Protecting Family Wealth Through Prenuptial and Postnuptial Agreements
A child’s wedding is an exciting and deeply meaningful milestone for any parent. It also marks a period of significant change, not only in your child’s life but in your own as well. As with any major life transition, it is important to consider the financial implications — for both the present and the future.
For families of significant means, one key financial consideration should be whether a prenuptial agreement is appropriate. In most cases, the answer is yes. Regardless of your child’s current income or the couple’s individual asset levels, a prenuptial agreement can provide crucial protections.
In Michigan, a general legal principle is that property inherited or gifted to one spouse, and kept separate, retains its character as separate property in the event of divorce. However, there are legal avenues through which a spouse can seek access to that property, potentially putting inherited or gifted assets at risk. Examples include:
- Income generated by separate assets may be considered in determining spousal support or alimony.
- Investing inherited or gifted assets into jointly owned businesses or assets may cause those assets to lose their separate property status.
- Using or relying on separate property during the marriage — such as for major purchases or household expenses — can weaken the legal argument for its separate nature.
These and other scenarios can expose your child’s inheritance or family gifts at risk in a divorce. A thoughtfully drafted prenuptial agreement can help safeguard these assets while still allowing for their reasonable use and enjoyment during the marriage and minimize the risk they would be invaded by a potential ex-spouse. Although no agreement can offer absolute protection, a well-constructed prenuptial agreement can provide protection that are otherwise unavailable.
Importantly, these protections should be considered regardless of your child’s current net worth or earning potential. If the idea of all property of a marriage being separate is uncomfortable for your child, a prenuptial agreement can be tailored to only safeguard gifted or inherited assets, which is often the most equitable and practical approach.
If your child is already married and there are concerns about future inheritances or gifts being put at risk, a postnuptial agreement may be a viable option to protect those assets. While relatively new in Michigan, postnuptial agreements have been enforced in certain circumstances. To pursue this route, it is essential to work with legal counsel experienced in this area.
Ultimately, your child’s inheritance and family gifts should be preserved for their benefit. A prenuptial or postnuptial agreement and comprehensive estate planning is an effective way to ensure that protection.
Pre- and postnuptial agreements are not just legal formalities — they are strategic tools that can safeguard generational wealth and preserve family harmony. For families with complex assets or legacy considerations, these agreements provide clarity and protection in uncertain times.
