By Roberta M. Gubbins
Legal News
"A pre-nuptial agreement is a document made in contemplation of marriage, signed by the parties prior to the marriage," said Mary Schrauben, opening the Ingham County Probate Section meetinglast month at the State Bar in Lansing.
"The consideration is the marriage," she said. The agreement contains a full disclosure of all assets and their value as well as ages of the parties, their health, children, and financial obligations.
"Future income or inheritances should also be included," Schrauben said. "The pre-nup can not be the result of fraud or duress." The standard for review by the courts is fairness.
"An attorney fee provision should be included so that if there is conflict, the party not in breach is responsible for attorney fees.
"Fault will not nullify the document, but can be used to modify the agreement," she said. A post-nuptial agreement is signed after the marriage, which can be used in divorce situations.
To avoid future litigation, she advised the group to question the parties and ask them to sign an acknowledgement that they have read and reviewed the document. She also recommended sending the document with a letter memorializing the meeting at which the document was signed.
Coming at the problem from the standpoint of estate planning, Katie Lynwood recommended that lawyers ask clients if there is a pre-nuptial agreement, which they might not consider as relevant. "A pre-nup could negate terms of the estate plan. Be sure you understand your clients' intentions," she said.
"With more blended families," Lynwood said, "it is important to review the titling of assets, for example, the home--if one spouse dies or must go in a nursing home--does the remaining spouse have a life estate in the home? And how is the property to be maintained. And when does the life estate end?" These issues should be raised.
Separate assets should be identified and listed, and children should be provided for. In Michigan it is possible to waive the allowances available under law. She recommended providing for that waiver especially if Medicaid eligibility is an issue.
"Any retirement benefits that are subject to ERISA or the Retirement Equity Act provide that those benefits must be paid in a joint survivor annuity unless the participant waives those benefits and the participant spouse consents to the waiver," she said.
"If the participant waives the benefits in the pre-nuptial agreement but they don't sign a waiver after the marriage, then ERISA will pre-empt the pre-nup and the benefits will be paid to the spouse. The reason being that at the time they enter into the pre-nup they are not husband and wife so there are no spousal rights to be waived and there is no spouse to consent to the waiver.
"Assets that are listed in the pre-nuptial agreement as separate assets are considered to be an available resource for Medicaid planning," Lynwood said.
Schrauben listed some of the quirky, probably unenforceable, provisions that she has come across such as:
* A provision that limits the spouse to no more than one football game on a Sunday
* An agreement regarding delegation of household chores
* An agreement on smoking and drinking.
* To never own a pet.
* A spouse being allowed to opt out of all vacations with in-laws.
* A payment of $100,000 every time the spouse goes outside of the marriage.
* Limiting a wife's weight to a specific amount with a financial penalty for weight gain.
Lynwood is with Mallory, Cunningham, Lapka, Scott, & Selin specializing in estate planning and family law. Her undergraduate and law degrees are from Michigan State University.
Schrauben, of Bernick, Omer, Radner, & Ouellette PC, is a guest lecturer at Cooley Law School. She graduated from Central Michigan University and Thomas M. Cooley Law School and specializes in family law and estate planning.
Published: Thu, Feb 10, 2011
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