Why You Probably Don’t Need a Prenuptial Agreement

By John F. Schaefer
Founder and Managing Partner, The Law Firm of John F. Schaefer
Birmingham, Michigan

With wedding season in full swing many engaged couples will consider a prenuptial agreement. These agreements have become increasingly popular over the past 15 to 20 years to the point that has become something that everyone thinks they should do, like making out a will.

As I have drafted –and busted up – hundreds of these agreements, I can say from experience it is not a “must-do” for most people, and that in many cases it may do more harm than good.

Prenuptial agreements have their place. They can be particularly valuable if either the future bride or groom is poised to inherit a tremendous amount of money. Very often, when there is a large inheritance, the heir’s parent will insist on such an agreement to protect the family assets.

What most people don’t realize is that a prenuptial agreement is not an ironclad legal document. In fact, I have seen few that cannot be picked apart. Up until recently, they were looked at as the answer to marital asset disputes because in many states such as Florida, California — and increasingly Michigan — they were regularly found valid and enforced. It certainly made for a fast legal process as judges could usher through difficult cases relying solely on the prenuptial agreement for guidance.

That has changed after a legal decision in Michigan Court of Appeals on the Allard v Allard case. The takeaway from this case is the court’s decision that states two people cannot contract to take away the court’s equitable powers. In Michigan, divorce settlements are supposed to be “equitable.” So, if a divorcing couple goes to court with a prenuptial agreement that the court decides is not equitable, then it doesn’t have to enforce the agreement. Court alone has the power to decide what is equitable.

In my opinion, this is a terrific decision. How can a document take care of everything seen and unforeseen? No one has a crystal ball to look into the future. There is no way of knowing a number of factors such as health or conduct issues.

Further, I believe, based on my 40 years experience in matrimonial law, that prenuptial agreements promote and facilitate divorce. I’ll give two examples based to illustrate my point.

On the one hand, let’s say the groom is worth $10 million and the prenuptial agreement gives the bride $100,000 if they split. It doesn’t sound like much, but what if the bride walks down the aisle and then walks right out on him? She just made $100,000 for walking down the aisle.

On the other hand, let’s say the same prenuptial agreement is in place, but now the couple is married 15 years and has three children, which the wife has foregone her career to raise. If the husband decides to leave, she gets $100,000 and a rough road ahead having been out of the job market for 15 years. Meanwhile the husband’s original $10 million in assets he brought into the married has doubled over the years. How is that agreement made when first married, fair to the wife now?

There are ways to protect family assets that are more civilized and equitable than some of these Draconian agreements that leave the non-moneyed partner with nothing if the marriage fails.

When a bride or groom has assets they would like to ensure go family members — such as their children from another marriage – a lot can be done with trusts that will have the same affect as a prenuptial agreement and they are a lot less offensive.

I have found that drafting a prenuptial agreement is tougher sometimes than negotiating the conclusion to a divorce case. I have witnessed too many times men spring this on their bride-to-be with bad results. It’s not the best start to a marriage partnership.

Most of these agreements are drafted in such a way so that the non-moneyed partner gets very little. This thinking needs revision. If it is decided that a prenuptial agreement is needed for whatever reason, it is important for the couple and their legal counsel to assess the situation realistically and be fair.

If the unfortunate day arrives that a couple decides to divorce, it is best to be able to stand in court and say both partners are take care of financially.