A prenuptial agreement is a binding legal contract between two people who intend to marry, signed before they marry. Traditionally, these agreements are more common in second marriages or in marriages where one of the parties brings substantially more assets or earning potential into the marriage. Prenups have grown more popular in recent years, as millennials wait longer and longer before tying the knot for the first time.
Why a Prenuptial Agreement?
The main purpose of prenuptial agreements is to predetermine how certain issues will be decided if the parties divorce, such as property division or spousal support (alimony). For example, the couple may agree that one spouse will not work outside the home and that the working spouse will pay spousal support if they ever divorce.
Another example would be where one or both spouses have their own business that they do not wish to divide or sell in the event of divorce. The prenuptial agreement can also cover retirement accounts, life insurance proceeds, and just about anything else that is not prohibited by law.
What’s Not Allowed?
Prohibitions include things like matters of child support or child custody. Support is based on the needs of the children and the parents’ ability to pay. Custody is based on the best interests of the child at the time the parents separate, so the spouses-to-be have no authority to “settle” these issues ahead of time.
To be enforceable, the prenuptial agreement must be “fair” and “reasonable” both at the time of signing and at the time of enforcement. If the parties’ relative situations change substantially over time, the prenup may be deemed unconscionable and thus unenforceable at the time of separation.
Other than that, the single most important factor is “full disclosure”. The parties cannot conceal assets or other relevant financial information from each other before signing the agreement. If one party fails to fully disclose their financial position to the other, the court may refuse to enforce the agreement, and let the parties “fight it out” in traditional divorce fashion
But What if You’re Already Married?
Couples who are already married needn’t feel left behind. Michigan law also allows for the enforce-ability of post-nuptial agreements, which can be signed during the marriage and are subject to restrictions similar to a prenup.
Legal costs for preparing a pre or post-nuptial agreement vary widely depending on the complexity of the matter. If you have questions, Rosi & Gardner will be glad to help.