B
F
A
R
 

Sword or Shield. The first question a client usually asks when considering a Prenuptial or Postnuptial
Agreement (Pre-nup or Post-nup) is whether they are enforceable. The answer is that since the Michigan
Supreme Court case in the Rinvelt case (1991), Pre-nup Agreements are enforceable as a general rule in
Michigan. A Post-nup Agreement was upheld even before that in the Rockwell case (1970).

Attack. Even from the outset, counsel for each party know and understand that the agreement is likely to be
attacked by the poorer spouse, in the event of death or divorce. The grounds on which an agreement may be
alleged to be unenforceable are varied and sometimes very subjective. The Michigan Supreme Court in Booth
(1992) enumerated circumstances when an agreement may be set aside:

(1) In the event of fraud, duress, mistake, misrepresentation or non-disclosure of material facts;

(2) The agreement was unconscionable when executed;

(3) Facts and circumstances have changed since the agreement was signed so as to make enforcement
unfair and unreasonable.

What Do Attorneys Recommend? An attorney for either party can only represent his or her client by advising
on the steps that need to be taken so that the agreement is enforceable, on its face, at the time it is signed.
Obviously, no attorney has a crystal ball to forecast changes in facts and circumstances that may occur with
the passage of time. What are the conditions for an agreement which is presumably enforceable at the time
of execution? These include the following:

(1) Full disclosure of assets on both sides. This usually involves attaching a schedule of each party’s assets
to the agreement and recitation that each party has reviewed the other’s asset schedule and had the
opportunity to ask questions or verify values;

(2) Each party should have separate counsel. This is especially important where there is a large disparity
between the resources of each party;

(3) Allow adequate time before the marriage to work out the terms of the agreement, taking into account that
the agreement covers both death and divorce, and that controversies may arise in either event. Typically, an
agreement signed on the steps of the church may be deemed to have been obtained under duress or
mistake;

(4) Is the agreement fair at the outset and does it take into account the passage of time? That is, does the
poorer spouse get recognition for the years invested in the marriage? Such provisions go to the fairness of
the agreement, at the outset, and should recognize sacrifices by one spouse or the other, such as giving up a
job, moving, rearing children, etc.

(5) Rights at death are important as they deal with estate planning, to provide a minimum degree of comfort to
each party in the event of the death of either spouse;

(6) Does the agreement purport to deal with changes of circumstances?

  • Children, what are their ages, and what are the support obligations
  • The length of the marriage
  • Changes in financial circumstances, up or down
  • Changes in the health of a spouse or children

All or any of the above items can change the perception of fairness when it comes time to apply and/or
enforce a Pre-nup or Post-nup.

Obviously, the more wealth that is involved, the more likely the agreement will carefully negotiated with all of
the above factors taken into account. Similarly, wealthier couples are more likely to wind up in contentious
disputes with one spouse claiming more than the agreement provides.

Broad Terminology. All of the above conditions concerning separate counsel, full disclosure and adequate
time for negotiation aside, words such as "unconscionable", "unfair" and "unreasonable" are subject to
different interpretations, depending on one’s point of view, whether one is defending or attacking an
agreement.

Does that mean that couples should not consider a Pre-nup or a Post-nup? Not at all. Such an agreement
gives a basis for negotiation and discussion and can greatly facilitate a settlement between parties in
disagreement, especially when one considers that only a small fraction of property disputes, in the event of
death or divorce, wind up in full blown litigation. The objective should be to provide a platform or framework for
parties to work out their differences.

This brief discussion should be enough to demonstrate that even with such agreements, a settlement is
rarely a "take it or leave it" proposition. Evidence the celebrity cases of Jackie Onassis and Ivana Trump,
which according to the press, received more than the Pre-nups provided in settling death or divorce claims.

If you have clients with difficult or challenging property arrangements to worked out in an estate planning
context (where Post-nups are often recommended) please contact Jim Modrall at 231-941-9660.

©BRANDT, FISHER, ALWARD & ROY, P.C.

This newsletter is provided for informational purposes and should not be acted upon without professional
advice.
WEALTH CONSERVATION:
PROFESSIONAL ALERT
Brandt, Fisher, Alward & Roy, P.C.
October 2004
MARITAL AGREEMENTS - ARE THEY ENFORCEABLE?
by James R. Modrall III, J.D., C.P.A.
If you would like to
receive future editions
of the monthly Wealth
Conservation
Newsletter directly to
your e-mail account,
please e-mail our office
using the following link:
 Estate Planning
Newsletter
Brandt, Fisher,
Alward & Roy, P.C.
Attorneys at Law