Baseball star Barry Bonds of the San Francisco Giants learned a multi-million dollar lesson recently about premarital agreements. The California Court of Appeal invalidated the agreement between Bonds and his former wife Sun, in a decision which means that despite the agreement, the property accumulated during their 7-year marriage is community property which Bonds must share with his former wife. Since Bonds was earning $8 million per year by the end of the marriage, this court decision will prove quite costly to him.

What did he (or his lawyers) do wrong? The main thing seems to be that while he had two lawyers drafting the agreement and representing his interests, his wife had no one representing hers. According to the court in the Bonds case, Sun Bonds thought that because she had no assets of her own, she did not need a lawyer, but the fact was "that she did have something: she had the potential legal right to community property." Without any legal representation to advise her of her rights and to protect her interests, Sun signed an agreement in which she gave up all claims to Barry's earnings and to any property accumulated from Barry's earnings during the marriage, all of which would ordinarily be community property in which she would have a valuable interest. As we'll see later on, the court used her unfortunate situation to set forth some guidelines for fundamental fairness in making premarital agreements.

In California, premarital agreements may be used by a couple to decide in advance such questions as: the respective rights and obligations of the spouses regarding the income earned by either of them during the marriage; the respective rights and obligations of the spouses regarding any property owned by either of them on the date of marriage or in the future, including the right to manage and control the property; the disposition of any such property upon the occurrence of future events such as death, divorce, or separation; the rights of the spouses to spousal support in the event of divorce; and other matters, including personal rights and obligations, as permitted by law. (Certain rights, however, may not be altered by a premarital agreement under California law, particularly the obligations of spouses to support each other during the marriage and the right of a child to support).

Prior to 1970, premarital agreements attempting to alter marital property rights in a divorce were generally not enforced by any state. Now, however, these agreements are enforceable under the laws of almost all states (although standards differ from state to state), and are today becoming more widely used. In view of the increasing level of wealth and the increasing prevalence of divorce and remarriage in our society, many people use these agreements today, not only to protect themselves in the event of divorce, but also to protect their children from a previous marriage in the event of their own death.

In order to have a valid and enforceable premarital agreement, however, certain conditions are required by California law:

• The agreement must be in writing and signed by both parties,
• The agreement must not be unconscionable when executed, and before execution of the agreement, each party must have adequate knowledge or receive fair and reasonable disclosure of the property and financial obligations of the other party, unless the party voluntarily and expressly waives in writing any right to a disclosure beyond that which was provided,

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• The agreement must be executed voluntarily.

The California Court of Appeal in the case of Barry and Sun Bonds found that the issue of whether a prospective spouse has intelligently signed the agreement voluntarily was closely linked with whether that spouse was unrepresented by legal counsel while the other spouse was represented. The court set forth some criteria for determining the validity of an agreement based upon whether execution was voluntary, considering the totality of the circumstances, where one party was represented by an attorney and the other neither had legal representation nor the opportunity to obtain it, and did not knowingly refuse such representation. These factors, which were applied by the court to the situation of Sun Bonds and which should be relevant in scrutinizing all premarital agreements in California, are:

• the party without representation does not have any particular legal skills or business acumen and agrees in the contract to give up statutory rights, such as an interest in community property, inheritance rights, or the right to receive spousal support
• the party without representation is first presented with the draft agreement only a short time before the wedding, is not given adequate time to review the draft, and may be threatened that there would be no wedding if the party does not sign (all of which suggest duress, coercion, or undue influence)
• the agreement is poorly and hastily drafted and contains numerous drafting and typographical errors, or is incomplete on its face
• the provisions of the agreement and their effect upon statutory rights in possible situations and contingencies which may arise are not adequately explained to the unrepresented party
• the other party's attorneys actually provide legal advice to the unrepresented party, so as to lead the party to believe that he or she is represented by those attorneys.

The court in scrutinizing the Bonds agreement in light of the above factors concluded that the agreement was not executed voluntarily by Sun Bonds and invalidated it, costing Barry Bonds millions of dollars. If Sun had been represented by counsel, or if certain guidelines for procedural fairness had been more closely adhered to, this disastrous result for Barry Bonds might have been avoided. What can the Bonds case teach about how to maximize the chances that a court will uphold an agreement and enforce the intentions of the parties?

• Both parties should be represented by independent counsel. Such counsel could, for instance, explain in detail what a party's rights would be under existing law if the party were to become disabled or be unsuccessful in a career during the marriage, and the potential detrimental effect of a proposed agreement on the party's financial position.
• If, however, a party should knowingly choose to waive the right to counsel, any such waiver should be made in writing. Such waiver should be made only after it has been explained to the waiving party that it is strongly advisable to seek legal representation because the interests of the parties are likely to come into conflict, because an attorney represents only the interests of the attorney's own client and not those of the other party to the agreement, and because important statutory rights will be waived or modified by the agreement.
• The statutory guidelines and those set forth in the Bonds case regarding procedural fairness should be observed. Adequate opportunity to review the agreement should be given both parties before execution, the provisions of the agreement and their effect on statutory rights should be fully explained to both parties, there should be fair and reasonable disclosure of assets and obligations, and above all, there should be no threats suggesting duress or coercion (such as stating on the eve of the wedding that the wedding will not take place if a party does not sign the agreement).

A premarital agreement defining the respective rights and obligations of the parties can be a good way to protect the spouses themselves and their children from prior marriages, and to avoid disputes both during the marriage and upon dissolution. But, as we have seen, there can be disastrous results if an agreement is not negotiated and drafted properly. If instead you follow the legal requirements for a valid agreement, you may be able to achieve the benefits of a premarital agreement while avoiding the unfortunate outcome experienced by Barry Bonds.