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Validity of Postnuptial Agreements in Arizona
Some people ask are postnuptial agreement valid in Arizona. First, you should know that a postnuptial agreement is a contract between a married couple wherein they intend to divides their assets and debts.
If done properly, a postnuptial agreement is valid and enforceable in Arizona. However, there are some important distinctions to make when determining the validity of a postuptial agreement between spouses.
Specifically, was the agreement reached during the marriage but with neither spouse contemplating a divorce? Or, alternatively, is the agreement reached as a part of a divorce settlement? Lastly, was the agreement, in reality, a part of an estate plan, such as a in a Last Will and Testament or a Family Trust? We will address all of these scenarios.
Postnuptial Agreement Between Spouse’s Who Are Not Planning to Get a Divorce
However, what if a couple simply wants to divide their property and debts without going through a divorce. A couple want to do so to protect their assets from creditors or to simply be able to give an inheritance to children or other family members.
Postnuptial Agreement for Estate Planning Purposes
The Arizona Supreme Court in the case of In re Harber’s Estate dealt with that specific situation.
In the Harber’s case, the husband and wife signed an agreement after their marriage dividing their property between themselves. They had no intention of getting divorced when they signed the agreement.
The parties remained married until the husband passed away. The wife passed away several months after the husband had passed away. The heirs of the spouses disputed whether the property agreement (i.e., Postnuptial Agreement) was valid and binding.
The Arizona Supreme Court concluded that the couple was not thinking of divorce when they entered into the agreement, but rather of death. They had no children but each had siblings they wanted to take care of when they died.
The Court found the husband wanted them to divide their marital property into the separate property that each spouse would be able to bequeath to whomever they wanted upon their death.
The Arizona Supreme Court first considered whether spouses in Arizona can validly divide their property by a post-nuptial agreement if they are not divorcing. After reviewing the law in different jurisdictions and the status of married women in Arizona, the Court agreed that a couple should have that right.
The Arizona Supreme Court indicated married couples should not be prevented from exercising their right to enter into contracts, including contracts between spouses, relative to dividing their debts and assets even if they do not intend to get divorced from each other.
However, the agreement cannot be induced by fraud, must be fair and equitable, and is entered into with full knowledge of the extent of all property and debts, and be entered into voluntarily.
The Court also indicated, however, a spouse would have to prove there was no fraud, coercion, or undue influence, that the agreement was fair and equitable, that the other spouse had knowledge of the extent of assets and debts when entering into the agreement if the other spouse later disputes those claims.
Postnuptial Agreements Between Spouses Planning to Get Divorced
The rules applying to a postnuptial agreement are a little different if the agreement is reached between spouse who are planning to get divorced.
Just two years after the Arizona Supreme Court issued the ruling in the case of In re Harber’s Estate, it heard another case involving a property settlement agreement in the case of Wick v. Wick.
The ruling in the Wick case distinguished between postnuptial agreements entered into by people who are not planning on a divorce from those that enter into such agreements with the specific intention of dividing their property in a divorce
In Wick, the husband and wife entered into a settlement agreement during a divorce case. The wife claimed the husband violated the agreement and the wife sought to enforce their agreement in the divorce case.
The judge in their divorce case refused to enforce the terms of the property agreement and entered orders dividing the couple’s property and debts in a manner inconsistent with the postnuptial agreement agreed upon by the spouses. Instead, the divorce court fashioned its own property division, using only parts of the agreement.
The Arizona Court of Appeals in the Wick case concluded that even if the agreement is reached between the spouse with full knowledge of their property rights and without fraud, duress or coercion, a divorce court is required by law to evaluate whether the agreement is fair and equitable.
If the agreement is not fair and equitable, the divorce court is not bound by the spouses’ postnuptial agreement that was entered specifically in contemplation of a divorce.
The Arizona Supreme Court, however, ruled in Wick that even when a property division agreement is valid and not the result of fraud or coercion, the court need not incorporate it into the divorce decree. It emphasized that the divorce court’s role was to determine a fair and equitable property division and it would not be limited in this responsibility by any agreement of the parties.
Postnuptial Agreements Made in Contemplation of Death
Lastly, there is a “type” of postnuptial agreement made in contemplation of death. Specifically, the creation of an estate plan is, in some ways, an agreement made after marriage for the purpose of a spouse providing for the inheritance of his or her assets upon his or her death.
These agreements are called a Last Will and Testament or a Family Trust. Although it is not a contract between both spouses, it is worth mentioning that including a spouse as an heir of an estate does not transform that property as the other spouse’s property separate property as would happen if the spouse’s entered into a valid postnuptial agreement.
The reason for this distinction is that a spouse who created an estate plan only intends to transfer his or her property if he dies. It is not a present intention to transfer those assets while he or she is still alive. In fact, he or she can make changes to the estate plan at any time before his or her death because the assets are and remain that spouses property.
This distinction is important because you must determine whether an agreement drafted between a couple or by one of the spouse’s during a marriage is, in fact, intended to be a valid and enforceable postnuptial agreement or, instead, simply a part of an estate plan which does not transfer ownership of property during a marriage.
Arizona Postnuptial Agreement Attorneys
If you need information about the validity of postnuptial agreements in Arizona, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona divorce attorneys have over 100 years of combined experience successfully representing clients in divorce cases in Arizona.
Our family law firm has earned numerous awards such as US News and World Reports Best Arizona Family Law Firm, US News and World Report Best Divorce Attorneys, “Best of the Valley” by Arizona Foothills readers, and “Best Arizona Divorce Law Firms” by North Scottsdale Magazine.
Call us today at (480)305-8300 or reach out to us through our appointment scheduling form to schedule your personalized consultation and turn your Arizona divorce case around today.
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