Seven Reasons Why Prenuptial Agreements May Fail

Most spouses are very uncomfortable discussing their wish to have a prenuptial agreement in place.  When spouses manage the difficult conversation, then spend the time and money on reaching an agreement on the terms of prenuptial agreement, they logically want to make sure that they can rely on the terms of the prenuptial agreement.  Prenuptial agreements are legal documents designed to protect assets and outline financial responsibilities in the event of divorce. While these agreements serve as proactive measures, several factors can contribute to their failure. Understanding these pitfalls is crucial before drafting such agreements.

Are all prenuptial agreements water tight?  Does the judge always accept the agreement when the spouses divorce? Unfortunately: no and no!  Prenuptial agreements should be negotiated with the assistance of an attorney and likewise, an experienced attorney should draft the agreement and necessary disclosures.  But let’s dig deeper: why do judges sometimes ignore the parties’ prenuptial agreement?  After more than three decades of reviewing Michigan law and local judge’s rulings, we have compiled the top seven reasons why we see judges set aside  or ignore the prenuptial agreement.

1. Inadequate Disclosure.

Prenuptial agreements require transparent financial disclosure from both parties. Failure to fully disclose assets, liabilities, or income can render the agreement invalid. Incomplete or misleading information jeopardizes the contract’s integrity and might lead to its dismissal during divorce proceedings.

2. Coercion or Duress.

If one party feels coerced or pressured into signing the agreement, it could be contested in court. Any sign of duress, such as signing under undue influence or insufficient time to review the terms, can invalidate the document.

3. Unfair or Unconscionable Terms.

Prenuptial agreements should be fair and conscionable. Overly lopsided terms favoring one party disproportionately or clauses that seem highly unjust might be challenged, causing the agreement’s failure.

4. Lack of Legal Counsel.

Proceeding without individual legal representation will jeopardize the agreement’s validity. Each party should have independent legal counsel to understand their rights and ensure the agreement aligns with their interests. This requirement again incorporates the need for the agreement to be signed without duress or pressure. When a party has an attorney explain the terms of the agreement and advise on its fairness, the likelihood of the agreement to be fair and be signed without duress greatly increases the agreement’s validity.

5. Invalid Provisions.

Including provisions outside the legal scope or against public policy can render the entire agreement void. Provisions about child custody, for example, often cannot be predetermined in a prenuptial agreement.

6. Changes in Circumstances.

Significant changes in circumstances, such as children entering the picture, substantial increase or decrease in wealth, or career shifts, may invalidate certain clauses within the agreement. Adapting the agreement to changing life circumstances is crucial for its enforceability.

7. Improper Execution.

Improper execution, like not signing the document correctly or failing to have it notarized or witnessed according to state laws, can lead to challenges in court, potentially causing the prenup to fail.

Conclusion.

During divorce proceedings, emotions often run high, leading one party to contest the agreement. Emotions, rather than rational assessment, may drive one’s decision to challenge the prenuptial agreement’s enforceability.

Understanding these pitfalls is essential before drafting a prenuptial agreement. Seeking legal counsel, ensuring transparency, and regularly reviewing and updating the agreement as circumstances change are vital steps to prevent potential failure. A well-crafted and carefully executed prenuptial agreement, tailored to the specific needs and circumstances of both parties, can mitigate these risks and serve as a valuable asset in protecting individuals’ interests in the unfortunate event of divorce.  If you are considering the need for a prenuptial agreement or are facing a divorce when you previously signed a prenuptial agreement, give our team a call at 616-285-0808 to discuss your options.