Care a Requirement in Drafting Prenuptial Agreements
The Issue
What happens if there is ambiguous language or unclear language in a prenuptial agreement, will it be enforced by the court?
The Answer
The Michigan Court of Appeals issued an opinion on a case on May 17, 2011 regarding prenuptial agreements and unclear or ambiguous language. In the case the court was asked to decide how the language in the prenuptial agreement applied to a condominium that the couple purchased after they were marred.
The couple signed the prenuptial two days before their marriage. Each party was previously married and had children from their previous marriage. They also had assets from their previous lives and marriages. The prenuptial stated that the parties could purchase property in their own names and hold title to any property they purchased with their own assets as their own separate property free from the other party. However, it also contained a paragraph that indicated that they could also purchase jointly held property. The jointly held property would basically pass to the other spouse by operation of the law and be exempted from the prenuptial agreement.
The problem here was that there was an additional sentence which specifically stated that they intended to purchase a condominium (the condominium at issue in the case) and that the condominium would be held jointly by the parties and included language that the condominium would pass to the other party by operation of the law. However, it went on to say that the surviving spouse would retain a life estate in the property after the death of the first spouse to pass away. The life estate reserved to the surviving spouse would allow the surviving spouse to continue living in the condominium until he or she passed away and then it would be divided between the couple's two estates. The prenuptial agreement did not state this intent specifically, rather it used legal terms which conflicted with one another.
The problem with this language is that it would not be necessary to reserve a life estate to the surviving spouse if the property was, as written, to pass to the other party upon the death of the first spouse, because the entire property would be owned by the surviving spouse. This created an ambiguity in the prenuptial agreement.
The wife passed away first and the husband transferred the condominium to a trust for the benefit of his heirs. When he passed away the children of the wife requested a fifty percent interest in the condominium from the husband's heirs, which they refused to grant. The two estates then sued each other in probate court.
The Michigan Court of Appeals found that this language was ambiguous so that the trial court should have considered evidence of the parties' intent in drafting this agreement. This means that the court found that this ambiguity would allow the two competing estates to provide evidence from experts and other witnesses as to what they intended to do with this condominium, even though they had signed this prenuptial agreement which they must have expected to deal with this issue.
It appears from the reading of the prenuptial agreement that what the parties intended with the purchase of this particular condominium was that they would each keep half of it as their own separate property which they could then distribute to their own heirs or it would be sold and one-half of the proceeds distributed to each parties' own heirs.
The person who drafted this agreement should have used more specific language regarding how the parties intended to handle this property. In addition, the drafter used the wrong words when referring to the manner in which the property was to be held. If not, then there was really no need for this additional language regarding the life estate. It should be noted that the lawyer who drafted this prenuptial agreement was the brother of the husband in this case.
The answer is that the court will enforce an ambiguous prenuptial agreement but it will take testimony and evidence regarding the intent of the parties when they entered the agreement, which to a certain extent defeats the reason for the prenuptial agreement in the first place. The court may decide that the intent was different at the hearing or trial then what the parties had really intended, especially in a case such as this where it is two competing estates and the original couple is not there to testify. Care must be taken to specifically explain the intent of the parties and use proper language that does not conflict. Finally, one should probably not use a relative to draft their legal documents.
What happens if there is ambiguous language or unclear language in a prenuptial agreement, will it be enforced by the court?
The Answer
The Michigan Court of Appeals issued an opinion on a case on May 17, 2011 regarding prenuptial agreements and unclear or ambiguous language. In the case the court was asked to decide how the language in the prenuptial agreement applied to a condominium that the couple purchased after they were marred.
The couple signed the prenuptial two days before their marriage. Each party was previously married and had children from their previous marriage. They also had assets from their previous lives and marriages. The prenuptial stated that the parties could purchase property in their own names and hold title to any property they purchased with their own assets as their own separate property free from the other party. However, it also contained a paragraph that indicated that they could also purchase jointly held property. The jointly held property would basically pass to the other spouse by operation of the law and be exempted from the prenuptial agreement.
The problem here was that there was an additional sentence which specifically stated that they intended to purchase a condominium (the condominium at issue in the case) and that the condominium would be held jointly by the parties and included language that the condominium would pass to the other party by operation of the law. However, it went on to say that the surviving spouse would retain a life estate in the property after the death of the first spouse to pass away. The life estate reserved to the surviving spouse would allow the surviving spouse to continue living in the condominium until he or she passed away and then it would be divided between the couple's two estates. The prenuptial agreement did not state this intent specifically, rather it used legal terms which conflicted with one another.
The problem with this language is that it would not be necessary to reserve a life estate to the surviving spouse if the property was, as written, to pass to the other party upon the death of the first spouse, because the entire property would be owned by the surviving spouse. This created an ambiguity in the prenuptial agreement.
The wife passed away first and the husband transferred the condominium to a trust for the benefit of his heirs. When he passed away the children of the wife requested a fifty percent interest in the condominium from the husband's heirs, which they refused to grant. The two estates then sued each other in probate court.
The Michigan Court of Appeals found that this language was ambiguous so that the trial court should have considered evidence of the parties' intent in drafting this agreement. This means that the court found that this ambiguity would allow the two competing estates to provide evidence from experts and other witnesses as to what they intended to do with this condominium, even though they had signed this prenuptial agreement which they must have expected to deal with this issue.
It appears from the reading of the prenuptial agreement that what the parties intended with the purchase of this particular condominium was that they would each keep half of it as their own separate property which they could then distribute to their own heirs or it would be sold and one-half of the proceeds distributed to each parties' own heirs.
The person who drafted this agreement should have used more specific language regarding how the parties intended to handle this property. In addition, the drafter used the wrong words when referring to the manner in which the property was to be held. If not, then there was really no need for this additional language regarding the life estate. It should be noted that the lawyer who drafted this prenuptial agreement was the brother of the husband in this case.
The answer is that the court will enforce an ambiguous prenuptial agreement but it will take testimony and evidence regarding the intent of the parties when they entered the agreement, which to a certain extent defeats the reason for the prenuptial agreement in the first place. The court may decide that the intent was different at the hearing or trial then what the parties had really intended, especially in a case such as this where it is two competing estates and the original couple is not there to testify. Care must be taken to specifically explain the intent of the parties and use proper language that does not conflict. Finally, one should probably not use a relative to draft their legal documents.
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