Developments in Prenuptial Agreements in Michigan

Over the last several years, the landscape of prenuptial agreements in Michigan has evlolved. Legislative proposals and a landmark case has driven these developments. While no specific major overhaul has occurred, there is a trend toward greater clarity and more defined standards for enforceability of prenuptial agreements.

The Uniform Premarital and Marital Agreements Act

One of the driving forces in this movement is Michigan's consideration of adopting a uniform law. The Uniform Premarital and Marital Agreements Act (UPMAA) is proposed legislation, currently in bill form in the Michigan Legislature, (e.g., Senate Bill 809 and 160), that aims to standardize the law regarding prenups and postnups.

Similar laws have been enacted in multiple other states across the country.  In these other adopting jurisdictions, similar statutes enumerate requirements in the content drafting and execution of prenuptial agreements. If enacted, it would provide a clear legal framework for creating and enforcing these agreements, which has been a point of contention in Michigan courts.

The UPMAA seeks to:

• Define "Duress": It would provide a specific definition of duress, which is a common reason for challenging a prenup. This includes factors like the timing of the agreement's presentation relative to the wedding date, the state of wedding plans and expenditures, and the threat of not marrying.
• Require Access to Legal Representation: A key provision would make an agreement unenforceable if a party didn't have access to independent legal representation. It would also mandate that an agreement include a notice of waiver of rights in plain language, especially if a party chooses not to have a lawyer.
• Clarify Financial Disclosure: The act would codify requirements for "adequate financial disclosure."   I This is already a crucial part of Michigan law, but the UPMAA would provide more explicit guidance on what information must be exchanged to ensure a fair and voluntary agreement.

While not yet law, the legislative effort to pass the UPMAA signals a growing consensus that the current case-law-based approach to prenups needs to be replaced with a more modern, statutory framework that is consistent with other states.

What Makes a Prenuptial Agreement Enforceable in Michigan?

Even without the UPMAA, Michigan's courts have established a strong set of standards for prenuptial agreements. These standards are critical for ensuring an agreement will be upheld in the event of a divorce. In order to be enforceable, a prenup must meet the following criteria:

• Voluntary Execution: Both parties must sign the agreement freely and without coercion or duress. The agreement shouldn't be presented at the last minute, right before the wedding.  In practice clients will often come to obtain a prenuptial agreement weeks or even less before their wedding date. It is good practice to actually address this in the text of the prenuptial agreement that the parties understand their wedding may be around the corner but nevertheless their execution is voluntary and not under any sort of duress.
• Full Financial Disclosure: Each party must fully and accurately disclose all of their assets, debts, and income. Failing to do so can invalidate the agreement. Most well drafted prenuptial agreements contain an actual schedule of assets and debts. Good prenups will also include the income of the parties. This is especially important when the parties’ waive at least a portion of the ability to petition the court for spousal support.
• Fairness and Reasonableness: The agreement must be fair and reasonable at the time it was signed. A court may also review it to ensure it hasn't become "unconscionable" or unfair due to a significant and unforeseen change in circumstances.  This is even more crucial after the Allard decision. Creating a prenuptial agreement that is too far lopsided for the benefit of one party or another is an invitation for a court challenge down the road. There must be balance between protecting the client’s interest and hedging your bets in the event that this contract’s enforceability is contested.
• Separate Legal Representation: While not a legal requirement, it's a strong recommendation for both parties to have their own independent legal counsel. This significantly increases the likelihood that a court will find the agreement was entered into with full knowledge and understanding. In the event that one party insists on not having representation it is good practice to have that party execute a separate waiver that reinforces that they were advised on seeking their own counsel before execution of that agreement.

Impact of Recent Case Law

Recent court decisions have reinforced the principle that Michigan courts have the authority to review and, in some cases, modify prenuptial agreements. This is especially true if a material changes in circumstances since the signing would make enforcing the agreement "unfair or unreasonable."

A contact may be deemed enforceable on its face but it doesn’t completely protect the client because it impoverishes one spouse or is otherwise unconscionable. For example, the Allard v Allard case affirmed that a family court judge has the power to access a spouse's separate property, even if a prenup designates it as such. This highlights that prenuptial agreements are not an absolute guarantee and remain subject to the court's equitable powers in a divorce proceeding.

The overall trend is clear: prenuptial agreements are more widely accepted than ever, but their enforcement is under stricter scrutiny. It's no longer enough to simply have a signed document. Ther are pitfalls present post-Allard. Agreements must be drafted with careful consideration of fairness, full disclosure, and the potential for a court to intervene if circumstances change dramatically. For couples considering a prenup, consulting with an experienced family law attorney is more crucial than ever to ensure the agreement will withstand a legal challenge. Precise drafting and balance is key.

We Can Help

If you facing the uncertainties of marriage with an appreciable estate that you desire to protect, contact our law firm to schedule a free consultation. We can help develop your legal options.

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