be set aside if within the statute of limitations.
If they are married now and their income is derived from earnings then her
income is included in "I". If that is handled in the prenup, I would still
include it but asterisk it that it is not really his income. Be careful
about the "totality of the circumstances" test under 707 even if they don't
have to pass the means test. If they have really high income together then
disclose it but don't let it get tallied up in the summary if you have a
plausible argument that her income is not his income.
As to whether her debt is his absent a prenup depends on when the debt was
incurred. If premarital then no worries. If the prenup effects this we are
back to the question of whether it is binding on 3rd parties. A possible
option if you go into filing unclear is to list all her debt on F as a
disputed debt in $0 amount and in the middle box disclose the amount and
character of the debt.
Steve
Law Offices of Steven B. Lever
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Have an upcoming consult that's going to revolve around these facts, so
wanted to gain some clarity on it:
Let's say H&W got married with a valid prenuptial agreement separating
pre-marriage assets and, hopefully, post marital income.
H needs to file bankruptcy now to get rid of a large tax debt. W has
approximately $100,000 in credit card debt. Together they have sufficient
income to stay current on W's debts.
If I file a bankruptcy for H, I understand that I must include W's income on
the means test (IF the means test is required); one question I have though
is: Does the wife's credit card debts count towards the total debt
(consumer vs. non-consumer) or is it only H's debts?
And depending on the answer to that, does W's income get factored in to any
abuse analysis (whether under 707(b) or 707(a))?
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
Toll Free: 1-866-576-6275
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this means at

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