As a family law attorney in the Rochester Hills area of Oakland County Michigan I recommend that most people who intend to get married at least consider signing a prenuptial agreement. But what happens if someone does not sign a prenuptial agreement and both parties want to enter into an amicable agreement regarding property division and spousal support if they do happen to get divorced in the future? The answer is to enter into a postnuptial agreement. However, an April 24, 2012 decision by the Court of Appeals calls into question whether such an agreement is enforceable in Michigan.
Will a divorce court uphold a postnuptial agreement that is entered into freely by both parties and otherwise would be enforceable if signed before the marriage?
In Cheff v Cheff, an Unpublished Michigan Court of Appeals case, Docket No. 300231, the court indicated that the agreement in that case was void as against public policy. The Court reached the wrong conclusion based upon weak reasoning.
The parties married in February 1998 and signed a postnuptial agreement shortly after in May 1988. The agreement provided that each party would keep his or her own premarital property and equally divide jointly acquired property. Neither party would be entitled to spousal support but the wife would be entitled to the greater of $200,000 or 25% of the amount by which the husband's net separate property exceeded $3,917,811 but not more than $1,000,000, which is a significant amount of money.
The husband filed for divorce in 2009 after over twenty years of marriage. The divorce trial court found that the postnuptial agreement was not enforceable due to inadequate disclosure of assets by the husband at the time of the agreement, which was a legitimate basis to find the agreement unenforceable. The husband appealed and the Appellate Court decided that it would uphold that decision but for some reason it went further and stated that the agreement was void as against public policy
The husband relied upon a previous 2006 case which upheld a postnuptial agreement. The Cheff court distinguished the cases stating that the parties in the 2006 case were separated and wanted to divide marital assets in anticipation of their imminent divorce. It stated that the court in the 2006 case specifically distinguished cases that involved postnuptial agreements that were not entered into by separated parties and that such cases met with much stricter legal scrutiny than post separation agreements that settled property issues in ongoing or imminent divorce litigation. Finally, it stated that the enforceability of the provisions of such an agreement are conditioned upon a finding that each party and the contract itself expressed a desire to maintain the marital covenant.
The court in the Cheff case stated that the parties were not separated at the time of signing the agreement and the agreement contemplated the divorce of a married couple in that it contained explicit provisions pertaining to alimony and property distribution in the event of divorce or separation. Finally it stated the agreement did not explicitly express a desire to maintain the marital covenant. These were the reasons that the court found the agreement to be void against public policy.
This reasoning is spurious and frankly a little silly. The court relies upon a distinction that the agreement was not enforceable because the parties were not separated at the time that the agreement was signed. This seems like a ridiculous requirement because it would seem to make no difference whether or not the parties were residing together when they signed the agreement. Further, it would seem to encourage people to separate if they want to sign such an agreement and separation definitely encourages divorce, which is against the very public policy that the court claims to be at issue; that a married couple “may not enter into an enforceable contract that anticipates and encourages separation or divorce.” Finally, this couple was married for over twenty years, so apparently the contract did not actually contribute to or encourage the parties to get divorced or separate shortly after they signed it.
The claim that the agreement contemplates the divorce and separation of a married couple because it contains explicit provisions regarding alimony and division of property is just as ridiculous. That is the whole point of a prenuptial or postnuptial – to define the rights of the parties to property at a time when the parties can make a reasonable and amicable agreement while they get along rather than after the deterioration of a relationship and the necessary emotional issues that come with the same.
Finally, the requirement that the contract state that the parties desire to maintain the marital covenant creates a requirement that the parties simply recite some magic words in order to make the agreement enforceable. This is form over substance. There is no reason why a contract should be more enforceable simply because it states “we intend to remain happily married and this contract is not made as an attempt to encourage divorce or separation.”
This poorly reasoned case seems to call into question the enforceability of postnuptial agreements despite the same having been previously upheld in Michigan and other states. Fortunately, it is an unpublished opinion so it does not create binding precedence. However, it appears that it would be wise that if one is contemplating marriage then he or she should obtain a prenuptial and not wait until after the marriage to seek such an agreement. If one has no choice, then the drafting attorney should at least specifically include the magic words I have indicated above.