Who has a prenuptial agreement? The rich and famous: Tom Cruise, Donald Trump, Andrew Carnegie,
to name a few. But many folks who fly
under the celebrity radar also have them, or at some time will consider them. Courts in Washington have reviewed them for
many years, and a December 31, 2012 opinion by the Division One Court of
Appeals is the most recent pronouncement.
Here’s a link to the opinion which provides interesting reading about
the factual circumstances and the judicial review. Keller v Estate of Keller
The Court took the opportunity to recite a few general principles. “Prenuptial agreements are
contracts subject to contract law, but also subject to special rules formulated
by the legislature and the courts. In re Marriage of Burke, 96 Wn. App.
474, 477, 980 P.2d 265 (1999). The
parties to a prenuptial agreement are unique, because they do not deal with
each other at arm's length. Friedlander, 80 Wn.2d at 301. Their relationship is one of mutual
confidence and trust which calls for the exercise of good faith, candor and
sincerity in all matters bearing upon the proposed agreement. Id. The validity of a prenuptial agreement is
based on the circumstances surrounding the execution of the agreement. In re
Marriage of Bernard, 165 Wn.2d 895, 904, 204 P.3d 907 (2009).”
The husband/widower’s estate sought to
uphold the prenuptial agreement. One of
its arguments was that the wife/ widow waived any objection by “ratifying” the
agreement over the years. The Court
disagreed. “We rely on the reasoning in
Flannery, Crawford, and Hollett in holding that a prenuptial agreement that is
substantively and procedurally unfair is void from the inception and is
incapable of ratification.”
The wife/widow also asserted the
agreement was unfair, which prompted the Court to recite the law: "A prenuptial agreement is
substantively fair if it provides a fair and reasonable provision for the party
not seeking enforcement of the agreement.
In re Marriage of Matson, 107
Wn.2d 479, 482, 730 P.2d 668 (1986). If
it is substantively fair, the inquiry ends.
Id. If it is substantively
unfair, then the court considers whether it is nevertheless procedurally
fair. Id. at 482-83. To determine
whether a prenuptial agreement is procedurally fair, we consider (1) whether
there was full disclosure by the parties of the amount, character, and value of
the property, and (2) whether the agreement was entered into freely and
voluntarily, upon independent advice, and with full knowledge by both spouses
of their rights. Id. at 483. Thus, a
prenuptial agreement is valid if it is either substantively fair or
procedurally fair. The party seeking to
enforce the agreement has the burden of proving its validity. Crawford,
107 Wn.2d at 496."
The wife/widow claimed that a
short period of negotiation was a reason to invalidate the agreement, but the
Court wasn’t receptive to the argument. "Donna claims that the
negotiation process was "wholly inequitable and per se fatal to the
agreement," because of the short period of time that passed between the
date of the proposal, the date the prenuptial agreement was signed, and the
date of the wedding. Specifically, she
asserts that she and Ken married 17 days after Ken's proposal, 13 days after
the mediation, 8 days after Donna first saw the prenuptial agreement, and 5
days after she signed the prenuptial agreement.
But, issues of timing are relevant only to the extent they inform
whether the agreement was entered into freely and voluntarily, upon independent
advice, and with full knowledge by both spouses of their rights. There is nothing inherently fatal about
signing a prenuptial agreement five days before the wedding."
Next on the wife/widow’s list of complaints
was that her attorney hadn’t provided effective legal counsel so the agreement
should be thrown out. That argument
didn’t work either.
"First, we cannot say that
effective independent counsel is required when independent counsel is not even
required in all cases. Matson, 107 Wn.2d at 483. The Washington Supreme Court has stated that,
in some circumstances, a requirement for independent counsel would be arbitrary
and unnecessary. Id. The precise standard
should be applied on a case-by-case basis.
Id. Likewise, counsel's
presence at any mediation or negotiation is not a prerequisite to procedural
fairness. Here, the parties to the
prenuptial agreement decided to negotiate the terms of the agreement with a
professional mediator without the presence of counsel. They negotiated further with the benefit of
independent counsel and revised the agreement after the mediation. The fact that counsel was not present at the
mediation is not a valid basis to find that the prenuptial agreement is
procedurally unfair.
Second, Donna's proposed
subjective test for effective assistance is untenable. The procedural fairness test directs us to
consider "'whether the agreement was entered into fully and voluntarily,
upon independent advice, and with full knowledge by [both spouses of their]
rights.'" Id. at 483 (alteration in original) (quoting Witney v. Seattle-First Nat'l Bank, 90 Wn.2d 105, 110, 579 P.2d 937
(1978)). Accepting Donna's argument
would require us to separately consider whether there was competent independent
advice and whether there was full understanding of those legal rights. A prospective spouse could not have
confidence that an agreement was valid without inquiring into, weighing, and evaluating the adequacy of the other spouse's independent
counsel. To do so would eliminate the
independence of that independent counsel and require an invasion of
attorney-client privilege. In addition
to evaluating the independent counsel's performance, the prospective spouse
would have to inquire into the other spouse's actual understanding of the legal
issues. Otherwise, in any subsequent
challenge, the challenging spouse would only have to assert that her counsel
failed to mention a legal right or that she lacked full understanding of her
legal rights to defeat an assertion of procedural fairness.
Knowledge of one's legal rights
is a conclusion that flows from the opportunity to obtain independent counsel.
Donna had that opportunity in this case.
She obtained independent counsel, participated in a mediation in which
counsel was not present for either side, and her attorney negotiated on her
behalf for revisions after the mediation. It is not a requirement that she
attain a lawyer's understanding of the nuance of family law. Our inquiry is not
whether she failed to understand her rights or whether her counsel failed to adequately
inform her. It is sufficient that she
had adequate opportunity to consult independent legal counsel.
A spouse who receives ineffective
assistance during prenuptial negotiations and is not made fully aware of her
legal rights may have a claim against her attorney, but she does not have a
basis to invalidate the prenuptial agreement itself. To the extent that our decision in Bernard
conflicts with this conclusion, we decline to follow it."
Read into this case and situation what you
will, but, for sure, prenuptial agreements are complex, complicated and very
significant legal contracts.
