Prenuptial agreements are frequently thought of as ironclad tools for asset protection. What are the pros and cons of a prenup agreement? The same standards that apply to last will apply to prenuptial agreements. The last will does not foretell death. It is an effort to get prepared for the possibility of death.
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The idea of conserving or protecting separate property and the rise in the value of the separate property in the event of a divorce are the benefits of a prenup. The absence of ironclad guarantees in Michigan’s prenup is a downside. If the prenuptial agreement is not equitable, the judge in Michigan has the authority to intervene with the subject of the prenuptial agreement.
Prenuptial agreements have been more commonplace in recent years. In a 2018 survey by the American Academy of Matrimonial Lawyers, 62% of lawyers questioned indicated they had observed an increase in the number of clients seeking prenuptial agreements during the previous three years.
Couples who wait longer to get married and amass more cash and assets prior to becoming engaged may be somewhat to blame for this trend. Given that many millennials getting married now have divorced parents, the prevalence of divorce in earlier generations may also be a factor in the rise in prenuptial agreements.
What Is a Prenuptial Agreement?
A prenuptial agreement, also known as an “antenuptial agreement” in Michigan, is a document that enables future spouses to stipulate how particular issues, such as property division, and alimony, will be resolved in the event of a divorce.
Antenuptial agreements are legally binding in the State of Michigan if they are made in writing and signed by the person who will be held responsible for the agreement, contract, or promise. This is also true of notes or memoranda that include the same information. To put it simply, this implies a court would consider an oral agreement void.
This agreement has a particular duty of disclosure more stringent than the standard negotiated agreement’s duty of disclosure, and it must be signed before being married. Before the agreement is signed, all parties have a duty to reveal their assets; if they fail to do so, the agreement may be void.
The agreement must also be “fair,” according to Michigan courts, and the facts and situation must not have altered between the time it was signed and the time it is being enforced. Any change in circumstances must have been unanticipated and not reasonably foreseeable by the parties prior to or at the time the agreement was made in order for it to be enforced at a later time.
Escalator clauses, which provide a party more money, property, etc. the longer the marriage, are sometimes included in prenuptial agreements. It is also possible to stipulate that the agreement will no longer be binding once a specified number of years have passed after the beginning of the marriage.
A prenuptial agreement in Michigan may cover any topic that is not illegal and doesn’t encourage divorce.
Any of the following can be covered by prenuptial agreements:
[ a ] Property, commercial interests, and financial accounts to be divided
[ b ] If the couple will share their retirement accounts equally between the two spouses
[ c ] Each spouse’s capacity to control the household’s resources during the marriage
[ d ] The amount and length of alimony payments, as well as whether one spouse will pay the other.
[ e ] How to share the proceeds of life insurance
[ f ] Child support or child inheritance from previous partnerships
[ g ] What occurs if a partner passes away during a marriage, and
[ h ] Whether the provisions of the agreement require one or both spouses to execute a will.
Under Michigan, child support or custody cannot ever be decided upon in a prenuptial agreement. Courts won’t allow spouses to agree on a child support sum in advance since the court bases child support on the children’s needs and their parent’s financial capacity. Judges also make custody decisions based on each child’s best interests at the moment of a parent’s separation, never beforehand. Only at the moment of separation, and with the consent of the court, can parents decide on child custody and child support.
What Are the Pros of Prenuptial Agreements?
A prenuptial agreement tries to assist future spouses in planning for the future, protecting their assets, and outlining their finances in detail before getting married. To ensure the prenuptial agreement is mutually beneficial and does not disproportionately benefit one spouse over the other, both parties must have their own legal counsel when negotiating it.
Let’s mention very specific pros of antenuptial or prenuptial agreements.
Wealth Protection
The ability to preserve your wealth with your prospective spouse is a prenuptial agreement’s potential biggest advantage. Contrary to popular belief, protection does not include guarding your assets against one another. A prenuptial agreement enables you and your future spouse to collaborate in protecting both the wealth you bring to the marriage as individuals and the wealth you will accumulate together.
Due to the fact that it necessitates complete and frank disclosure from both parties regarding the assets and debts they will be bringing to the marriage, prenuptial agreements can accomplish this dual wealth protection. Additionally, in order to create a prenuptial agreement, the couple must talk about their financial aspirations for these assets as well as any additional assets they might acquire together in the future.
Smoothen Compliance with Future Legal Processes
A prenup is used in situations other than separation and divorce. Prenuptial agreements can ease the divorce process and reduce stress, but they can also make estate planning and end-of-life planning simpler. In comparison to a standard will, a prenuptial agreement offers you greater flexibility when it comes to leaving an inheritance for your children.
A will doesn’t always provide people the flexibility they’d like when deciding who they want to leave their property to because many jurisdictions, including Colorado, have extremely strict inheritance laws. However, the couple can decide together and, in some ways, mitigate the state’s inheritance laws through a prenuptial agreement. This is just one example of how a prenuptial agreement might make future legal challenges more understandable and manageable.
What Are the Cons of Prenuptial Agreements?
A prenuptial contract does not cover everything. With this kind of arrangement, you cannot control every facet of marriage. Before establishing the prenuptial agreement, you should be aware of these limitations.
Here are some cons to the use of prenuptial agreements.
Provisions of the Agreement Are Not Ironclad
Prenuptial agreements are not actually harmful, thus this is more of a misconception. Prenuptial agreements have sadly earned a poor reputation. Many people mistakenly think they lack romance and fundamentally lack faith in the relationship. Making a legal contract may not be the most romantic thing you can do, but it does not show mistrust or a lack of confidence the relationship will endure.
If the situation has changed in a way that makes it unfair to enforce the agreement, judges may decide to nullify it. The fact one spouse receives a significantly larger portion of the marital estate under the agreement does not automatically render it unenforceable. Even if the prenuptial agreement forbids it, the court may order the other spouse to pay alimony if, for instance, one spouse lost their ability to work due to a disability that occurred during the marriage. For a judge to declare an agreement unenforceable owing to unfairness, there typically has to be an extreme case like that.
The Existence of the Agreement Implies Distrust
People believe that mentioning the drafting of a last will and testament is a foreboding of death. Some see prenup as a foretelling of divorce. A fairytale ending and proposals frequently conjure up ideas of candlelit meals, holding hands, and strolls in the moonlight. Bringing up the possibility of a future divorce is the surest way to ruin that mood. Marriage is a partnership extending beyond romance and touches on serious matters like property and finances, but for some couples, talking about these topics could overshadow this delightful time.
Don’t wait until the wedding invitations have been sent out to bring up a prenup; instead, carefully evaluate the best time and place to bring it up. Not only is that unfair to your future spouse, but in many states, if you coerce your fiancé into signing a prenuptial agreement right before the wedding, a court might declare the contract unlawful because your fiancé didn’t have enough time to thoroughly study the contents.
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