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Bill aims to clarify prenup enforcement.

Byline: Lee Dryden

A bill aimed at providing clarity for enforcing prenuptial agreements is under consideration by state lawmakers. House Bill 4751, sponsored by Rep. Klint Kesto, R-Commerce Township, is summarized in a legislative analysis by the House Fiscal Agency: Generally speaking, the bill would render a prenuptial agreement unenforceable if certain factors can be proven, such as duress or unconscionable terms. Section of Public Act 216 of 191 currently states that a contract relating to property made between persons in contemplation of marriage is enforceable after the marriage takes place. The bill would amend this section by adding specific circumstances when such a contract is unenforceable. Kesto, who is a lawyer, told the House Law and Justice Committee on Sept. 12 that a January Court of Appeals decision, Allard v. Allard, brought a great deal of unpredictability regarding the enforcement of marital contracts. The court said that these contracts basically take away the courts right to make equitable decisions regardless of fraud, duress or mistake, he said, adding the court essentially ruled that it gets to decide the equities. Enforcement of these agreements has been based on longstanding case law so what my bill does is actually codify it and says that if you are a court, then you have to enforce this agreement unless it was unconscionable at the time, there was fraud, there was duress. And we codify that in statute. The bill The legislation would allow for a prenuptial agreement to be ruled unenforceable if a party against whom enforcement is sought proves that either the parties consent to the contract was the result of fraud, duress, or mistake or before signing the contract, the party did not receive adequate financial disclosure, according to the analysis. Under the bill, the party would receive adequate financial disclosure if he or she receives a reasonably accurate description and good-faith estimate of value of the property, liabilities and income of the other party; expressly waives the right to financial disclosure beyond the disclosure provided; or has adequate knowledge or a reasonable basis for having adequate knowledge of the estimate of value of the property, liabilities, and income of the other party. The bill would defer to courts to refuse to enforce a term of the contract or the entire contract if the term was unconscionable (or extremely unfair such that no reasonable party would agree) at the time the contract was signed or enforcement of the term would be unconscionable for a party at the time of enforcement because of a material (meaning important; having influence or effect) change in circumstances arising after the contract was signed that was not reasonably foreseeable at the time the contract was signed. The courts decision on whether a term or the entire contract is unconscionable would be decided as a matter of law. This means that the court would not investigate the facts of the case, but rather decide the issue through principles described in the applicable statutes, the analysis stated. As it reads, the bill would only apply this section retroactively to prenuptial agreements made before the bills amendments to this section were enacted. Testimony In testimony before the committee on Sept. 26, Robert B. Labe of Williams, Williams, Rattner and Plunkett PC spoke in support of the bill. He said laws codified by the bill strike a balance between allowing parties to form contracts and a judges ability to interfere with a contract. Labe said enforceability of such agreements is good public policy and encourages marriage. If the legislation is not approved, Labe said the ability to enforce a premarital agreement will be drastically reduced and the likelihood of litigation will increase exponentially. We strongly believe to not pass this legislation will create great uncertainty about the ability to enforce a fair and reasonable premarital agreement, he said. That will not serve the public good. The State Bar of Michigan Family Law Section opposes the bill as explained in its public policy position which states that the legislation could undermine the holding in Allard. It added that prenuptial agreements can be useful, especially in second marriages where there are children from prior marriages. But prenuptial agreements are different from other contracts because they are rarely arms length transactions. In addition, an unscrupulous party can use the protection of MCL 600.2901 to evade equitable remedies for misconduct. Any codification of the law of prenuptial agreements must protect both parties to the agreement, according to the sections statement. The Family Law Section opposes this bill as written. At a minimum the bill should permit a court to refuse to enforce a prenuptial agreement initiated shortly before a planned wedding date. The disclosure provisions should include all assets placed in a Domestic Asset Protection Trust, and the bill should state that the agreements cannot limit the courts authority under MCL 552.23 or MCL 552.401. The committee approved the bill Oct. 17 and sent it to the full House of Representatives. It was amended to include disclosing assets in a Domestic Asset Protection Trust. Amendments regarding other suggestions from the Family Law Section were defeated. If you would like to comment on this story, email Lee Dryden at ldryden@mi.lawyersweekly.com.

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Title Annotation:House Bill 4751; Michigan
Author:Dryden, Lee
Publication:Michigan Lawyers Weekly
Date:Oct 20, 2017
Words:878
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