Prenuptial Agreements in New Jersey
Friday, June 24, 2016
A prenuptial (or premarital) Agreement is a legal document that spells out the rights and responsibilities of each of the future spouses in case of a later separation or divorce. Just because you have such an Agreement doesn’t mean your marriage is doomed. It only means you’re thinking and planning ahead.
A prenuptial Agreement is like an insurance policy. You buy insurance to protect yourself against possible losses due to an unplanned event. You get that policy even though your house may never burn down and your car may never be carried away in a flood. Getting the insurance doesn’t cause the adverse event. But in case those things happen, you’re protected. A prenuptial Agreement may also protect you against costs in money, time, energy and emotion if an unplanned divorce happens.
Divorce litigation can be expensive, time consuming, and emotionally costly. You not only deal with the reality of the breakup of the relationship, but all the details that come with it. Who is responsible for what debts? Who is entitled to what assets, including the house? What if the parties have been married before and each of them is working, settled, and not in need of future support? Those issues could be decided ahead of time in a prenuptial Agreement. If a divorce occurs, resolution between the parties could be far simpler, faster, less stressful and less expensive. If a divorce occurs, a party who seeks to vary the settlement terms from the premarital terms is going to have an uphill fight.
Another benefit of creating a prenuptial Agreement is that it forces the two of you to think about and discuss important issues in your life before you marry, like finances and career plans. Without a negotiated Agreement, that serious discussion may go wanting.
Prenuptial Agreements are legal contracts that should include:
- Both parties’ rights and obligations to premarital, joint, and separate property.
- The right to buy, sell, use, transfer, exchange, abandon, lease, assign, dispose of or otherwise manage and control property.
- The division of property upon separation, divorce or death.
- Spousal support payments.
- Creating a will, trust, or other vehicles to fulfill the Agreement.
- Directing that neither party shall serve as the other’s personal estate representative or have a right to an elective share upon separation/divorce.
- The ownership and disposition of death benefits from a life insurance policy.
- Any other matter, including personal rights and obligations, as long as it’s not in violation of public policy.
What a prenuptial Agreement can’t do is:
- Limit or cut off child support or any other types of financial support for a child, including paying for health or life insurance.
- Spell out which party should have custody of a child who may later be born of the marriage.
To be valid a prenuptial Agreement:
- Must be in writing,
- Signed by the parties,
- Contain a statement of assets and debts for each,
- There must be full, fair, and reasonable disclosure by each party about his or her financial condition as of the date of the Agreement’s entry,
- Each party must have the benefit of separate legal assistance from the lawyer of his and her choosing,
- The parties understand and accept the terms and conditions of the Agreement, and
- The Agreement must be fair and not unconscionable, not leaving a spouse in poverty or providing a standard of living far below what was enjoyed before and during the marriage.
During the marriage the Agreement can be changed or revoked if both spouses agree.
Anyone getting married can have a prenuptial Agreement done but it may be especially helpful for people who fit one or more of the following descriptions:
- If one or both of the parties has accumulated premarital wealth.
- If one party earns much more or has many more assets or debts than the other.
- If this is not the first marriage and there are children or obligations from a prior marriage.
- When one future spouse plans on working to support the other spouse while he or she furthers their education or puts in a lot of hours to develop their career.
- If one person has heirlooms, property or real estate that’s been passed from one generation to the next.
- When one party has an ownership interest in a business that he or she wants to survive the marriage without a property claim by the other party.
If a divorce later occurs, a party who earlier agreed to the Agreement may not be happy with the Agreement anymore. Like any other contract, a prenuptial Agreement may be simultaneously defended by one party and attacked by the other, subject to the following caveats:
- The trial court will presume the Agreement valid and enforceable as long as it’s fair and equitable.
- An Agreement may be set aside if it’s the result of fraud or overreaching by a party trying to take advantage of the relationship.
- The principles of contract law are used by the courts to define the terms of the Agreement and determine the intent of the parties.
- If an Agreement is challenged in court the party bringing the lawsuit shouldn’t expect a judge to draft a new one.
The spouse challenging the Agreement carries the burden to prove it invalid and must show by clear and convincing evidence that:
- The Agreement was executed involuntarily.
- The Agreement was unconscionable (so unfair that it’s taking advantage of the other party) when it was signed.
- Prior to signing the Agreement the spouse was not provided a full and fair disclosure of the earnings, property and financial obligations of other spouse.
- Before signing he or she failed to consult with an attorney and didn’t voluntarily and expressly waive, in writing, the opportunity for counsel.
You will need the services of an experienced Family Law attorney if:
- You thinking about entering into a prenuptial Agreement made,
- You and your future spouse have decided to make such an Agreement,
- A prenuptial Agreement was already signed and you will be getting a divorce, or
- You or your spouse are considering a legal challenge to the Agreement.
It is possible to mediate or arbitrate or use collaborative law to create, interpret, and/or enforce a Prenuptial Agreement. Your lawyer should be able to show you the benefits and drawbacks to each such approach.
If you have questions, concerns or want experienced Family Law help with a planned prenuptial Agreement or one that’s already been executed, our Central Jersey prenuptial Agreement attorneys are here to help you. To arrange a near‐term reduced fee initial consultation, please contact us online or call 609‐683‐7400.