No longer just for the rich and famous, the use of prenuptial and postnuptial agreements is a growing trend in Michigan divorce cases. Couples are increasingly looking to nuptial agreements to provide some predictability in the event of death or divorce. Couples should beware, though, that a nuptial agreement will not be worth the paper it is written on unless it can stand up in court. This article sets out how Michigan courts determine whether or not to enforce a nuptial agreement.
Postnuptial Agreements – The “Clearly Imminent” Threshold
A postnuptial agreement is a contract entered into by a couple, after they are married, to determine how their assets and debts are to be divided upon death or divorce. These must undergo an extra layer of scrutiny because they touch on a fundamental public policy concern – namely, the sanctity of marriage. The thinking is that, when a marital relationship is still intact, allowing the couple to enter into a contract that contemplates divorce may actually encourage divorce, on some level.
On the other hand, when the divorce is “clearly imminent,” the concern over not undercutting the marriage becomes irrelevant, because it is going to end anyway. Then the parties should be encouraged to enter into agreements as to how their assets and debts will be divided. The idea is that, if they are going to be divided anyway, it is best that the parties agree on how they are divided, instead of the court making the decision for them at trial.
Thus, the threshold analysis is this question of whether or not the divorce or separation is “clearly imminent” at the time of the agreement. If not, then the postnuptial agreement will be thrown out by a Michigan court. If so, then the court moves on to apply the analysis for the enforceability of prenuptial agreements.
Prenuptial Agreements – The Three-Question Test of Enforceability
A prenuptial agreement is identical to a postnuptial agreement, except that it is entered into before the parties are married. To determine the enforceability of a prenuptial agreement, or a postnuptial agreement that has passed the threshold analysis above, a court will determine whether certain standards of “fairness” have been met. To make that determination, the court asks three questions:
- Was the agreement obtained through fraud, duress or mistake, or misrepresentation or nondisclosure of material fact?
- Was the agreement unconscionable when executed?
- Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable?
If the answer is “yes” to any one of those questions, a Michigan court will not enforce the nuptial agreement. In other words, for the agreement to stand up in court, the answer to all three questions must be “no.”
That would seem straightforward enough, except that there is a problem with the third question. Whether or not a change of circumstances has made enforcing the agreement “unfair and unreasonable” is a somewhat vague and subjective test. When Michigan courts first began applying the three question test, question three led judges to essentially substitute their own personal ideas of fairness for the ideas of the parties. This ran afoul of another fundamental public policy interest – people’s freedom to make contracts.
The Michigan courts have found a way around this problem, though. They now approach question three not as a subjective question of fairness, but as an objective question of whether the change of circumstances was “reasonably foreseeable.” If a reasonable person would have foreseen that change of circumstances, then the nuptial agreement should not be struck down based on that foreseeable change of circumstances. If a reasonable person would not have foreseen it, then the court will not hold the parties to that contract. This is a more objective way to determine whether it would still be “fair” to uphold the agreement.
Especially in our current economic climate, it can be very valuable to know how your assets and debts will be divided if you get a divorce. A prenuptial or postnuptial agreement can provide that type of predictability. That predictability is only as good, though, as the predictability that your nuptial agreement will stand up in court. Following the requirements discussed here will give you the best chance that it will.
Can’t Find an Answer to Your Question About Prenuptial or Postnuptial Agreements?
If you have a question about prenuptial or postnuptial agreements in Michigan that isn’t included in this article, please call our office and Metro Detroit family law and divorce attorney Carlo J. Martina can answer your questions. Mr. Martina can also represent you in all family law and divorce proceedings to ensure your rights and interests are protected.
Call Plymouth, MI divorce lawyer Carlo J. Martina today at (734) 254-1140 to schedule a consultation.