Colorado’s new Uniform Premarital and Marital Agreements Act becomes effective July 1, 2014. The Act is Colorado’s version of a uniform law which was developed by the National Conference of Commissioners on Uniform State Laws. Colorado is one of only two states that have adopted the new uniform law, which means that we will be a test ground.
Colorado currently permits both premarital and post marital agreements. However, this new Act affects the drafting and enforceability of agreements after July 1, 2014. Following are some of the big changes:
The other side must now have “meaningful access to independent legal representation.” Colorado’s new Act requires that before signing an agreement, the unrepresented party must have had reasonable time to “(1) Decide whether to retain a lawyer to provide independent legal representation; and (2) Locate a lawyer to provide independent legal representation, obtain the lawyer’s advice, and consider the advice provided.” HB 1204, 69th Gen. Assem., Reg. Sess. (Colo. 2013). Further, if the other party is represented by a lawyer, the unrepresented party must either (1) “[have] the financial ability to retain a lawyer” or (2) the represented party must “agree to pay the reasonable fees and expenses of independent legal representation. Id. at § (2)(a).
If one party decides to proceed without an attorney, the agreement must contain conspicuous warning language, similar to the surgeon general’s language we see on cigarette cartons: “If you sign this agreement, you may be giving up your right to be supported by the person you are marrying; agreeing to pay bills and debts of the person you are marrying; giving up your right to money and property if your marriage ends or the person to whom you are married dies; giving up your right to have legal fees paid.” Id. at §§ (1)(c) and (3).
Colorado did not go so far as to require a “cooling off period” (e.g., California requires 7 days between presentment and signature), but these requirements give spouses more protection than existing law.
Agreements signed after July 1, 2014 should separately identify each right the parties are giving up. Agreements under current law sometimes simply referenced a statutory list of rights that may be waived at death. See C.R.S. § 15-11-207(1): “a waiver of rights upon death.” The new Act no longer provides a specific section that allows incorporation by reference. Accordingly, agreements should specifically list each of the rights the parties intend to waive. Do you waive your right to elect against your spouse’s estate? Do you waive your right to claim exempt property? Do you waive your right to a family allowance? Do you waive your right to your spouse’s homestead exemption? Do you waive your priority to serve as personal representative?
Agreements should also specifically discuss waiver of maintenance, if this is what the parties intend. Effective January 1, 2014, Colorado law provides a formula guideline maintenance amount in order to provide consistency between courts across the state.
Enforceability of agreements signed after July 1, 2014 may ultimately be evaluated for “equity.” Under current law, a court may review maintenance terms of an agreement for conscionability at the time of enforcement, but may not review other terms if the agreement was signed voluntarily and with reasonable disclosure. The new Act expressly states that “principles of law and equity” supplement the law. Id. at § 14-2-305. Since Colorado is a test state for this new uniform law, it is unclear how broadly trial courts will interpret this provision.
If you are thinking about doing a premarital or post marital agreement, what does this mean for you? You should consult an experienced estate planning attorney and expect the process to require plenty of time in order to facilitate detailed disclosure and counseling for both parties.
I periodically get calls from potential clients regarding “asset protection.” Generally speaking, asset protection is pre-claim planning for those who are concerned that someday they