Michigan Prenuptial Agreements

Did you know Michigan has the most miles of freshwater shoreline than any other state? Did you also know that Michigan’s prenup laws can be super tricky to navigate? Well, we can help you steer the ship on Michigan prenups. 

 

Michigan Prenuptial Agreements

The Michigan courts refer to a prenuptial agreement as an “antenuptial agreement” and sometimes also a “prenuptial agreement.” An antenuptial agreement and prenuptial agreement are the same thing: a legal contract drafted between two parties before getting married. A prenup is only valid after the marriage takes place. Michigan’s Antenuptial Agreement statute and case law govern the laws in Michigan pertaining to prenups and outline the rules and requirements for a valid agreement. The terms of a Michigan prenup agreement may include alimony, property division, attorney’s fees, retirement accounts, and more. On the other hand, a prenup in Michigan cannot limit or contract around child support or child custody. Michigan courts have the right to throw out your prenup if they don’t think it’s fair. 

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What to include in a valid Michigan Prenup 

For a Michigan prenup to be considered valid, you should consider the following: 

  • The contract must be in writing
  • The terms must be fair, equitable, and reasonable
  • The terms must be lawful
  • Must be signed voluntarily by both parties (without being under duress, fraud, or misrepresentation)
  • The contract must be signed at a reasonable amount of time before the wedding
  • Full disclosure of all financial assets and income *Do not skimp on this*
  • It is strongly recommended that both parties be represented by their own attorneys
  • It is strongly recommended that there be witnesses
  • It is strongly recommended that the contract be notarized 
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    What to exclude from your Michigan prenup  

    To make sure that your prenup comports with Michigan law, make sure not to include…

    • Child support or child custody
    • Unfair, inequitable, or unreasonable terms 
    • Unconscionable terms
    • Provisions that violate the law or public policy

    Keep in mind, if the Michigan courts think your prenup creates an unfair result, they can overturn it and work out their own terms for your divorce.  

    Statutes & terms to understand for a Michigan Prenup

    *Before diving into the deep end, let’s go through some terminology and phrases that will be used in your prenup – that way, you don’t go cross-eyed trying to decipher the legal jargon and miss something.

    What do the courts consider a fair prenup?

    Before 1991, the state of Michigan didn’t even recognize prenups in the context of divorce! The 1991 Rinvelt case changed all of that. Previous courts had stated that prenups in anticipation of divorce were against public policy. The Rinvelt court disagreed and declared that prenups are great for parties to foster a healthy relationship.

    The Rinvelt case set out the following standards for which a Michigan court will look at when determining if a prenup is fair:

    • The agreement was not made through fraud, duress, mistake, or misrepresentation
    • Full disclosure was made to both parties before the agreement was signed 
    • The agreement was not unconscionable when executed
    • Since the signing of the prenup, the facts and circumstances have not changed in such a way that enforcing the prenup would be unfair for either party

    Rinvelt v. Rinvelt, 190 Mich.App. 372 (1991). 

    Michigan Antenuptial Agreement Statute and Case Law

    If you would like to get a prenup in Michigan, you must comply with the following:

    • The contract must be in writing
    • The terms must be fair, equitable, and reasonable
    • The terms must be lawful
    • Must be signed voluntarily by both parties (without being under duress, fraud, or misrepresentation)
    • The contract must be signed at a reasonable amount of time before the wedding
    • Full disclosure of all financial assets and income *Do not skimp on this*
    • It is strongly recommended that both parties be represented by their own attorneys
    • It is strongly recommended that there be witnesses
    • It is strongly recommended that the contract be notarized 
    • Do not include clauses about child custody or child support, that is for the court to decide 

    Michigan Compiled Laws (MCL) Section 557.28 is the statute governing prenups in Michigan. You can see the statute’s fine print here. Most of Michigan’s prenuptial standards are based on case law.

    A FAIR play by the Michigan court

    What do Michigan judges deem as a fair prenup under Michigan law? Well, for starters, Michigan courts have a lot of wiggle room to decide whether a prenup is fair or not. If the court thinks it’s unfair in any way, then the court can and will declare the prenup invalid. A landmark Michigan prenuptial case from 2005 speaks volumes about prenup fairness. The case goes as follows. 

    Husband and Wife were married in 1975. Husband was a newly graduated lawyer and Wife was an engineer. At the time of marriage, they had a combined net worth of $20,000. About two months before their wedding day, they executed a prenup. The prenup stated that both parties would keep their own separate property and Husband would get to keep the home they lived in throughout the marriage. Throughout the marriage, they kept their finances separate, with separate bank accounts and even purchasing property under their own separate names. 

    All good things come to an end, and for this Detroit couple, it was in the year 2000. Wife filed for divorce in 2000 after a 25-year marriage. At the time of divorce, Wife and Husband were each making an identical $1,000,000 per year. In the divorce proceedings, Wife asked the court to declare the prenup invalid because there was a change in circumstances making the prenup unfair. Wife’s argument stems from their combined net worth going from $20,000 to more than $2,000,000. Husband disagreed and asked the court to deem the prenup valid. Husband counter-argued that they kept separate bank accounts and purchased property separately all these years. He also argued that Wife never saved any money, and that’s why she’s asking for the prenup to be wiped.

    The million-dollar question (literally): what did the court think? Drum roll… the court held this prenup to be fair! The court reasoned that just because their assets grew substantially does not mean that the circumstances changed so much that it deemed the prenup invalid. In other words, just because the Husband had a lot more money at the time of the divorce and the prenup now benefits him does not make the prenup unfair. (Reed v. Reed, 265 Mich.App. 131 (2005))

    Allard v Allard, 318 Mich App 583; 899 NW2d 420, 596 (2017)

    Along with unsuccessfully challenging the validity of the couple’s prenuptial agreement, former wife sought equitable distribution of the parties’ assets pursuant to the court’s statutory authority (i.e. distribution as if there were no prenup). However, the trial court declared that it was bound by the antenuptial agreement. The appellate court disagreed and reversed. In reaching its conclusion, the court attempted to reconcile the two “bedrock principles”: “first, that the fundamental right to contract must be protected by allowing parties to contract freely and by enforcing contractual agreements; second, that courts sitting in equity must be free to afford whatever relief is necessary to see done that which, in good conscience, ought to be done.” While the laws of divorce are statutory in nature, the division of property must be equitable. Former husband argued that parties can divest the courts of its statutory authority to effectuate an equitable settlement by way of an antenuptial agreement. See MCL 557.28 (“A contract relating to property made between persons in contemplation of marriage shall remain in full force after marriage takes place.”). However, parties cannot enter into contracts which are contrary to public policy. See Maids Int’l, Inc. v. Saunders, Inc., 224 Mich.App. 508, 511, 569 N.W.2d 857 (1997) (“contracts founded on acts prohibited by a statute, or contracts in violation of public policy, are void.”).  

    The court reasoned that the Legislature clearly demonstrated that it intends circuit courts, when ordering property division in a divorce matter, to have equitable discretion to “invade separate assets” if doing so is necessary to achieve equity (i.e. make things fair). See MCL 552.12 See footnote 1, below; MCL 552.23(1) See footnote 2, below; MCL 552.401 See footnote 3, below. This right is held by the circuit courts, not the parties themselves. Therefore, the right cannot be waived by the parties to an antenuptial agreement. “Put differently, the parties to a divorce cannot, through antenuptial agreement, compel a court of equity to order a property settlement that is inequitable. Although parties have a fundamental right to contract as they see fit, they have no right to do so in direct contravention of this state’s laws and public policy” Id. at 601. Therefore, the court declared that parties may not waive the court’s equitable discretion (i.e. power to divide things fairly) via antenuptial agreements. Read the entire case here

    Footnotes:

    1. Divorce actions “shall be conducted in the same manner as other suits in courts of equity; and the court shall have the power to award issues, to decree costs, and to enforce its decrees, as in other cases.” MCL 552.12.

    2. “Upon entry of a judgment of divorce or separate maintenance, if the estate and effects awarded to either party are insufficient for the suitable support and maintenance of either party and any children of the marriage are committed to the care and custody of either party, the court may award to either party the part of the real and personal estate of either party and spousal support out of the real and personal estate, to be paid to either party in gross or otherwise as the court considers just and reasonable, after considering the ability of either party to pay and the character and situation of the parties, and all the other circumstances of the case.” MCL 552.23(1).

    3. “The circuit court of this state may include in any decree of divorce or of separate maintenance entered in the circuit court appropriate provisions awarding to a party all or a portion of the property, either real or personal, owned by his or her spouse, as appears to the court to be equitable under all the circumstances of the case, if it appears from the evidence in the case that the party contributed to the acquisition, improvement, or accumulation of the property.” MCL 552.401.

    Divorce Statute 

    Official term for Divorce in Michigan

    A divorce occurs when two people, who have been legally married, begin the court process to end the marriage. Some states refer to divorce as “dissolution of marriage,” which also refers to the general process of a divorce. Michigan refers to the ending of a marriage as the more commonly known term “divorce.”   

    How to end a marriage in Michigan

    There are three ways that a couple can legally end a marriage in Michigan: separate maintenance, annulment, and divorce. Only one party needs to begin the process of ending a marriage (but don’t get us wrong, it takes two to make it work!) If one party wants to divorce the other party, it is within their sole right to do so, and the other non-participating party does not have to agree in order to begin the process. If a non-participating spouse does not partake in the proceedings, a default judgment will be entered and force the divorce to proceed.

    Residency requirement

    Each state has residency requirements that must be fulfilled before you can divorce in that state. In Michigan, these are the residency requirements:

    • One spouse has resided in Michigan for 180 days immediately before filing the divorce.
    • One spouse has resided in the county where the divorce is filed for at least 10 days immediately before the filing.

    No-Fault Divorce

    Michigan is a “no-fault” divorce state – meaning either party can file for a divorce without having to prove that the other party did something “wrong” to justify the divorce. Michigan is a pure no-fault state, so you will need to claim that the marriage is irretrievably broken. In other words, your divorce is beyond repair, and it must end in divorce.

    >>For the entire fine print review Michigan Compiled Laws Section 552.6

    Separate Property

    Official term for property not considered part of the marital estate

    Separate property is the property you get to keep in the divorce settlement. In Michigan, separate property is obtained or earned before the marriage. On the other hand, marital property is acquired or earned during the marriage. Marital property is what will be divided up in the divorce. Be careful though because there are exceptions to these standards: 

    • If one spouse receives an inheritance during the marriage, it is deemed separate property. 
    • If one spouse acquired a property before the marriage, but both spouses put in work on the property to improve it, it may become marital property.
    • If separate property becomes frequently used for marital purposes, it may become marital property subject to distribution. For example, if an inheritance is deposited into the shared bank account.
    • If one spouse receives proceeds in a personal injury lawsuit for pain and suffering, it is considered separate property.

    >>For more fine print review Michigan Compiled Statute 552.19

    What about worker’s compensation? 

    A divorce in 2010 helped Michigan courts decide if, and to what extent, workers’ compensation benefits received during a marriage is separate or marital property. Remember, marital property is subject to distribution in the divorce. Separate property is what you keep.

    The facts of the case are as follows. A Michigan couple divorced. Wife wanted Husband’s workers’ compensation to be considered marital property so it would be distributed in the divorce settlement. Husband wanted the workers’ compensation to be considered separate property so he could keep it. 

    What did the court think? The court said that workers’ compensation is marital property (a.k.a. it would get split up in the divorce) if it compensated for wages lost. If the workers’ compensation was for pain and suffering, it would be considered separate property and, therefore, not split up. (Cunningham v. Cunningham, 289 Mich.App. 195 (2010)). 

    Alimony (also commonly known as Spousal Support)

    Term used in Michigan for Spousal Support: Alimony

    In Michigan, courts consider the primary purpose of alimony to be balancing the income of the parties’ needs so that neither party will be unequally disadvantaged. Michigan courts want to create an outcome that is just and reasonable. The factors that they will consider determining reasonableness are the following:

    • The past relations and conduct of the spouses
    • The length of the marriage
    • The abilities of the spouses to work
    • The type of property awarded to the spouses in the divorce proceeding
    • The spouses’ ages (in retirement already? Too old to find work?)
    • The abilities of the spouses to pay alimony
    • The present situation of the spouses
    • The needs of the spouses 
    • The spouses’ health 
    • The spouses’ prior standard of living
    • The contributions of the spouses to the joint estate
    • A spouse’s fault in causing the divorce
    • The effect of cohabitation on a spouse’s financial status, and 
    • General equity principles (anything else the court may consider reasonable)

    To calculate the amount of alimony awarded, Michigan courts typically examine age, education, length of marriage, and income of the parties.

    Types of alimony

    Michigan offers two different types of alimony: rehabilitative and permanent alimony. Rehabilitative alimony is temporary in nature and gives a spouse the ability to return to the workforce. Permanent alimony lasts long-term. 

    >>For more fine print review Michigan Compiled Statute 552.13 and 552.23

    Max Emmer, Esq.

    Max Emmer, Esq.

    Attorney, Emmer Law PLC

    Max Emmer is a Michigan attorney who believes that prenups can improve marriages through good communication and financial transparency. He understands both the legal and deeply emotional aspects of prenuptial agreements and aims to help his clients reach a resolution in the most helpful and efficient way possible.

    Consider reaching out to Max with any Michigan prenup questions, concerns, and if you would like advice or representation.

    EmmerLawPLC.com

    [email protected]

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