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

February 7, 2013, by

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In Kellar v. Estate of Kellar, the Washington Court of Appeals worked its way through preliminary arguments, to arrive at the point of deciding on the validity of Ken and Donna's premarital agreement. It turned out rich guy Ken got lucky, or more accurately his kids did since the issue was being raised in his estate.

A premarital agreement is valid under Washington law if it is either made with proper procedure, or economically fair. To meet the procedural test there must be full disclosure of finances, an absence of coercion, and independent legal advice for each party. Donna argued in vain on each of these points.

Because Donna was prevented by the dead man's statute from testifying on what Ken had said (see last week's blog), there was little evidence on the amount of financial disclosure. The Court thought it significant that the paragraph of the agreement acknowledging full disclosure was separately initialed by the parties. That seems a little skinny, but the Court let Ken's estate get by on this issue.

Donna also argued that they had been hurried through the process of making the agreement, and so she had felt coerced into it. Successful marriage proposal in early September 2001, agreement made on the 14th, and marriage on the 19th. That does seem rushed, but Ken's estate prevailed on this issue also. It helped that there had been some negotiation. The Court wrote "There is nothing inherently fatal about signing a prenuptial agreement five days before the wedding." Ken's heirs were fortunate; most attorneys advising clients on premarital agreements would be uncomfortable with that kind of timing.

Donna's final shot on procedure was that her attorney had been ineffective. The Court had little trouble with this one; it would be unfair to the person in Ken's position to have to confirm that Donna's attorney was doing his job well. If her attorney had stumbled, Donna might have a claim against the attorney but it was not Ken's problem.

Having found procedural propriety in the making of the agreement, the Court did not need to address the question whether it was economically fair. So apparently Donna got only what Ken had provided in his Will: about $1,000,000, much of it paid over time. The Will had been a little more generous than the premarital agreement, so she got the benefit of that.

This decision could have gone either way. It's not advisable for the wealthier person to leave the financial statements off the signed agreement, and execute it five days before the wedding. For Ken that was good enough, but of course his heirs had to go through a trial and an appeal to secure the win.