§54.04 Drafting Written Agreements

• Jurisdiction: Washington

§ 54.04 DRAFTING WRITTEN AGREEMENTS

There is no practical difference in labeling a document as a "property settlement agreement" rather than a "separation agreement." The template you develop for your practice can include language that specifically states the agreement or contract is binding, regardless of whether the parties divorce, reconcile, or die, and can only be modified by a later writing with the same formality as the original agreement.

Comment: At least one Division II court, in In re Marriage of Grimsley-LaVergne and LaVergne, 156 Wn. App. 735, 742, 236 P.3d 208 (2010), review denied, 170 Wn.2d 1030 (2011), has held in what is arguably dicta that a court looking at the enforceability of a CR 2A agreement used as a "predissolution agreement" should have required the parties to comply with the standards for separation contracts as set forth in RCW 26.09.070.

[1] Practice Aids

Checklists and pattern clauses can be useful, although practitioners should rely on personal experience and creativity when drafting property settlement agreements. See checklist at § 54.05, below.

[2] General Recitals

The parties should be introduced and identified by their names, not "husband/wife" or, worse, "party of the first part/party of the second part." The date and place of the marriage together with the date of physical separation should be stated. Whether there is a pending dissolution or legal separation proceeding should be indicated, together with the cause number if the case has been filed. Children should be identified by name and birth date; however, many documents that are filed with the court should reference only ages of children and should not include actual birthdates.

Caveat: Be sure to check local rules for additional requirements. For a guide to general recital style, you may wish to consult examples of petitions for dissolution or separation in 19-20 Scott Horenstein, WASHINGTON PRACTICE: FAMILY AND COMMUNITY PROPERTY LAW WITH FORMS (2015 & Supp. 2020).

[3] Reference to Consideration

Reference to the contractual consideration is recommended. E.g., "Now, therefore, in consideration of the mutual promises and undertakings and other valuable considerations, the parties agree . . . ."

[4] Representation

Identifying the parties' professional representatives may prove useful should a question or claim later arise concerning lack of adequate professional counseling. If one spouse is pro se, state that joint legal representation was not requested, intended, or provided and that independent counsel was recommended but declined.

If both parties are represented by counsel, the property settlement agreement should contain a provision stating that both parties acknowledge that the contract shall be construed as if both parties were responsible for its drafting, and that the contract language shall not be construed against the drafting attorney. Such a provision will preclude the argument that any ambiguities in the document should be construed against the drafting attorney. Also consider inserting signature lines for both parties following this particular provision so that it is clear that the parties specifically reviewed it.

[5] Property

All property of the parties, whether separate or community, is before the court in a dissolution and may be awarded to either party by the court to achieve a just and equitable division of property.

[a] Background

RCW 26.09.080 governs the disposition of property and liabilities and establishes certain minimum factors. The trial court has a statutory duty to justly and equitably dispose of all property and liabilities whether separate or community, and in doing so to characterize each asset and debt as separate or community. The court is able to award the separate property of one party to the other if such award is necessary to accomplish a fair and equitable division of the property; the same is true of separate liabilities. There is no requirement that exceptional circumstances exist to award or assign the separate property or debt of one party to the other party. Konzen v. Konzen, 103 Wn.2d 470, 693 P.2d 97, cert. denied, 473 U.S. 906 (1985). However, courts should refrain from awarding the separate property of one spouse to another if equitable distribution can be obtained without doing so. Stokes v. Polley, 145 Wn.2d 341, 37 P.3d 1211 (2001); In re Marriage of Little, 96 Wn.2d 183, 634 P.2d 498 (1981), abrogation on other grounds recognized, Freedom Found. v. Teamsters Local 117, Segregated Fund, 197 Wn.2d 116, 480 P.3d 119 (2021); Shaffer v. Shaffer, 43 Wn.2d 629, 262 P.2d 763 (1953). A decree must definitely and finally determine each party's interest in property. Moore v. Moore, 9 Wn. App. 951, 953, 515 P.2d 1309 (1973). Although separate property not disposed of by the decree will become the property of the spouse who owned it prior to the decree, joint or community property not addressed within the decree vests in the parties as tenants in common. Perez v. Perez, 11 Wn. App. 429, 523 P.2d 455, review denied, 84 Wn.2d 1009 (1974), overruled on other grounds, Brown v. Brown, 100 Wn.2d. 729, 675 P.2d 1207 (1984). See Chapter 30 (Identification of Property Interests) of this deskbook.

The meaning of a "final and definite determination of property interests" was clarified in Byrne v. Ackerlund, 108 Wn.2d 445, 739 P.2d 1138 (1987). A 1972 divorce decree had awarded the wife a lien against property awarded to the husband but failed to establish a date when the lien must be paid. After 10 years the wife sought a declaratory judgment to require the sale of property. The wife's claim was dismissed on summary judgment but was reinstated by the Court of Appeals, which faulted the decree for failing to provide the requisite finality regarding the parties' interests. The Supreme Court reversed the Court of Appeals, however, holding that the decree did finally dispose of property and a date for sale of property could not be implied. As to a "definite and final determination," the court stated:

We believe that the Shaffer requirement is satisfied by a specific disposition of each asset which informs the parties of what is going to happen to the asset and upon what operative events, e.g., that a set sum or formula of money will be paid upon the sale of certain property. See generally Yeats v. Estate of Yeats, 90 Wn.2d 201, 205, 580 P.2d 617 (1987). . . . Property settlement agreements are to be examined by the trial court for general fairness, see id.; it is not necessary to set a fixed deadline and value for each item of disposition.

Byrne, 108 Wn.2d at 451-52.

See also In re Marriage of Trubner-Biria, 72 Wn. App. 858, 866 P.2d 675 (1994), in which the court determined that after a party was paid in full for that person's interest in a home and quitclaimed the property to the other party, the party receiving payment could not enforce a provision in the decree of dissolution requiring the home to be sold.

All property should be identified, characterized as separate or community, and allocated within the appropriate portion of the agreement. Traditional property categories include real and personal property, causes of action, financial accounts, retirement, securities, receivables, beneficial or expectancy interests, tax credits or anticipated refunds, prepaid obligations, business interests (including goodwill), disability benefits, and royalties. Severance pay may also be a valuable asset. See In re Marriage of Bishop, 46 Wn. App. 198, 729 P.2d 647 (1986). See Chapter 30 (Identification of Property Interests) of this deskbook.

Practice Tip: The attorney should be specific regarding dates if the dates affect the transfer of property (e.g., dates on which pensions accrue as community property are critical). If retirement or investment accounts are also to be divided, name a date for the value each party is to receive from the account, and clarify whether the parties receive any increases or decreases of the value due to interest or market fluctuation. Also, clearly indicate who will receive the benefit of any deposits that are made to the account subsequent to the agreement, but prior to division of the account. When negotiating beneficial or expectancy interests, know what triggering events would lead to vesting, and how those events affect your client's interest. Additionally, complete client Social Security numbers, bank accounts, and credit card numbers should not appear in any document that will become public record. If such information must be included to accomplish the transfer, the document should be sealed.

The agreement should expressly state that all property subject to disposition has been fully disclosed. Undisclosed property should continue in the coownership of the parties. In In re Grant, 199 Wn. App. 119, 397 P.3d 912 (2017), the court held that a pension account that was not disclosed in a settlement agreement was community property despite language stating that the balance of assets would go to the husband, because the court could not determine whether the division of assets was fair when a significant asset had not been disclosed. Conveyance language should, if the parties so intend, transfer title free and clear of any interest or claim of the other party. If any question exists about debts, liens, or encumbrances, a warranty rather than a quit claim conveyance may be preferred. A real property title search or a UCC-1 lien search might be recommended. For a reasonable fee, local title companies will produce a litigation guarantee. A UCC Information Request, UCC Form 11, should be completed and sent with the applicable fee to the Uniform Commercial Code, P.O. Box 9660, Olympia, WA 98057-9660. See Wash. State Dep't of Licensing, Forms: UCC, https://www.dol.wa.gov/business/UCC/uccf...