New Case Limits Enforceability of Prenuptial Agreements
In a recent decision, the Michigan Court of Appeals declined to enforce portions of a prenuptial agreement limiting the discretion of the trial court to intervene in property distribution between the parties. If you or someone you know are considering entering into a prenuptial agreement or are trying to contest the validity of such an agreement, contact the Peter J. Johnson Law Office, PLLC, a leading family law attorney in Berrien County.
In Michigan, it is increasingly common for couples with significant assets to enter into prenuptial agreements, also known as antenuptial agreements or premarital agreements. Such agreements can cover a broad array of topics, but often they are used to ensure that one party retains certain property during divorce proceedings. While Michigan courts generally enforce prenuptial agreements controlling property divisions, they are less willing to do so when the agreement is inherently unfair or when there has been an unforeseeable change in circumstances after the marriage that makes enforcement unjust. Courts have also routinely refused to enforce other kinds of prenuptial provisions, such as ones which seek to limit the court’s role in determining custody or child support for children born during the marriage because Michigan law requires the court to consider the best interests of those children in determining those issues.
Recently, courts have focused on the ability of prenuptial agreements to limit a court’s discretion to adjust imbalanced property settlements. Under Michigan law, if a presiding court finds that the division of marital property provides insufficient support for one of the parties, it can order the other party to give up a larger share from the property acquired during the marriage. In extremely imbalanced cases, the court can also require the more secure party to give up his or her separate property, including property acquired before the marriage.
In Allard, a recent Michigan Court of Appeals decision, the parties entered into a prenuptial agreement that explicitly precluded division of any separate property owned by the parties before the marriage, and imposed a mandatory 50/50 split of any property acquired after the marriage. The prenuptial agreement also went a step farther by including provisions that limited the trial court’s ability to correct imbalanced property divisions in the manner described above. As a whole, this prenuptial agreement greatly disadvantaged the Defendant in Allard, because it resulted in a much smaller property division than might otherwise have received and it limited the court’s ability to adjust this division in her favor. Nevertheless, the trial court enforced the agreement, noting that the agreement was not unconscionable and that there had not been an unforeseeable change in the circumstances of the parties since the agreement was signed.
However, the Michigan Court of Appeals later overruled this decision. Compared to the trial court, the Michigan Court of Appeals focused less on the limits of what the parties were allowed to agree to and more on the inherent powers of the presiding judge in divorce cases. The fatal flaw in the prenuptial agreement was its interference with judicial discretion; the parties are free to agree to terms that may prove disadvantageous, but they cannot prohibit the court from reviewing and possibly correcting the result to protect one of the parties.
In a statement after the decision, the attorney for the Plaintiff issued a warning to people who might be contemplating getting a prenuptial agreement. He compared writing a prenuptial agreement to planting a bomb that won’t explode until years or decades have passed, and stated it was vital to retain an attorney who understands the intricacies of such agreements, not an attorney who merely “dabbles” in writing them. If you or someone you know are considering entering into a prenuptial agreement or are trying to contest the validity of such an agreement, contact the Peter J. Johnson Law Office, PLLC, a leading family law attorney in Berrien County today at 269.982.1100 or visit www.AttorneyPeterJohnson.com for further information.