Prenuptial Agreements in New Jersey

Prenuptial Agreement Overview

Prenuptial agreements have greatly increased in popularity in recent years as a result of changing attitudes toward divorce and a heightened awareness of its financial consequences to those involved. Such agreements can be extremely useful not only to protect one’s own assets in the event of divorce, but to ensure stability in the post-divorce relationship and minimize contentious litigation. There are generally two questions that come to mind when discussing prenuptial agreements:

  • What can a prenuptial agreement do?
  • Is such an agreement enforceable?

We will provide brief answers to both questions in this Divorce Guide.

Purposes and Effects of Prenuptial Agreements

Effective in November 1988, the New Jersey Legislature adopted the Uniform Premarital Agreement Act (UPAA). The Act addresses the permissible subject matter of prenuptial agreements and states that two people contemplating marriage may enter into an agreement regarding:

  1. The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;
  2. The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign create a security interest in, mortgage encumber, dispose of, or otherwise manage and control property;
  3. The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;
  4. The modification or elimination of spousal support;
  5. The making of a will, trust, or other arrangement to carry out the provisions of the agreement;
  6. The ownership rights in an disposition of the death benefit from a life insurance policy;
  7. The choice of law governing the construction of the agreement; and
  8. Any other matter, including their personal rights and obligations, not in violation of public policy.

Enforceability of Prenuptial Agreements

Prenuptial agreements in New Jersey are enforceable as long as (1) there has been full disclosure and (2) the agreement is not “unconscionable,” meaning excessively unfair. The Court starts out assuming that a prenuptial agreements is enforceable. As a result, the person asking that the Court refuse to honor the agreement has the burden to establish, by clear and convincing evidence, that:

  1. The party executed the agreement involuntarily; or
  2. The agreement was unconscionable when it was executed.

It is important to examine these criteria (and their subparts) closely.

The first is fairly obvious, at least at first glance. If someone signs an agreement involuntarily, the Court will not enforce that agreement. Take, for example, someone who forces you to sign a contract with a gun to your head. Enforcing that contract afterward would be absurd. Nevertheless, there are contexts in which “involuntary” is less clear. If you give your spouse-to-be an ultimatum on the day of the wedding: “Sign the agreement or I walk,” would that be considered involuntary? It is critical that a prenuptial agreement is signed as far in advance of the wedding, and in the most neutral and detached circumstances, as possible to ensure that the agreement is ultimately enforced.

The second criteria is whether the agreement was “unconscionable” when it was signed. “Unconscionable” means excessively unfair or unreasonable. Notably, the law as to prenuptial agreements was amended in 2013. Despite the recent amendments, at least a few things are clear. The Court will refuse to enforce an agreement if either spouse proves that, before execution of the agreement, he or she:

  1. Was not provided full and fair disclosure of the earnings, property and financial obligations of the other party;
  2. Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided;
  3. Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party; or
  4. Did not consult with independent legal counsel and did not voluntarily and expressly waive, in writing, the opportunity to consult with independent legal counsel.

You may have noticed that all four of these requirements relate to circumstances that existed on or before the time the agreement was signed. This is a result of the recent changes discussed earlier. Previously, the Court would also consider unconscionability as of the date of enforcement, generally after the parties have separated and are seeking a divorce. Being legally required to consider facts only as they existed when the agreement was signed prohibits the Court from considering things like the birth of children or, perhaps, one spouse or the other having won the Mega Millions jackpot a few years into the marriage. The amendment, consequently, dramatically increases the enforceability of prenuptial agreements, and it indicates the Legislature’s intent to promote their use in the future.

Importantly, the amendment took effect on June 27, 2013 and applies to all premarital agreements either (a) signed on or after that date or (b) signed before that date but voluntarily revised afterward according to procedures set forth by law. If your prenuptial agreement was signed before June 27, 2013 and has not been voluntarily amended, the previous laws remain in effect.

CLICK HERE FOR THE FULL TEXT OF THE PRENUPTIAL AGREEMENT REFORM BILL.

Other Important Considerations

There a number of other considerations in entering into a prenuptial agreement:

  1. The agreement must be in writing.
  2. The agreement cannot adversely affect the independent right of a child to support.
  3. The agreement becomes effective upon marriage.
  4. The agreement, once effective, can only be changed or terminated by another signed writing.
  5. If a marriage is void, the agreement remains enforceable but only to the extent necessary to prevent an unjust result.
  6. The Courts are required to consider such agreements when dividing assets between divorcing spouses.

Finally, the language of the agreement itself is perhaps the most important consideration. We strongly recommend that anyone considering entering into a prenuptial agreement schedule a consultation with the DeTommaso Law Group or other qualified matrimonial attorneys. Distinctions in language that may seem subtle now can lead to serious issues down the road.

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