Premarital Agreements (cont'd): Ken gambles early and Donna late; who wins?

January 31, 2013, by

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Our rich guy Ken, married to Donna in 2001, died in 2009. He was 84. Donna took his estate to Court over the validity of their premarital agreement. This week and next we will look at the decision of the Court of Appeals.

There were several issues other than validity for the Court to decide. One was on admission of certain evidence under the dead man's statute. That law (found in Revised Code of Washington 5.60.030) prevented Donna from testifying in her favor about things Ken had said to her, now that Ken was no longer able to contradict her. The trial Court had stricken testimony including the following: "Ken asked me to quit my job and fly to South Dakota to get married... I was never provided with any financial statement showing Ken's assets and liabilities before signing the prenuptial agreement. It wasn't until 2005 that I learned that in December 2001, Ken had assets of approximately $93,000,000, approximately $16,000,000 in liabilities, and [therefore] approximately $77,000,000 in equity [net worth]." The first part of that is pretty obviously forbidden by the dead man's statute, the latter part not so clearly because it doesn't include direct statements by Ken. However, the Court of Appeals held that it was all properly stricken as taking unfair advantage of Ken's inability to contradict it. Score one for Ken here.

A second issue was judicial estoppel. The principle here is that what happens in one ruling body should be binding in later-arising matters in Court. The lawyers for Ken's estate had succeeded in the trial Court with the argument that the decision of the South Dakota Gaming Commission, granting Donna a casino license based on her assertion of the separateness of her assets and Ken's, should be held against her in this later claim in his estate. This trial Court decision was reversed by the Court of Appeals. It found the doctrine only applies if the earlier proceeding is a judicial one. The Gaming Commission was not a judicial body but rather an administrative one. Donna scores on this one.

A third issue apart from the validity of the premarital agreement, was whether Donna had fallen into the trap of the no-contest provision in Ken's Will, by bringing her legal action. That clause said "If any person brings any action, lawsuit, or claim against my estate... that would, if successful, increase the share of the claimant of my estate, then I direct that the claimant shall forfeit all interest in my estate..." The trial Court had permitted Donna's claim despite this prohibition. The Court of Appeals agreed, on the notion Donna was merely trying to determine what constituted Ken's estate, and what was legally hers. Thus she was not trying to increase her share of Ken's estate, but rather asking the Court to decide what belonged to each of them. So on this one Donna kept her right to roll.

All this left the Court of Appeals able to decide directly the validity of the premarital agreement, without having made that question moot on other grounds. We will review the main ruling next week. As indicated in the previous paragraph, Donna was claiming as hers, a portion of what Ken's lawyers and children felt was his alone. The terms of the premarital agreement stood in Donna's way of going on in life with more of the $77,000,000.