Contemporary Prenuptial Agreements and Divorce
Hollywood movie star Kevin Costner has been instrumental in placing prenuptial agreements back into the news. The actor’s wife filed for divorce last month; it did not take long for the world to learn that the couple tied the knot with a prenuptial agreement 19-years ago.
When Costner executed his prenuptial agreement, most of his big hits were in the past and he was doing movies like Open Range and The Upside of Anger. He has acted in at least one movie a year since Sizzle Beach in 1981; his most-recent offering on the small screen with Yellowstone. By any standard, a successful wealthy actor at the time of his nuptial to the relatively unknown Christine Baumgartner.
Costner’s divorce highlights one of the chief criticisms of prenuptial agreements which have been the subject of scholarly analysis over the past Century. A prenuptial agreement is often seen in the United States, and in Michigan, as a contract to protect the assets of a wealthy individual.
A recent article in the ABA publication The Family Advocate noted that prenuptial agreements can be traced back at least 2000 years. Here are some interesting general observations about prenuptial agreements:
Prenuptial agreements did not start out as contracts to protect the assets of the wealthy but rather, they were designed to protect and maintain the non-propertied spouse [usually the Wife];
The wife of the prophet Mohammad, married several times, had at least one prenuptial agreement that allegedly proscribed her husband from disagreeing with her about anything;
The Hebrew marriage contract known as the ketubah has been around for two millennia;
Dowries were considered to be early forms of prenuptial agreements dating back to the Seventh Century;
Because a woman’s property became her husband’s property upon marriage well into the 19th Century, a prenuptial agreement was needed to protect the Wife’s property rights, to the extent that they existed at all; and
A Harris poll cited in the The Family Advocate article, supra, estimated that only 3% of married couples executed prenuptial agreements in 2010, but that percentage shot up to 15% by 2020.
Over the course of modern divorce history, prenuptial agreements have regularly come under attack as symptomatic of an unequal relationship. A “power play” to protect the assets of the moneyed spouse.
The longer the marriage, and therefore the longer the prenuptial agreement remains in place, the greater the potential that the moneyed spouse will significantly improve his or her position. Ultimately, the property division becomes unfair at some point in time, with the non-moneyed spouse devoting her life to a spouse for very little relative material gain.
Prenuptial agreements contemplating divorce became legal in Michigan in 1981; prior to that year, prenuptial agreements could only contemplate the death of a spouse, not divorce. There are some basic requirements for a valid prenuptial agreement: paramount among these is that the agreement must be fair, equitable and reasonable relative to the surrounding facts and circumstances of the executing couple.
To be considered fair, the executing parties must disclose all their assets and liabilities to the other. Each party must have ample opportunity to consult legal counsel. The further in advance of the nuptials the agreement is signed the better; midnight on the evening before the wedding is not the time to execute the agreement.
Setting all of the above aside, a seminal 2017 Michigan Supreme Court decision in Allard v Allard forever changed the landscape of modern prenuptial agreements. In that case, the issue was whether a family court had the power to invade the separate property of a spouse, even when the genesis of that separate property was a prenuptial agreement.
The Supreme Court answered the question in the affirmative: family court judges can, under certain circumstances, award the separate property of one spouse to the other spouse, even when the property was designated as separate within a properly executed prenuptial agreement. Spouses in Kevin Costner’s position would have good reason to doubt the efficacy of their prenuptial agreements if they found themselves filing for divorce here in Michigan.
Currently, there is a movement among the family law bar in Michigan to adopt the Uniform Premarital and Marital Agreement Act [UPMAA]. This uniform act does not apply to separation agreements; does not affect the rights of third parties; affirms that prenuptial agreements are enforceable without consideration [normally a requirement for a contract to be valid]; and establishes standards of enforcement to guide family court judges.
Some critics assert that adoption of the UPMAA would conflict with the Allard decision. If the model code was adopted, would family court judges still retain the power to invade separate property identified in a prenuptial agreement?
The bottom line is that if a family court judge deems the present circumstances of a couple before it on a divorce proceeding make enforcement of a longstanding prenuptial agreement inequitable, then the judge can make their own determination of an equitable property division, regardless of what the prenuptial agreement says. This gives clients contemplating a prenuptial agreement pause: should they bother protecting their separate property if a judge is going to invade that separate property at the end of the marriage?
Of course, it depends on the circumstances of the case. There are many situations, particularly in second marriages, or at the beginning of a marriage, where prenuptial agreements are mutually desireable. In others cases, they do point to a potential inequity in the relationship.
If you or a family member need legal advice pertaining to the creation, execution or enforcement of a prenuptial agreement, contact our law firm to schedule a free consultation. After assessing your individual circumstances, we can help develop some options.