In a recent case, Reed v. Reed, the Michigan Appellate Court made a decision that upheld the enforcement of prenuptial agreements especially in long-term marriages.
Before Reed, there five main factors to determine if a prenuptial agreement is in force:
- Is the agreement obtained through fraud, suffering or error?
- Is the agreement not intentional / unfair when it is signed?
- Has information and circumstances changed since then to make it unreasonable and unreasonable?
- Do both parties enter into voluntary agreements?
- Did both parties disclose all of the assets and facts before signing the agreement?
In enforcing prenuptial agreements over long-term marriages, the Courts of Michigan found that information and circumstances had changed since the date of the agreement and refused to enforce it. The new decision limits the ability of the trial courts to reject a prenuptial agreement that the trial court does not want and substitute its own decision instead of adhering to the prenuptial.
It has actually been widely practiced until the Reed v Reed case. Mr. and Mrs. Reed married in 1975. When they got married, Mr. Reed was in law school and Mrs. Reed is studying for his degree in business. They have approximately $ 20,000 worth of assets. Mr. and Mrs. Reed has been married for thirty years. During the marriage, they raised millions of dollars. They share some of their assets and bank accounts in the same way and title other properties and bank accounts in their own names.
The trial court ruled that the agreement was not enforceable. The trial court held that it was unreasonable to enforce the agreement at the time of divorce based on the length of the marriage and the accumulation of assets. The Court of Appeal disagreed with the trial court and ordered the trial court to enforce the agreement despite the length of the marriage and the accumulation of assets.
The Court of Appeal included an element of "predictability." It indicates that during the agreement, it will be noted that the parties may preserve significant wealth and that a long-term marriage is as predictable (and indeed what most people expect) as a short-term wedding. The court found that because of the "foreseeability" of long-term marriages and the accumulation of assets, the enforcement was fair. It identified Mr. and Mrs.. Reed could have known of the long-term marriage and accumulation of assets as soon as they entered into the agreement.
The Court says it has a strong desire to maintain prenuptial agreements. It said the parties to the prenuptial agreement "agreed to become captains of their own finance ship and decide their own destiny." So, if the future event is to be known, it is not a change that makes no sense.
This decision strengthens the enforcement of prenuptial agreements, especially in long-term marriages. If the married parties want to maintain their own separate assets and future income, it appears that prenuptial agreements are a solid way to do so. When writing a prenuptial or making changes to the other, both persons should be represented by a lawyer because of the serious effects it has on their rights. Prenuptials are especially important for small business / family members or partners.