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Sign The Prenup and You're Done? Not So Fast...

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We've written about prenuptial agreements before and we think they are a good idea for couples who plan to tie the knot. While no one wants to think about their marriage ending in divorce, think of it as divorce insurance. After all, no one wants to die but that doesn't make life insurance any less of a good idea. 

But, like any legal contract or insurance policy, it is important to make sure a prenuptial agreement covers all the bases before putting ink to paper. A recent Michigan Court of Appeals decision highlights just how important it is. 

Allard v. Allard

In this case, the Court of Appeals decided a case involving a divorcing couple who had signed a prenuptial agreement prior to getting married. During the course of the marriage, the husband purchased real estate assets via several LLCs that he had set up.

According to the terms of the prenuptial agreement, the husband would maintain ownership of any property he acquired during the marriage in his name. However, the Court of Appeals ruled that the LLC is a separate entity and therefore the real estate purchased was not owned by the husband individually.

Why is this distinction so important? Because the Court of Appeals ruled that the trial court could consider the real estate assets when determining the division of property in the divorce.

You Can Avoid This Mess

If you are considering a prenuptial agreement, make sure that you consider how you want to treat property acquired during the marriage. If not, you could find yourself in an expensive court battle in the event your marriage ends in divorce.

When it comes to prenuptial agreements, an ounce of prevention is definitely worth a pound of cure.

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