What to Do When Your Prenup Doesn’t Cover Your New Assets
There was a time when prenuptial agreements—also called premarital or antenuptial agreements, but popularly known as a “prenup”—held a certain stigma. Many people assumed that people who were entering marriage and drafting a prenup already had their eyes on the exit.
But now that stigma is largely gone because prenuptial agreements have proven to be a valuable exercise for marrying couples. Having an attorney draft the agreement requires a full disclosure of the assets and debts of both parties, so both know what they’re getting into and can protect assets important to them.
The prenup outlines a division of the couple’s assets if one of the partners dies, or the couple divorces. Michigan law has many requirements for validating prenuptial agreements, but if the agreement is prepared properly and is objectively fair to both parties, it should be enforceable.
BUT—what if things change? A prenuptial agreement only applies to assets accumulated before the marriage. Assets accrued after the wedding are regarded as marital property. For example, stocks, real estate, a business or valuable personal property acquired after the marriage are assets subject to property division laws administered by a divorce court. In a divorce scenario, the couple could end up in a pitched battle for who gets what from the fruits of their union.
So, the original prenup only goes so far in simplifying things. What’s the answer?
Time to Revise
To save potential trouble in the long run, couples who have accumulated substantial assets since their marriage may opt to redraft their prenuptial agreement. This enables both parties to take stock of things, and is an opportunity to:
- Consider the couple’s total assets and potential disbursal in a logical, dispassionate atmosphere.
- Frame the agreement to be consistent with the desires expressed in both partners’ final wills (such as the intention to transfer assets to children from a prior marriage).
- Uncover and correct any inequities in the original agreement. Remember, Michigan law says an enforceable prenuptial agreement must be fair.
Of course, legal matters like these can be complex. Ownership of a business, for example, can involve an intricate web of relationships. And a lot can happen in a marriage over the years; values and priorities, as well as assets, can change. That’s why it’s important not to try to handle these issues without capable legal counsel, preferably an experienced family law attorney.
A Deliberate Process
When redrafting a prenuptial agreement, you and your spouse may submit to your attorney(s) a document outlining your thoughts, based on the original agreement, or the attorney can write the new agreement from scratch. Sometimes the latter option yields the best result.
You can find templates online and elsewhere for creating a prenuptial agreement, but we recommend against them. These templates won’t likely be tailored to your situation, or even conform to the most current rulings and statutes in Michigan law. It’s critical that the prenup is drafted properly; otherwise, a court might rule it unenforceable.
Obtaining a properly drafted prenuptial agreement from an attorney is not without expense. In fact, you might regard it as costly. But a proper agreement could save you much more money in the future.
Too much information?
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