House Study Bill 557 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON SWAIM) A BILL FOR An Act relating to marital agreements, and including effective 1 date and applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5585HC (7) 83 pf/rj
H.F. _____ Section 1. Section 249A.3, subsection 11, paragraph d, Code 1 Supplement 2009, is amended to read as follows: 2 d. Unless a surviving spouse is precluded from making an 3 election under the terms of a premarital marital agreement as 4 defined in section 596.1 , the failure of a surviving spouse to 5 take an elective share pursuant to chapter 633, division V, 6 constitutes a transfer of assets for the purpose of determining 7 eligibility for medical assistance to the extent that the value 8 received by taking an elective share would have exceeded the 9 value of the inheritance received under the will. 10 Sec. 2. Section 596.1, Code 2009, is amended to read as 11 follows: 12 596.1 Definitions. 13 As used in this chapter: 14 1. “Marital agreement” means any of the following: 15 a. A premarital agreement. 16 b. An agreement between present spouses, but only relating 17 to post-death matters. 18 c. An amendment to a marital agreement. 19 2. “Party” means a person who has entered into a marital 20 agreement. 21 1. 3. “Premarital agreement” means an agreement between 22 prospective spouses made in contemplation of marriage and to be 23 effective upon marriage. 24 4. “Post-death matter” includes but is not limited to the 25 disposition of the parties’ individually or jointly owned 26 assets upon the death of either or both parties; the making of 27 a will, trust, or other arrangements for the disposition of 28 property upon the death of either or both parties; ownership 29 rights in life insurance policies and retirement plans and the 30 disposition of the death benefits of any such policy or plan; 31 and the limitation or expansion of spousal elective shares 32 pursuant to chapter 633, division V. 33 2. 5. “Property” means an interest, present or future, 34 legal or equitable, vested or contingent, in real or personal 35 -1- LSB 5585HC (7) 83 pf/rj 1/ 8
H.F. _____ property , including income and earnings . 1 Sec. 3. Section 596.2, Code 2009, is amended to read as 2 follows: 3 596.2 Construction and application. 4 This chapter shall be construed and applied to effectuate 5 its general purpose to make uniform the law with respect to 6 premarital agreements . 7 Sec. 4. Section 596.3, Code 2009, is amended to read as 8 follows: 9 596.3 Short title. 10 This chapter may be cited as the “Iowa Uniform Premarital 11 Marital Agreement Act” . 12 Sec. 5. Section 596.4, Code 2009, is amended to read as 13 follows: 14 596.4 Formalities. 15 1. A premarital marital agreement must be in writing and 16 must be signed by both prospective spouses. It parties. 17 2. A marital agreement between present spouses must be 18 signed by both parties prior to the filing of an action for 19 dissolution of marriage, for legal separation, or for separate 20 maintenance. 21 3. A marital agreement is enforceable without consideration 22 other than the marriage . 23 4. Both parties to the a marital agreement shall must 24 execute all documents necessary to enforce the agreement. 25 Sec. 6. Section 596.5, Code 2009, is amended to read as 26 follows: 27 596.5 Content. 28 1. Parties Subject to the limitations of a marital agreement 29 between present spouses only relating to post-death matters, 30 parties to a premarital marital agreement may contract with 31 respect to the following: 32 a. The rights and obligations of each of the parties in any 33 of the property of either or both of them whenever and wherever 34 acquired or located. 35 -2- LSB 5585HC (7) 83 pf/rj 2/ 8
H.F. _____ b. The right rights of possession, ownership, or control, 1 including but not limited to the rights to buy, sell, use, 2 transfer, make a gift of, exchange, abandon, lease, consume, 3 expend, assign, create a security interest in, mortgage, 4 encumber, dispose of, or otherwise manage and control property. 5 c. The disposition of property upon separation, dissolution 6 of the marriage, death, or the occurrence or nonoccurrence of 7 any other event. 8 d. The making of a will, trust, or other arrangement to 9 carry out the provisions of the marital agreement. 10 e. The ownership rights in and disposition of the death 11 benefit from a life insurance policy and the establishment of 12 rights of beneficiaries to the benefits of such policy . 13 f. The rights and obligations in benefits available or to be 14 available under an employee benefit or retirement plan, except 15 to the extent federal law prevents a binding agreement with 16 respect to such rights and obligations. 17 f. g. The choice of law governing the construction of the 18 marital agreement. 19 g. h. Any other matter, including the personal rights and 20 obligations of the parties, not in violation of public policy 21 or a statute imposing a criminal penalty. 22 2. A marital agreement is not enforceable unless the 23 agreement contains a statement of the types of rights that 24 could be affected by the marital agreement in an all capital 25 letter typeface and font size as large as the largest typeface 26 and font contained in the document. The following statement or 27 a statement of like import, contained within the document shall 28 be acceptable for this purpose: 29 “BE ADVISED, BY SIGNING THIS DOCUMENT, YOU MAY BE GIVING 30 UP LEGAL RIGHTS, SUCH AS THE RIGHTS TO OWN OR OCCUPY YOUR 31 HOMESTEAD, RIGHTS TO A STATUTORY SHARE OF YOUR SPOUSE’S ASSETS 32 UPON DEATH, RIGHTS TO COURT DETERMINATIONS OF DISTRIBUTIONS OF 33 PROPERTY UPON DISSOLUTION OF MARRIAGE, AND OTHER RIGHTS YOU 34 MAY HAVE BY REASON OF MARRIAGE. YOU MAY ALSO BE EXPANDING OR 35 -3- LSB 5585HC (7) 83 pf/rj 3/ 8
H.F. _____ RESTRICTING THOSE TYPES OF RIGHTS OR EXPANDING OR RESTRICTING 1 THE COURT’S POWERS TO DETERMINE THESE ISSUES.” 2 2. 3. The right of a spouse or child to support , whether 3 during the lifetime or after the death of a party, shall not be 4 adversely affected by a premarital marital agreement. 5 Sec. 7. Section 596.6, Code 2009, is amended to read as 6 follows: 7 596.6 Effective date of agreement. 8 1. A premarital marital agreement becomes effective upon 9 the marriage , if signed by both of the parties prior to the 10 marriage . 11 2. If a marital agreement is signed by the parties during 12 their marriage, the marital agreement becomes effective on the 13 effective date stated in the marital agreement. If no such 14 effective date is stated in the marital agreement, the marital 15 agreement becomes effective upon the latest date of signature 16 by the parties. 17 Sec. 8. Section 596.7, Code 2009, is amended to read as 18 follows: 19 596.7 Revocation and amendment . 20 1. Revocation. After marriage, a premarital marital 21 agreement may be revoked , in whole or in part, only as follows: 22 1. a. By a written agreement signed by both spouses 23 parties . The revocation is enforceable without consideration. 24 2. b. To revoke a premarital By either party to the 25 marital agreement without the consent of the other 26 spouse party , the person seeking revocation must prove one 27 or more if the party seeking revocation proves any of the 28 following: 29 a. (1) The person party seeking revocation did not execute 30 the marital agreement voluntarily. 31 b. (2) The marital agreement was unconscionable when it 32 was executed. 33 c. (3) Before the execution of the marital agreement the 34 person party seeking revocation was not provided a fair and 35 -4- LSB 5585HC (7) 83 pf/rj 4/ 8
H.F. _____ reasonable disclosure of the property or financial obligations 1 of the other spouse party ; and the person party seeking 2 revocation did not have, or reasonably could not have had, an 3 adequate knowledge of the property or financial obligations of 4 the other spouse party; and such disclosure would have been 5 material to the decision of the party seeking revocation to 6 execute the marital agreement . 7 (4) Before the execution of the marital agreement the party 8 seeking revocation was not given a reasonable opportunity to 9 obtain independent legal representation with respect to the 10 marital agreement. 11 c. If the revocation of one or more provisions of the 12 marital agreement, or the application of the revocation of such 13 a provision to a party is upheld by the court, any revoked 14 provision shall be severed from the remainder of the marital 15 agreement, unless the marital agreement states otherwise, and 16 shall not affect the remaining provisions. 17 2. Amendment. A marital agreement may be amended by a 18 written agreement signed by both parties. An amendment is 19 subject to the enforcement provisions of section 596.8. 20 3. Limits on amendment and revocation. A marital 21 agreement cannot be amended or revoked by an agent, guardian, 22 conservator, or other legal representative of either party, or 23 after the death of either party, except as provided pursuant 24 to subsection 1, paragraph “b” , relating to revocation without 25 the consent of the other party. 26 Sec. 9. Section 596.8, Code 2009, is amended to read as 27 follows: 28 596.8 Enforcement. 29 1. A premarital marital agreement is not enforceable if the 30 person or party against whom enforcement is sought proves any 31 of the following: 32 1. The person did not execute the agreement voluntarily. 33 2. The agreement was unconscionable when it was executed. 34 3. Before the execution of the agreement the person was 35 -5- LSB 5585HC (7) 83 pf/rj 5/ 8
H.F. _____ not provided a fair and reasonable disclosure of the property 1 or financial obligations of the other spouse; and the person 2 did not have, or reasonably could not have had, an adequate 3 knowledge of the property or financial obligations of the other 4 spouse that such person or party could have revoked the marital 5 agreement pursuant to section 596.7, subsection 1, paragraph 6 “b” , relating to revocation without consent of the other party . 7 2. If a provision one or more of the provisions of the 8 marital agreement or the application of the provision to a 9 party is found determined by the court to be unenforceable 10 pursuant to this section , the unenforceable provision shall be 11 severed from the remainder of the marital agreement , unless the 12 marital agreement states otherwise, and shall not affect the 13 remaining provisions , or application, of the agreement which 14 can be given effect without the unenforceable provision . 15 3. Other than the determination of the issue of 16 unconscionability, actions with respect to enforcement of a 17 marital agreement shall be decided by the court as a matter of 18 equity. 19 Sec. 10. Section 596.9, Code 2009, is amended to read as 20 follows: 21 596.9 Unconscionability. 22 In any action under this chapter to revoke or enforce a 23 premarital marital agreement the issue of unconscionability of 24 a premarital marital agreement shall be decided by the court 25 as a matter of law. 26 Sec. 11. Section 596.10, Code 2009, is amended to read as 27 follows: 28 596.10 Enforcement —— void marriage. 29 If a marriage is determined to be void, an agreement that 30 would otherwise have been a premarital marital agreement 31 is enforceable only to the extent necessary to avoid an 32 inequitable result. 33 Sec. 12. Section 596.11, Code 2009, is amended to read as 34 follows: 35 -6- LSB 5585HC (7) 83 pf/rj 6/ 8
H.F. _____ 596.11 Limitation of actions. 1 Any statute of limitations applicable to an action asserting 2 a claim for relief under a premarital marital agreement is 3 tolled during the marriage of the parties to the agreement . 4 However, equitable defenses limiting the time for enforcement, 5 including laches and estoppel, are available to either party. 6 Sec. 13. Section 596.12, Code 2009, is amended to read as 7 follows: 8 596.12 Effective date. 9 1. This As it relates to premarital agreements, this chapter 10 takes effect on January 1, 1992, and applies to any premarital 11 agreement executed on or after that date , in accordance 12 with the statutory provisions in effect as of the date of 13 the premarital agreement . This chapter does not affect the 14 validity under Iowa law of any premarital agreement entered 15 into prior to January 1, 1992. 16 2. As it relates to amendments to premarital agreements and 17 to marital agreements entered into after marriage, this chapter 18 takes effect July 1, 2010, and applies to any such amendments 19 or agreements executed on or after that date. 20 Sec. 14. Section 633.246A, Code 2009, is amended to read as 21 follows: 22 633.246A Medical assistance eligibility. 23 Unless precluded from doing so under the terms of a 24 premarital marital agreement as defined in section 596.1 , the 25 failure of a surviving spouse to make an election under this 26 division constitutes a transfer of assets for the purpose of 27 determining eligibility for medical assistance pursuant to 28 chapter 249A to the extent that the value received by making 29 the election would have exceeded the value of property received 30 absent the election. 31 EXPLANATION 32 This bill amends Code chapter 596 (premarital agreements) 33 to allow for the amendment of premarital agreements and the 34 creation of new marital agreements by the parties to the 35 -7- LSB 5585HC (7) 83 pf/rj 7/ 8
H.F. _____ marriage. A marital agreement between present spouses is 1 effective only to the extent it relates to disposition of 2 assets upon the death of the other party (post-death matters). 3 The bill provides for protection of the parties including 4 that the agreement must not be unconscionable at the time 5 it is entered into; the agreement must include a provision 6 that states the rights a party may be giving up; an agent is 7 prohibited from amending or revoking a marital agreement on 8 behalf of a party; and unconscionability is determined by the 9 court as a matter of law while all other matters are determined 10 in equity. The bill provides for revocation and amendment of 11 marital agreements, places limits on amendments and revocations 12 of marital agreements, provides for enforcement, and makes 13 conforming changes. 14 The bill provides that as it relates to premarital 15 agreements, the amended Code chapter takes effect on January 1, 16 1992, and applies to any premarital agreement executed on or 17 after that date, in accordance with the statutory provisions 18 in effect as of the date of the premarital agreement. The bill 19 directs that the Code chapter does not affect the validity 20 under Iowa law of any premarital agreement entered into prior 21 to January 1, 1992. Additionally, the bill provides that as 22 the Code chapter relates to amendments to premarital agreements 23 and to marital agreements entered into after marriage, the 24 amended Code chapter takes effect July 1, 2010, and applies to 25 any such amendments or agreements executed on or after that 26 date. 27 -8- LSB 5585HC (7) 83 pf/rj 8/ 8