Making Premarital Agreements More Likely to Be Enforced

The actress Kaley Cuoco’s divorce became final in California recently. News reports (<http://www.huffingtonpost.com/entry/kaley-cuoco-keeps-72-million-fortune-in-divorce-from-ryan-sweeting_us_5731d049e4b016f37896e314>) indicate that although her Big Bang Theory contract is worth $72 million, and that California requires a 50-50 division of community property, she got to keep almost all of her earnings, both the couple’s houses, and the future contract rights, while her husband got $165,000 and Cuoco covering $200,000 in personal training bills. Why? She and her husband signed a premarital agreement in which he waived his claim to an equal share of community property.

The law was long somewhat suspicious of premarital agreements because of cases involving unfair negotiations. Quite a few cases in Oregon involve “take it or leave it” offers presented on the eve of the ceremony. These, generally speaking, were thrown out. In another case (Leathers and Leathers, 98 Or. App. 152, 779 P.2d 619 (1989), rev den, 309 Or. 625 (1990), <http://www.leagle.com/decision/19891398779P2d619_11364/MATTER%20OF%20MARRIAGE%20OF%20LEATHERS&gt;) , the Court of Appeals ruled the most significant asset, Leathers Fuels, to have been operated as a partnership by the spouses and was no longer solely the husband’s property to be awarded to him under a fairly one-sided agreement.

In 1987, however, Oregon enacted a new law affecting premarital agreements. The most important section (ORS 109.725, <http://www.oregonlaws.org/ors/108.725>), sets the two main conditions for a challenge to the validity of an agreement. First, if the agreement wasn’t voluntary, it’s no good. Second, if the court finds that the agreement or the bargaining process are so one-sided as to offend the court’s conscience to a severe degree and that the challenging spouse wasn’t given a full disclosure of assets and liabilities or sufficient opportunity to investigate the other spouse’s financial situation, then the court can refuse to enforce the agreement. This is a departure from previous law. Prior to 1987, gross unfairness alone was sufficient grounds to invalidate a premarital agreement. In addition, waivers of spousal support can be disregarded to avoid placing a spouse on public assistance or Medicaid.

The courts have not had much opportunity to apply the new law in published cases. In one case, however (Rudder and Rudder, 230 Or App 437, 217 P3d 183, <law.justia.com/cases/oregon/court-of-appeals/2009/a135992.html>, rev den, 347 Or 365 (2009)), the court confirmed that gross unfairness must be supplemented with lack of sufficient financial disclosure or investigative opportunity to defeat a premarital agreement, and also explained the meaning of voluntary agreement. Voluntariness was explained to be a free and intentional choice without taint of coercion, intimidation, or unreasonable pressure, and requiring some reasonable knowledge of the terms of the agreement and the property affected.

It is not uncommon for people to move to a different state over the course of a marriage. Many states keep standards closer to Oregon’s old distrust of premarital agreements, including Washington, As a practical matter, therefore, if you want a premarital agreement to be upheld, you should probably bend over backwards to make the disclosure of your property and debts full and complete and to allow your fiance a fair opportunity to say no and to allow them time to consult an independent lawyer. And, no matter what, you should avoid surprising them shortly before the wedding with the idea. That’s one of the biggest factors the Oregon courts have tended to rely on when ruling against an agreement.

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