Marital Agreements

Marital agreements are legally binding contracts between two individuals that outline how their assets and debts will be managed and divided in the event of divorce, separation, or death. These agreements allow couples to make these important decisions together, rather than relying solely on state laws, which may not align with their specific wishes or circumstances.

There are two main types of marital agreements:

• Prenuptial Agreements (Premarital Agreements): These agreements are entered into before a couple gets married. They typically address the separate and marital property of each individual, potential spousal support, and other financial considerations.

• Postnuptial Agreements (Postmarital Agreements): These agreements are created after a couple is already married. They can address similar issues as prenuptial agreements and are often used when couples experience significant changes in their financial situation or wish to clarify financial matters during their marriage.

For an agreement to be valid and enforceable, both parties must enter into it voluntarily, with full disclosure of their assets and debts, and ideally with the independent legal counsel. The agreement must also be fair and reasonable and in writing.

While discussing finances and potential separation might seem unromantic, marital agreements offer numerous benefits for couples at all stages of their relationship:

• Clarity and Transparency: They encourage open and honest conversations about finances, expectations, and individual assets and debts.
• Protection of Assets: They can protect pre-marital assets, inheritances, and business interests.
• Financial Security: They can provide financial security for both spouses in the event of unforeseen circumstances.
• Reduced Conflict: By pre-determining the division of assets, they can minimize potential disputes and legal costs in the event of separation or divorce.
• Estate Planning: They can work in conjunction with estate planning documents to ensure your wishes regarding your assets are respected.
• Second Marriages: They can be particularly important in second marriages, especially when there are children from previous relationships.
• Business Ownership: They can protect a business owner's interests and ensure the continuity of the business.
• Support for Stay-at-Home Spouses: They can provide financial support and recognition for a spouse who takes on domestic responsibilities.

Marital agreements can also be disadvantageous for several reasons:

• Marital agreements may suggest uncertainty about commitment to the marriage.
• Marital agreements should be prepared by an experienced attorney, and therefore, cost may be a factor.
• If not properly drafted, marital agreements are subject to legal challenge in court.
• Even with an agreement, Michigan courts are permitted to invade the separate property of either party in certain limited circumstances.
• The couple must avoid commingling separate and marital property.

Marital agreements can address a wide range of financial and property-related issues, including:

• Separate Property:  Defining assets and debts owned by each individual before the marriage or acquired separately during the marriage (e.g., gifts, inheritances).
• Marital Property:  Determining how assets and debts acquired during the marriage will be owned and divided.
• Spousal Support (Alimony):  Outlining whether spousal support will be paid, the amount, and the duration. Note that some states may have limitations on waiving spousal support.
• Business Interests:  Specifying how a business owned by one or both spouses will be treated.
• Retirement Accounts:  Addressing the division of retirement funds.
• Real Estate:  Determining the ownership and division of any real property.
• Debt Allocation:  Specifying how existing and future debts will be handled.
• Life Insurance:  Addressing beneficiary designations and ownership of policies.
• Other Financial Matters:  Any other financial arrangements the couple wishes to agree upon.

• Child Support:  Marital agreements cannot determine child custody or child support arrangements, as these are decided based on the best interests of the child at the time of separation or divorce.
• Michigan Law:  A marital agreement cannot compel a court to divide property in a manner that violates Michigan law or public policy. 

Upon divorce, a court must classify property owned by a married couple as "separate" or "marital" as follows:

• Marital Property:  Real and personal property that shall have come to either party by reason of the marriage. 
• Separate Property:  Real and personal property that shall have come to either party outside of the marriage. This generally refers to property acquired before the marriage, or by gift or inheritance.  

As a general rule, marital property is divided between the parties, and the parties each take their separate property without invasion from the other party.

The purpose of a marital agreement is to clarify the types of property owned by a couple and to modify the default rules where applicable. In addition, a marital agreement is used to address payment of debts, commingling of separate property with marital property, and how appreciation of separate property during the marriage will be handled. 

Deciding whether to enter into a marital agreement is a personal choice that depends on your individual circumstances, financial situation, and relationship dynamics. We encourage open communication with your partner and seeking legal advice to understand your rights and options.

You should consider a marital agreement if any of these points apply to you:

• You or your partner have significant assets or debts prior to marriage.
• You own a business.
• You have children from a previous relationship.
• You anticipate receiving a significant inheritance.
• There is a significant disparity in your incomes or assets.
• You simply desire clarity and open communication about financial matters.

The cost of drafting a marital agreement depends on the complexity of the agreement and whether you need estate planning documents to accompany it.  In other words, there is some efficiency gained (and cost savings) from completing your marital agreement and estate planning documents at the same time.  

You may estimate the cost for a marital agreement as follows:

• Marital Agreement Without a Core Estate Plan:  $2,450.00

• Marital Agreement With a Core Estate Plan:  $1,650.00