A prenuptial agreement. A document that defines what is marital property and what is separate property. You have properties you gathered before getting married. The goal is to keep them. You do not want your assets to be included in the marital estate. That is how a prenup works. Many people lament having a prenuptial agreement and a divorce settlement. Now that you know, you can split anything. My ex still wants it all despite the prenup.
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In Michigan, the law is not like in the movies. There is no such thing as a prenup that is impenetrable. There isn’t a prenup in Michigan that can’t be penetrated. If the court rejects the terms of a prenuptial agreement, don’t be shocked. The clause of a legally binding contract will be upheld by the court. The court must also follow what equity dictates.
What is a prenuptial agreement?
A prenuptial agreement is often referred to as an “antenuptial agreement” in Michigan. It’s a document that outlines how certain divorce-related issues ought to be settled. Alimony and the division of property are two of these issues. In recent years, prenuptial agreements have begun to shed their negative reputation. The wealthy and famous are no longer the only ones who use prenuptial agreements. According to a poll, 44% of single persons and 49% of divorcees support prenuptial agreements. Both men and women from various socioeconomic backgrounds use them. It lessens the possibility of financial uncertainty.
Who needs a prenuptial agreement?
Any couple who wants to decide in advance how to divide their marital assets should consider entering into a prenuptial agreement. A prenuptial contract may have an impact on how you divide your future assets. Even if you don’t have a lot of money or possessions, it makes sense. The following are typical justifications for a couple getting a prenup:
- Protect separate property.
- Decide whether one spouse would provide alimony to the other.
- Decide how to divide marital assets.
A prenuptial agreement can safeguard a spouse’s children’s inheritance if there are any. Some couples decide that if they get divorced, one of them will stay at home to support the other. A divorcing spouse can own a business together that they don’t want to split or sell. Some partnerships may decide to resolve these issues beforehand. Do it while your relationship with each other is still strong. This will put a stop to disputes over how to distribute assets in the case of a divorce.
What can be covered by a prenuptial agreement?
Most of us would like to believe that we will marry our future partners out of mutual love and respect. Prenuptial (or “premarital”) agreements are currently being requested by even first-time brides and grooms because of the high divorce rate in America. The odds are stacked against living happily ever after. Anyone getting married should carefully consider what they might do if presented with a prenuptial agreement. These types of agreements have grown to be extremely prevalent. Do keep in mind that since life can be so unpredictable, creating this type of paperwork now may really provide you both more peace of mind. The following significant topics ought to be mentioned in any sane prenuptial agreement in Michigan.
Property that you owned separately before getting married
Most people want to make certain they may keep whatever property they already had in their own name before getting married. Adding your spouse’s name to a joint bank account or to the house you both want to live in together if you previously owned it separately is, of course, frequently seen as a loving gesture – provided your personal attorney has been fully informed about the proposal.
Balancing your separate and combined incomes while you’re married
Decide exactly which sources paying for your recurring expenses during marriage. Remember recurring expenses? These are your mortgage, new automobiles, and children’s current and future educational expenditures. Don’t forget medical costs and other necessary living expenses.
Debts that each partner owes prior to marriage
How do you intend to manage your debt? These responsibilities might not necessarily be especially significant. The unpaid bills of the other party are typically paid by the other party. Generally speaking, keeping thorough records of these transactions is a good idea. In the event that you decide to get a divorce in the future, this is. You might desire to be compensated for your prior excellent effort.
Gifts and inheritances during marriage
These things require different management than other properties. You and your spouse may decide to approach some gifts differently depending on your financial situation.
Monthly expenses
Make sure you make a sensible choice. The person who spends more tends to wield a lot of power in the relationship. You might want to switch roles every now and then.
Your current and long-term financial objectives
You won’t necessarily end up getting divorced. You might have that notion because you’re negotiating a prenuptial agreement. You and your partner could start setting realistic financial objectives. You can start early on with the aid of a carefully drafted prenuptial agreement.
Health issues affecting either side
Be realistic so that the impaired spouse doesn’t have to worry excessively about how they could be treated in the future, especially given their health.
Reasonable and equitable spousal support
Try to be fair and generous when talking about elements of the prenuptial agreements. This avoids the likelihood that a future court will invalidate your prenuptial agreement.
Lump sum payment at the moment of divorce
If your marriage doesn’t endure longer than a specific period of time, ask yourself if you really believe you should specify how much the less wealthy spouse at the time you marry should be provided.
An expiration date for your prenuptial agreement
For the would-be spouses to discuss, this can be a very loving provision. It might also confirm the reasons you and your spouse decided to be married in the first place.
The most important aspect to remember is that before signing any potential prenuptial agreement, both parties should have their own private attorneys evaluate it. Too many individuals are accustomed to protecting “Number One” when it comes to money. During discussions about what to cover in a prenup, you make sure someone has your back. Get a good family law attorney in Michigan.
What makes a prenuptial agreement valid in Michigan?
In Michigan, prenuptial agreements were not recognized as legal until 1991. No one was surprised at the time because everyone assumed it would encourage divorce. Promoting marriage conflicts with the state’s objectives. In 1991, the Michigan Court of Appeals issued its well-known Rinvelt v. Rinvelt ruling, which established a precedent. Prenuptial agreements are legitimate according to recognized law. It is both valid and legal. The arrangement promotes marriage.
Marriage is encouraged by these contracts because it promotes stability. It gives couples the power to live independently. It supports enhanced interpersonal communication. An engaged couple might prepare their financial future with a prenuptial agreement. It boosts the future and partnership security. According to the Michigan Court of Appeals, there are three factors that must be met for a prenuptial agreement to be valid:
Was the agreement signed under duress, fraud, error, misrepresentation, or nondisclosure of a crucial fact?
The prenuptial agreement goes through careful drafting by the attorney and the inclusion of declarations disclosing the pertinent information. Exhibits to the agreement will typically include financial situation statements for each party. It will include income, savings, assets, and debt. There will also be precise disclaimers about the contract being signed by each participant voluntarily and without coercion.
Was the agreement unconscionable when it was signed?
If both parties are advised by counsel, which means that each party should really have his or her own attorney review and sign the agreement, then the court will almost always find that it was not unconscionable when written. This factor is typically satisfied again by having the attorney carefully draft the agreement. The court rarely finds the contract to be unconscionable since it is presumed that both parties are of legal age and have had their attorneys explain their rights to them.
Since the agreement was signed, have facts or circumstances changed that would render enforcement unjust or unreasonable?
This last factor appears to pose an issue. Later courts made determinations about prenups. Only unexpected changes in the facts or circumstances render them unfair or unreasonable. More court rulings have demonstrated that almost everything is predictable. The possibility that one party will do exceptionally well in business. Someone can excel in their career while the other does not. The possibility that one party will have more assets at the time of a divorce. Even problems like accidents, illness, and infirmity have been deemed predictable. These circumstances did not prevent the prenuptial agreement from being enforced.
Before signing, a couple must disclose their entire financial situation. The likelihood that the prenuptial agreement will be upheld by the court is higher. A financial statement should be created for each couple. If necessary, see an accountant for advice. Attach the report to the executed contract. The prenuptial agreement may be amended to reflect any agreements the parties make. A contract may be terminated after a predetermined period of time thanks to sunset clauses. Some property awards may be determined thanks to these clauses. These awards may be influenced by a number of factors. One party’s absence from work when the other is expecting a child could be a significant factor.
What makes a prenuptial agreement enforceable in Michigan?
The court uses the Uniform Prenuptial Agreement Act as the basis for determining if your prenup is enforceable in Michigan. The Act is also used in other states and says that for a prenuptial to be enforced it must be:
The prenup must be reasonable, fair, and equitable under the circumstances
In Michigan, the courts are all about being reasonable, fair, and equitable. They are whether it’s divorce, child custody, or property division. With children, a Michigan court is all about the child’s best interest.
The parties to the prenup entered voluntarily, fully disclosed, and have understood their rights fully including the waiver of rights
Parties to the prenup must have a clear understanding of the implications of the provisions in the agreement. They need to comprehend not only those rights they invoke but also what rights they are going to waive. They must know and adequately understand the financial issues being addressed by the provisions of the prenup. This is where the role of their respective attorneys becomes critical.
The drafting of the prenup must be free from fraud, lack of consent, undue influence, and/or mental incapacity
One spouse may have engaged in deception or deceit as a condition of the agreement. The court will void the agreement. A court is likely to invalidate a prenuptial agreement when a spouse hides assets from the other. More so if such a fact was not disclosed during the signing of the prenup. The burden of establishing fraud or deceit rests with the spouse seeking to contest the legitimacy of the prenup. A spouse may have felt coerced into signing a prenuptial agreement by the other. That spouse may contest the pact. A threat to not get married to the other spouse is insufficient to void the agreement. A judge cannot throw out an agreement.
Unless of course, the other spouse made credible threats of bodily or mental harm. A court may decline to enforce a prenup if one spouse is not mentally capable of signing it. A person wouldn’t have the mental ability to consent if they were mentally impaired. They won’t be able to consent if they are dealing with a mental illness. If you were foolish enough to be intoxicated when you signed, the court won’t uphold the prenup.
The facts and circumstances can’t have changed much since the signing of the prenup.
Circumstances should not make it unfair or unreasonable to enforce. It might no longer be reasonable to enforce the agreement because of the way things are now. The prenuptial agreement might be rejected by the court. The fact that one spouse receives a greater share of the marital estate does not automatically render a prenup unenforceable. Prenuptial agreements may prohibit it. The other spouse may still be ordered to pay alimony by the court. For example, when one spouse becomes disabled during the marriage and is no longer able to work. That kind of serious circumstance must be discovered by a judge. In order to find a prenup unenforceable due to unfairness, the court must make that determination.
The spouses must sign the written prenup
Obviously, both of you must sign the prenup to signify your agreement. In some states, it is best that credible witnesses be present when you actually sign it. In Michigan, it is sufficient to have both parties willfully and voluntarily sign the prenup.
Is there such a thing as an ironclad prenuptial agreement?
Prenuptial agreements aren’t exactly set in stone in Michigan. The court tries to make decisions that are in line with what the parties want. When deciding whether a prenuptial agreement is legitimate, the court will always try to be fair. A prenuptial agreement could occasionally be deemed unjust by a judge, even if it is perfectly legal. It is legal to enter the property covered by the prenuptial agreement. It’s possible that circumstances will change to the point where it would be unfair to apply the agreement. The court might rule against the agreement’s provision. The terms of the agreement could provide one partner with a bigger share of the marital estate.
Even so, it continues to be enforced. The courts have always had the right to pierce prenuptial agreements in order to avoid an unjust outcome. How can we realistically foresee what may be ruled unfair by a judge (whom we cannot choose) a few years (and asset changes) down the road when drafting a prenuptial agreement? Although there is no definitive answer to this question, cautious attorneys and parties will take steps to make prenuptial agreements appear more equal.
Prenuptial agreements should be signed far enough in advance of the wedding as one precaution worth mentioning. The agreement may include a progressive property settlement schedule based on the length of the marriage if the couple’s wealth is significantly different and both parties should have independent legal counsel.
Another step to guarantee the protection of separate property before marriage is the creation of irrevocable trusts, such as Michigan’s new Domestic Asset Protection Trust, which can be used by either couple to give stronger asset protection for separate assets.
Is there another way to protect assets aside from a prenuptial agreement?
Prenuptial agreements have a place and can be helpful when preparing an estate. But there are other ways to make sure that your intentions are known. An alternative to getting your intentions respected besides a prenuptial agreement. Prenups are useful. You may encounter difficulty in convincing a partner to agree. You might be seen as more concerned with planning for divorce than the wedding. Prenups often demand that both partners disclose (or forgo disclosing) their financial information. Concur to the provisions of the agreement. You should still have a separate estate plan after the process. Talking about it can be awkward and inconvenient.
Create a trust
Most people are capable of achieving all the objectives of a prenuptial agreement. They can accomplish more if they create a trust. Assets are exempt from a spouse’s elective share. Not if handed to one’s children via a Michigan trust. This may not always be the case in other states. Assets held in a trust are exempt from probate. The intended beneficiary can obtain them more easily. Trusts are also less litigated in court than wills are.
What your ex-spouse wants and what the law allows may not be the same thing. Your ex-spouse may want everything but it may not be more than what the Michigan court will uphold. What the prenup has put together will determine most of what will be available for both of you. Of course, the prenup must be valid in the eyes of the Michigan court. It must be fair and equitable to all parties. A prenuptial agreement will only be enforced by a court after a marriage has been declared over. It is required to prevent injustice. There may be modifications to the prenuptial agreement after the marriage. Both spouses must sign the written amendment to the agreement.
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