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Prenuptial Agreement

Prenuptial Agreement in Washington State

A prenuptial agreement (also referred to as a premarital or antenuptial agreement) is a contract entered into by prospective spouses prior to marriage.  The marriage has to be contemplated.  From the agreement, the property rights of one or both of the prospective spouses are determined or are secured to one or both of them or to their children.  In re Estate of Crawford; Friedlander v. Friedlander.

Parties to a prenuptial agreement must exercise the highest degree of good faith, candor and sincerity in all matters bearing on the proposed agreement.   Prenuptial agreements are contracts that detract from the law would otherwise provide;  and for that reason they are very closely scrutinized.  The courts insist on either a fair and reasonable contract or procedural fairness.

In Washington State, there is no statutory authority for prenuptial agreements although there is a statutory basis for married persons to enter into separation contracts.  RCW 26.09.070.  There is a statute allowing married persons to enter into an agreement regarding the status and disposition of community property.  RCW 26.16.120.  There is also statutory authorization for married couples to convert community interest in real estate to one spouse, thus converting it to separate property.  RCW 26.16.050.

Validity of the Prenuptial Agreement

Case law establishes the test for the validity of prenuptial agreements.  There is a two-prong analysis for evaluating the validity of such contracts.

(1)        Is the agreement fair?  Does it provide a fair and reasonable provision for the party not seeking enforcement of the agreement.

If the court makes this finding, then the analysis ends and the agreement may be enforced.  If the agreement is fair and reasonable and if no fraud or overreaching is shown, then there is no need to advance to the second prong of the analysis.  If the agreement is not fair, then the court must proceed to the second prong which includes two tests.

(2)        Full disclosure and voluntary with full knowledge of rights.  First, was full disclosure made by the parties of the amount, character and value of the property involved, and, second, was the agreement entered into voluntarily through independent advice and with full knowledge by the spouses of their rights?

The burden of proving the prerequisites for a valid agreement is on the party asserting the agreement.

In analyzing prong two, some of the common factors that have been considered to determine if an agreement is valid include the following:

u         the bargaining positions of the parties;

u         the sophistication of the parties;

u         the presence of independent legal advice;

u         the party’s understanding of the legal consequences and rights;

u         the timing of the agreement juxtaposed with the wedding date;

u         whether there was complete disclosure of the value of the property involved;

u         all circumstances leading to the execution of the agreement.

Full Financial Disclosure

Under prong two, the cases clearly require full financial disclosure.  The disclosure of value need not be exact and appraisals may not be required, but case law does not indicate how value must be disclosed.  The bases of the valuation should be disclosed, be it by tax assessment, book value, estimate by the parties, purchase price, stock market closing figure, real estate opinion or appraisal.

Independent Counsel

Although the existence of independent legal counsel is not absolutely required, it is a very important factor in considering whether the party entered the agreement intelligently.  Voluntariness is not sufficient; the signing of the contract must also have been “intelligent”, i.e., with an understanding of the legal consequences of the contract. The Supreme Court held there was no absolute requirement of independent counsel in a case where an agreement was found to be fair and reasonable, but in that case, where the agreement was patently unreasonable, “independent counsel was required.”

Agreements which purport to terminate future child support are invalid as they contravene public policy.  I

In Washington, the court may refuse to enforce a prenuptial agreement that the parties themselves have not observed during the marriage.  It also held that the burden is upon the spouse seeking to enforce the agreement to show it has been strictly observed.

 

 

 

 

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