Law Office of John S. Palmer Attorney at Law

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Prenuptial Agreements

Posted Monday, November 12, 2012 by John S. Palmer

While Washington law presumes that all property acquired during marriage or registered domestic partnership is community property, most people know that this presumption may be altered by entering into an agreement dictating whether property is separate or community in nature, and how that property will be divided in the event of divorce or termination of the partnership.

Such agreements may be signed at any time during the relationship, whether before or after marriage or registration of the domestic partnership. In Washington, the seminal case of In re Marriage of Matson (1986) sets forth a two-prong test concerning the enforceability of a prenuptial or post-nuptial agreement. The burden is on the party seeking to enforce the agreement to demonstrate that the agreement is either substantively or procedurally fair. It will be upheld as substantively fair if the court finds that the agreement “provides a fair and reasonable provision for the party not seeking enforcement of the agreement.”

Even if the agreement is not substantively fair, it will be upheld as procedurally fair if the court finds that (1) there was full disclosure of the amount, character and value of the property involved, and (2) the agreement was entered into fully and voluntarily on independent advice and with full knowledge by both parties of their rights. Due to the complexity of the community property laws, all of the consequences of signing a prenuptial agreement may not be readily apparent; therefore the best way to satisfy the procedural fairness test is for each party to consult with the independent attorney of his or her choice before signing the agreement.

What is perhaps not so well known is that a premarital or post-marital agreement need not be in writing; as the Washington Supreme Court noted in In re Marriage of Mueller (2007):

Spouses may change the status of their community property to separate property by entering into mutual agreements. These agreements may be oral or written. A spouse seeking to enforce an agreement, whether oral or written, that purports to convert community property into separate property must establish with clear and convincing evidence both (1) the existence of the agreement and (2) that the parties mutually observed the terms of the agreement throughout their marriage.

The Washington Court of Appeals has been confronted with oral prenuptial agreements three times. In Mueller, the court found that the husband failed to prove the existence of an oral post-nuptial agreement; conversely, in Dewberry v. George (2003), the court upheld an oral prenuptial agreement based on substantial evidence that the agreement existed and that the parties had carried it out by meticulously keeping their finances and property separate. The third case, decided in September, involved an oral agreement between an unmarried couple and is discussed in my next post.

In any event, a written agreement offers much greater protection than an oral one, as the exact terms of the agreement are much easier to prove. Also, a written agreement can provide that assets remain separate even if occasionally used in a manner that is inconsistent with the terms of the agreement (e.g., if the separate funds of one party are used to pay a separate debt of the other), whereas the general rule is that courts will typically refuse to enforce an oral agreement if the parties do not consistently adhere to the agreement during their relationship.

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Law Office of John S. Palmer11911 NE 1st St, Ste. B204,Bellevue, WA 98005-3056