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Michigan Prenuptial Agreements Require Careful Drafting

I am a divorce lawyer in the Rochester area of Oakland County, Michigan. My office is easily accessible to Clarkston, Troy, Birmingham, Lake Orion, Bloomfield, Oxford and Macomb. Prenuptial agreements in Michigan are binding and enforceable contracts. I advise anyone that is contemplating marriage to consider getting one. Consulting with a family law attorney prior to the marriage will be an eye-opening experience for most people with regards to how a court may treat division of property, debt or alimony in the case of death, divorce or separation. However, drafting a prenuptial requires care and consideration on the part of the attorneys and the clients.

The Issue

Will the courts enforce prenuptial agreements as written?

The Answer

Yes, unless there is an ambiguity, the courts will enforce the prenuptial contract as it is written without attempting to determine the intent of the parties. For this reason, attorneys must take great care in preparing the documents.

In Allard v Allard, COA No. 308194, December 18, 2014 (For Publication), the Michigan Court of Appeals addressed the wife's appeal after a divorce court awarded the husband assets in excess of $900,000, the wife around $95,000 and denied alimony.

In that case, the husband presented the wife with a draft of an agreement approximately 10 days before the wedding. The wife was not represented by an attorney when she signed the agreement. The wife attempted to set aside the contract for these reasons and she claimed that the husband abused her during the marriage. She also claimed she should be allowed to invade the husband's separate assets based upon Michigan domestic statutes.

Neither the trial court nor the appellate court agreed with her. There is no case law which shows that fault in a divorce can void the contract, further the duress of being presented with a prenuptial on the day of the rehearsal dinner is not sufficient. However, on appeal she claimed that the court should not have considered all of the property the divorce court awarded to the husband as his separate property under the specific terms of the contract. The Court of Appeals agreed.

It appears that during the marriage, the husband formed six LLC's which he used to purchase and sell many real estate holdings. This created a problem because the wife agreed, in the prenuptial, to forgo her rights to property that the husband acquired in his individual capacity. The Michigan Court of Appeals held that the LLC's created during the marriage are separate legal entities and to the extent that any of the property awarded to the husband was obtained during the marriage by the LLC's that property should be subject to an equitable distribution.

In addition, it appears that the court found that the agreement did not treat the income earned by the parties during the marriage as separate property. It did so, in my opinion, based upon convoluted reasoning, however again, one must now take this into consideration. The result is that the appellate court held that the divorce court should have treated all income earned by either party as marital and subject to division.

Summation

This appears to be a decision where the appellate court applied twisted logic in order to avoid granting such a disparate division of property. However, the husband in the case should still be able to maintain the assets that he brought into the marriage (which totaled around $400,000 in value) and avoid paying spousal support. This means that while the prenuptial agreement did not provide the complete protection that his attorney sought for him, it still provided significant protection and benefit.

I am a divorce lawyer in the Rochester area of Oakland County, Michigan. My office is easily accessible to Clarkston, Troy, Birmingham, Lake Orion, Bloomfield, Oxford and Macomb.

Prenuptial agreements in Michigan are binding and enforceable contracts. I advise anyone that is contemplating marriage to consider getting one. Consulting with a family law attorney prior to the marriage will be an eye-opening experience for most people with regards to how a court may treat division of property, debt or alimony in the case of death, divorce or separation. However, drafting a prenuptial requires care and consideration on the part of the attorneys and the clients.

The Issue

Will the courts enforce prenuptial agreements as written?

The Answer

Yes, unless there is an ambiguity, the courts will enforce the prenuptial contract as it is written without attempting to determine the intent of the parties. For this reason, attorneys must take great care in preparing the documents.

In Allard v Allard, COA No. 308194, December 18, 2014 (For Publication), the Michigan Court of Appeals addressed the wife's appeal after a divorce court awarded the husband assets in excess of $900,000, the wife around $95,000 and denied alimony.

In that case, the husband presented the wife with a draft of an agreement approximately 10 days before the wedding. The wife was not represented by an attorney when she signed the agreement. The wife attempted to set aside the contract for these reasons and she claimed that the husband abused her during the marriage. She also claimed she should be allowed to invade the husband's separate assets based upon Michigan domestic statutes.

Neither the trial court nor the appellate court agreed with her. There is no case law which shows that fault in a divorce can void the contract, further the duress of being presented with a prenuptial on the day of the rehearsal dinner is not sufficient. However, on appeal she claimed that the court should not have considered all of the property the divorce court awarded to the husband as his separate property under the specific terms of the contract. The Court of Appeals agreed.

It appears that during the marriage, the husband formed six LLC's which he used to purchase and sell many real estate holdings. This created a problem because the wife agreed, in the prenuptial, to forgo her rights to property that the husband acquired in his individual capacity. The Michigan Court of Appeals held that the LLC's created during the marriage are separate legal entities and to the extent that any of the property awarded to the husband was obtained during the marriage by the LLC's that property should be subject to an equitable distribution.

In addition, it appears that the court found that the agreement did not treat the income earned by the parties during the marriage as separate property. It did so, in my opinion, based upon convoluted reasoning, however, one must now take this into consideration. The result is that the appellate court held that the divorce court should have treated all income earned by either party as marital and subject to division.

Summation

This appears to be a decision where the appellate court applied twisted logic in order to avoid granting such a disparate division of property. However, the husband in the case should still be able to maintain the assets that he brought into the marriage (which totaled around $400,000 in value) and avoid paying spousal support. This means that while the prenuptial agreement did not provide the complete protection that his attorney sought for him, it still provided significant protection and benefit.

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