Prenuptial Agreements and Separate Property in Michigan Divorce
Prenuptial agreements -in existence for over 2,000 years- originally safeguarded a moneyed spouse. Early prenuptial agreements were not designed to protect the rights of non-property-owning spouses; most often, wives. Historical examples include the Hebrew ketubah, early dowries, and even an agreement by one of the Prophet Muhammad’s wives.
In earlier centuries, such contracts protected women’s limited property rights, as their assets became their husband's upon marriage. In more recent times, these contracts are most often utilized to protect pre-existing wealth that a spouse owns going into a marriage.
Despite their long history, prenuptial agreements have often faced criticism, especially in modern divorce proceedings, for reinforcing economic imbalances. Critics argue that over time, these agreements can unfairly benefit the wealthier spouse, particularly in long-term marriages where the non-moneyed spouse contributes significantly without comparable financial gain.
In Michigan, prenuptial agreements became legally enforceable in divorce cases in 1981. Valid agreements must be fair, equitable, and reasonable under the couple’s circumstances. Full financial disclosure and the opportunity for each party to consult legal counsel are essential. Signing the agreement well in advance of the wedding is also advised.
A pivotal 2017 Michigan Supreme Court case, Allard v Allard, significantly altered the legal landscape. The Court ruled that family judges may, under certain conditions, award one spouse property designated as separate in a prenuptial agreement, challenging the assumption that such agreements provide absolute protection.
In the Allard case, the couple had been married for decades. Husband’s business interests were protected by a prenuptial agreement. During the long marriage, Wife made various contributions to the marriage and to the Allard household by caring for the minor children and for Husband’s elderly mother. All the while, Husband steadily grew his business interests.
The Michigan Supreme Court eventually ruled that family court judges could set aside onerous provisions of an otherwise valid prenuptial contract in the interests of justice. Also, even if a prenuptial contract is valid, family courts are free to exercise their discretion to invade separate property; even property set aside in a prenuptial agreement.
In the seven years since Allard was decided, the Michigan appellate courts have continued to refine the common law of prenuptial agreements in Michigan within the context of separate property. We take a look at two very recent intermediate appellate decisions in this post.
Last month, the Michigan Court of Appeals decided Moore v Moore which also held that family courts have to power to remedy inequitable property divisions, even in the presence of valid prenuptial agreements. Like Allard, Wife stayed at home raising children while Husband continued working and saving for retirement, which savings were deemed separate under the parties’ prenuptial contract. Although the prenuptial agreement was found valid, the family court concluded that the overall property division was inequitable and it proceeded to invade some of Husband’s separate assets.
Where the lower court erred was not making findings about which tranche of assets were separate and which tranche were marital. Family courts cannot place the proverbial cart before the horse; they must first determine the character of the assets before ruling on the asset division. The Court of Appeals remanded the matter for further findings in this regard.
Even without a prenuptial agreement, ownership of separate property is often preserved for the spouse bringing that property into the marriage. While a contract adds an additional level of protection, subject to the caselaw discussed above, separate property is frequently preserved.
But not always. The unpublished decision in Grant v Grant provides guidance as to best practices when presenting proof of separate property ownership in Michigan. In that case, the Wayne County Family Court awarded to Wife the Husband's separate properties located in Detroit and Jamaica. Adding insult to injury, the family court also strapped Husband with the liabilities of those properties.
The intermediate appellate court, however, pumped the bakes by remanding for further findings. No deed was introduced as evidence in the case; nor were appraisals or other evidence offered as proof of the values of the parcels. We always advise our clients: if you are going to assert that the property is separate, you have to offer sufficient proof of: a) the separate character of the property; and b) the value of the property.
Currently, Michigan is considering adopting the Uniform Premarital and Marital Agreements Act (UPMAA), which affirms the enforceability of prenuptial agreements without consideration and outlines enforcement standards. However, some argue this could conflict with the Allard ruling by potentially limiting judicial discretion in property division.
Ultimately, prenuptial agreements remain a useful tool, particularly in second marriages or for protecting pre-marital assets. Yet, their enforceability can depend heavily on context, raising important questions about fairness and legal reliability.
Michigan's common law is a rich tapestry as to what circumstances support a separate property award, and what circumstances support the invasion of separate property. Each case depends on its unique facts.
For personalized advice on creating or enforcing a prenuptial agreement, or making a solid offer of proof as to separate property, consider scheduling a consultation with a qualified attorney.
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