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Prenuptial Agreements Should Provide Language to Help Protect Against “Invasion” of Separate Assets

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, Beverly Hills and Oxford. It seems clear that in Michigan prenuptial agreements, when prepared properly will be enforceable. In fact, a 2010 case stated that the court should never disregard a valid prenuptial agreement, but should instead enforce its clear unambiguous terms. However, there are two statutes which allow the court to “invade” the separate property of one spouse and award it to the other spouse in specific situations.

The Issue

May a court invade separate property of one spouse and award it to the other spouse even when there is a valid and enforceable prenuptial agreement?

The Answer

According to Shariff v Sharrif, COA No. 314824, September 18, 2014 (Unpublished) the answer is yes. In that case, there was a valid prenuptial (which still allowed the husband to keep more of the marital property as his separate property than he would have without the contract) but the court did invade his separate property and award some of it to his wife.

In that case, the parties signed a prenuptial shortly before their marriage. The wife appealed the trial court's finding that the agreement was valid for a variety of reasons. The ex-wife claimed that she did not know what she was signing, that she had not spoken with the husband's attorney and that she did not have her own attorney. The appellate court agreed that this was not sufficient to defeat the prenuptial. Absent fraud or mutual mistake, a party cannot invalidate it on grounds one failed to read or understand it and there is no absolute requirement that one be represented by independent counsel before committing to a binding contract.

Further, the substantial increase in the husband's earning potential and income did not invalidate the contract based upon a change in circumstances. The fact that the husband was a cardiologist with a new business and a potential for meteoric income increase was something that she knew or should have known when she signed the agreement.

The prenuptial agreement created separate property for the husband which, but for the contract, would have been marital property subject to a roughly equal division. However, there are two statutes which will allow a court to invade a separate asset (whether an inheritance, premarital property or separate property created by a prenuptial agreement) and award some of that asset to the other side. In this case, the court found that while the contract created separate assets, there was no language in it that would trump the court's general ability to use the statutes to invade the separate property created by the prenuptial. The court utilized one of the statutes to grant the wife $274,000 of the husband's separate property; however, he still had significantly greater assets and income than the wife as a result of the contract.

I have considered this issue in the past when drafting prenuptial agreements. My solution has been to add into the agreement a specific waiver of rights by each party to the statutory invasion of property. I specifically list the two statutes in the agreement and then indicate that the parties understand the statutes and specifically waive any right to invasion of separate property of the other under either of the statutes, their successor statutes or other similar statutes that may be enacted in the future. I will also provide written copies of the two statutes to the parties to read before signing the agreement.

It appears that such language was not included in the prenuptial at issue. In fact, one judge (Murray) wrote a concurring opinion where he pointed out that the courts have allowed parties to waive numerous statutory rights, including the right to alimony. He then went on to state that since the Legislature specifically approves of premarital agreements regarding property, an argument could be made that the parties can agree to waive the statutory invasion provisions without violating public policy but that was not the case before the court.

Summation

It is my belief that this case actually helps to confirm my opinion that a well-drafted prenuptial agreement should include language waiving the statutory invasion provisions and that if it does, the problem the husband experienced in this case will be avoided.

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