Your Prenuptial Agreement Is Enforceable in Michigan – Until It Isn’t

As we all learn at some point, life is not always fair. The same can be said of prenuptial agreements. Whether by design or by circumstance, many premarital contracts leave one spouse with the short end of the stick when it comes to the division of property or spousal support. But why should that matter? After all, it is well established that premarital agreements are valid and enforceable in Michigan absent fraud, duress, nondisclosure, misrepresentations, or other deficiencies surrounding the execution of the document. If both spouses entered into their prenup with eyes wide open, and the agreement was otherwise valid, why should a judge be able to unilaterally disregard its terms and override the parties’ agreement?

Because they can.

In Michigan, prenuptial agreements are valid and enforceable if each of these questions can be answered with a “No”:

  1. Was the agreement obtained through fraud, duress or mistake, or misrepresentation or nondisclosure of material fact?
  2. Was the agreement unconscionable when executed?
  3. Have the facts and circumstances significantly and unforeseeably changed since the execution of the agreement to make its enforcement unfair and unreasonable?

The first two of these three queries relate temporally to the circumstances surrounding the drafting, negotiation, and execution of the document. The last question, however, involves the impact of the agreement years or decades later. And that is where judges have significant power to override the terms of an otherwise valid prenup.

Judges’ Power to Avoid Inequitable Results versus Spouses’ Rights to Make Their Own Decisions

In most aspects of divorce proceedings, Michigan judges have significant discretion to make decisions that achieve equity. This includes decisions involving the division of property or the award of spousal support. It is this power to avoid inequitable results that runs squarely into the rights of the parties to contractually delineate what happens regarding such matters upon the end of their marriage.

The conflict between the need for equity and the rights of spouses to decide their own fates came to a head in the 2017 Michigan Appellate Court decision in Allard v. Allard.

In Allard, the court acknowledged that spouses may contract away their property rights in a prenuptial agreement. But it also noted that two Michigan statutes give the courts the power to make decisions as to property allocation and spousal support that a prenuptial agreement cannot override.

Specifically, the court cited two statutes, MCL 552.23(1) and MCL 552.401. Together these statutes allow a court to award a marital estate’s assets, regarding both property distribution and spousal support, to a party who would otherwise receive assets “insufficient for the suitable support and maintenance,” notwithstanding the parties’ agreement to contractually waive rights to property and spousal support in the event of a divorce by contract.

Spouses Cannot Contractually Take Away a Court’s Power to Achieve Equity

In concert, these two statutes “clearly demonstrate that the Legislature intends circuit courts, when ordering a property division in a divorce matter, to have equitable discretion to invade separate assets if doing so is necessary to achieve equity,” the court said.

While spouses can agree to a great many things in a prenup, they cannot agree to take away the court’s power to achieve equity. As the Allard court concluded:

“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.”

The Allard decision caused a stir when released, leading many to wonder whether prenuptial agreements weren’t worth the paper they’re written on if judges can simply disregard them if they believe that enforcing them would be, in their discretion, inequitable. But the reality is that, well before Allard, judges would not hesitate to modify or refuse to enforce the terms of a prenup if intervening circumstances rendered it inequitable to do so.

Prenuptial agreements in Michigan remain a valid and useful means of delineating property and support rights upon divorce in most cases. But, as noted, life can be unfair. Parties to a prenup need to be aware of the possibility that life’s changes may render their agreement so unfair as to be disregarded by a court.

Questions About Prenuptial Agreements? Kreis Enderle’s Family Law Attorneys Have Answers

If you are considering a prenuptial agreement or have questions or concerns about an existing agreement, contact Alissa Oetman or one of the attorneys in Kreis Enderle’s Family Law Practice Group, who can help you understand your rights and protect your interests. Please contact us today.

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