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A Better Partnership
December 20, 2014

COA upholds validity of antenuptial agreements, even under allegations of abuse

In Allard v. Allard, No. 308194, the Michigan Court of Appeals upheld the validity of an antenuptial agreement against claims of duress, unconscionability, and change of circumstances.  The court found that the plain terms of the antenuptial contract controlled, but remanded for a determination of whether income derived from Plaintiff’s LLCs constituted marital income. 
 
Plaintiff and Defendant were married in 1993.  The parties signed an antenuptial agreement two days before the wedding.  After more than 16 years of marriage, Plaintiff husband filed for divorce.  Plaintiff filed a second motion for partial summary disposition regarding the antenuptial agreement, arguing that the agreement governed and was dispositive of all issues except for custody, parenting time, and child support.  Under the agreement, Plaintiff Husband would be awarded assets, including six LLC entities, valued in excess of $900,000, while assets awarded to Plaintiff wife totaled approximately $95,000.
 
Defendant argued that the agreement was void as it was signed under duress on the day of the wedding rehearsal, that a change of circumstances supported the setting aside of the agreement because she was abused by Plaintiff during the marriage, and that the agreement was unconscionable.  The trial court granted Plaintiff’s motion for summary disposition, finding that defendant’s claim of duress failed because in Michigan there must be a showing of illegality in order for a duress action to succeed.  Here, the court found that no facts were alleged that would show any illegal act on the part of the Plaintiff. The trial court found that the unconscionability argument also failed, as the length of a marriage and the growth of assets are not unforeseeable and that the abuse allegations did not rise to the level of rendering the contract unenforceable. 
 
The Court of Appeals upheld the trial court’s ruling in regards to the duress, unconscionability, and change of circumstances arguments.  In addition, the Court of Appeals upheld the determination that physical abuse, or a party’s “fault” in a divorce, does not rise to the level of rendering the contract unenforceable, particularly where the agreement provides that “fault” would not be a factor in these determinations.  However, the Court ruled that even though the antenuptial agreement was valid, under the agreement’s plain language, the multiple LLCs created by Plaintiff during the course of the marriage were not acquired in Plaintiff’s individual capacity or name and that any income was to be treated as marital income and therefore not subject to division as separate property.  The Court of Appeals remanded for the trial court to determine the extent to which income earned by the Plaintiff and derived from the LLCs should be treated as marital income and whether that marital income was utilized to purchase assets titled to the LLCs.

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