House Bill 4751 was recently introduced in the state Legislature, and would make prenuptial agreements in Michigan unenforceable if certain factors are proven, like duress, fraud or unconscionable terms.
Currently, Michigan law says a contract relating to property that is made between persons in contemplation of marriage — in other words, a prenuptial agreement — is enforceable after the marriage takes place. House Bill 4751 would add specific circumstances to define when such a contract is unenforceable.
Prenuptial Agreements In Michigan And House Bill 4751
Under House Bill 4751, prenuptial agreements in Michigan could be held unenforceable if a party against whom enforcement is sought shows that consent to the contract “was the result of fraud, duress or mistake.”
In addition, the measure also says prenuptial agreements may be declared unenforceable if, before signing the contract, “the party did not receive adequate financial disclosure.” Adequate financial disclosure would happen when the party: 1) receives a reasonably accurate description and good-faith estimate of value of the property, liabilities and income of the other party; 2) expressly waives the right to financial disclosure beyond the disclosure provided; or 3) has adequate knowledge or a reasonable basis for having adequate knowledge of the estimate of value of the property, liabilities and income of the other party.
House Bill 4751 would also give deference to the courts to refuse to enforce a term in a Michigan prenuptial agreement or the entire agreement if: 1) the term was unconscionable (or extremely unfair) at the time the contract was signed, or 2) enforcing the term would be unconscionable for a party because of a “material change in circumstances” that arose after the contract was signed which was not “reasonably foreseeable” at the time the contract was signed.
Legislative Hearing On House Bill 4751
At a recent hearing before the House Law and Justice Committee, the bill’s sponsor, Rep. Klint Kesto, said House Bill 4751 is needed because of the January 2017 Michigan Court of Appeals decision in Allard v Allard.
Kesto reportedly told the committee the Allard ruling injected “a great deal of unpredictability” when it comes to enforcing prenuptial agreements in Michigan. In Allard, the Court of Appeals held that a court retains the authority to award a party’s separate property to the other party in a divorce proceeding, despite a valid prenuptial agreement protecting such assets.
“Enforcement of these agreements has been based on longstanding case law, so what my bill [House Bill 4751] does is actually codify it and says that if you are a court, then you have to enforce this agreement unless it was unconscionable at the time, there was fraud, there was duress,” Kesto reportedly told the committee. “And we codify that in statute.”
Others have also testified on House Bill 4751, including attorneys who support the proposal, asserting it is “good public policy.”
However, the State Bar of Michigan Family Law Section does not favor the bill. The Family Law Section says that House Bill 4751 could undermine the Allard decision and that prenuptial agreements in Michigan are useful, particularly in second marriages. The Family Law Section said in its position statement:
“[P]renuptial agreements are different from other contracts because they are rarely arm’s length transactions. … Any codification of the law of prenuptial agreements must protect both parties to the agreement. … The Family Law Section opposes this bill as written. At a minimum the bill should permit a court to refuse to enforce a prenuptial agreement initiated shortly before a planned wedding date. The disclosure provisions should include all assets placed in a Domestic Asset Protection Trust, and the bill should state that the agreements cannot limit the court’s authority under MCL 552.23 or MCL 552.401.”
The Future Of Prenuptial Agreements In Michigan
On October 17, 2017, House Bill 4751 was amended to include the disclosure of assets in a Domestic Asset Protection Trust. The House Law and Justice Committee approved the amended version of the bill and forwarded it to the full House for consideration.
While several other amendments were suggested by the State Bar of Michigan Family Law Section, none of them were adopted.
Stay with the Sinas Dramis Family Law Blog for updates on House Bill 4751, as it moves through the Legislature.