Pre-Nuptial Agreements

Pre-nuptial Agreements (sometimes referred to as antenuptial agreements or, more commonly, prenups) are growing in popularity and societal recognition. When properly executed and fairly applied, they are enforceable in Michigan. However, there are many complexities associated with the preparation, enforcement, and validity of such agreements. Many times, the enforceability and validity of these agreements are focal points during the divorce litigation because of their potential effect on the ultimate outcome of many important divorce issues. It is, therefore, of critical importance that you understand the law and the facts associated with any claims regarding a prenuptial agreement which asserts authority over your case.

Pre-Nuptial Agreements are Enforceable in Michigan

Persons who are contemplating marriage may consider whether or not to enter into a pre-nuptial agreement. A pre-nuptial agreement is a legal arrangement whereby the parties to the anticipated marriage agree to modify or give up certain rights in the property of their prospective spouse that they may otherwise receive simply by virtue of their marriage. These rights may include a right to their prospective spouse’s real estate or inheritance, rights to inherit property from their spouse in the event of death, and certain other rights given to a husband or wife as a result of the marriage alone.

Until recently, pre-nuptial agreements which were made only in contemplation of divorce or separation were deemed contrary to the public policy and not enforceable. It had been thought that if parties to an agreement (ordinarily the prospective husband and wife) knew the outcome of a divorce if one were to occur, they would be less likely to remain in the marriage and divorce would even be encouraged. However, given the increase in the occurrence of divorce in recent decades, and that divorce no longer carries the social stigma that it once did, pre-nuptial agreements have gained recognition as an accepted method of dividing the assets of matrimony.

Common Uses of Pre-Nuptial Agreements

Prenuptial agreements may be used by any parties contemplating marriage. However, they have found particular importance in certain situations where couples wish to enter into a marriage but maintain their rights to certain pre-marital assets. Particularly, such agreements have been useful:

(a) For people who have been previously married;

(b) When one or both of the spouses to the marriage have children from a previous marriage, whom they wish to protect financially from the potential claims of their new spouse; or

(c) Those individuals who have acquired sizeable assets before the contemplated marriage, and who wish to keep those assets segregated from their new marital estate.

For these classes of individuals, and others, a properly drafted and executed prenuptial agreement can serve to reduce the controversy in the event that a divorce should occur.

Enforceability of Pre-Nuptial Agreements

In 1991, the Michigan Court of Appeals established that a properly drafted and executed prenuptial agreement is enforceable in the event of a divorce. Rinvelt v Rinvelt, 190 Mich App 372 (1991). However, in so holding, the Court established certain guidelines for the enforceability of these agreements.

Specifically, the Court determined that when the proponent of a prenuptial agreement seeks enforcement of the provisions contained therein, the Court must examine both the document and the facts surrounding its creation and execution, and determine that:

(1) The agreement was not obtained by fraud, duress, mistake, or misrepresentation, or by non-disclosure of material facts; and

(2) The agreement was not unconscionable (grossly unfair) at the time that it was executed; and

(3) The facts and circumstances since the signing of the agreement have not changed so substantially or dramatically so as to render the enforcement of the agreement at the time of the divorce unfair, even if it was fair at the time of the signing of the agreement.

Steps You Can Take to Ensure Enforceability of a Pre-nuptial Agreement

In order to maximize the likelihood of the pre-nuptial agreement being enforceable in the event of a divorce, the following measures should be observed:

(1) Each party to the agreement should be represented by their own independent attorney. While it is not essential that each party be represented by a separate attorney (in separate law firms or practices), claims of duress, fraud, or undue pressure or influence from one spouse upon the other will be more readily avoided.

(2) The agreement should be made and executed as far in advance of the wedding as time will allow. Agreements executed on the wedding day or the week preceding the wedding are subject to being declared void. This problem is substantially avoided if the agreement is executed well in advance of the wedding.

(3) There should be complete disclosure of all assets of the parties. The assets should be listed in the agreement or in exhibits that are attached to the agreement. This allows each of the parties to make an informed choice as to what they are giving up and avoid claims of misrepresentation or omission of assets.

(4) The technical contract aspects of the agreement, including the method of execution, whether adequate consideration is given, whether qualified individuals witnessed the execution of the agreement, and the like, must be observed. Accordingly, the agreement should be prepared by legal counsel and its signing formalities carefully observed.

Proposing a Pre-nuptial Agreement to a Potential Spouse

As a practical proposition, a pre-nuptial agreement is a difficult issue to address by the parties and requires mature, adult consideration. In many cases, the prospective husband or wife believes that the consideration of a pre-nuptial agreement represents something less than a full commitment on the part of the prospective spouse. In some cases, the potential spouse to whom the agreement is proposed will feel as if they are not receiving a full commitment from their partner.

Parties entering into a marriage are counseled to approach the issue from a mature viewpoint and recognize that other factors, such as the interests of children from a previous relationship or a prior unsatisfactory experience from an earlier marriage and divorce, make the consideration of a pre-nuptial agreement a way of addressing financial matters in advance so that the new husband and wife can focus on the all important non-financial aspects of their marriage.

Even if a Court determines that a pre-nuptial agreement is not enforceable upon a divorce, the Court may consider the pre-nuptial agreement as an expression of the intentions of the parties upon its execution. This could have considerable effect on the ultimate distribution of property awarded by the Court, even when the Court is not applying the agreement as written.