Planning to Get Married? Consider How a Prenuptial Agreement Can Help

January 4, 2020

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Gerri Duswalt

Whether you are getting married at the start of your career, or contemplating a second or third marriage, an agreement between prospective spouses can save much time, money and litigation, if prepared correctly. Within the agreement, parties can address inheritance, support, division of assets and liabilities.  Common provisions of a prenuptial agreement include such issues as spousal support, division of assets and rights of inheritance. Where one spouse has a large asset that he or she owns before the marriage begins, it is not unusual to obtain a prenuptial agreement to set out how the asset will be divided in the event of divorce, if at all. In cases where the spouse is part or full owner of a family business, this is a very common request. The amount or existence of spousal support may also be predetermined or waived. Parties may also wish to protect real estate from future division in case of divorce.

The purpose of a pre-nuptial agreement is to make sure that both spouses had a fair understanding of what assets existed at the time the prenuptial was entered into, or at least knew that they had the right to request full disclosures at the time. If, at the time of divorce, it is revealed that one or both parties did not have a complete understanding of the assets that existed at the time, or did not waive this right voluntarily, this could be grounds to set aside the agreement. The person who may later seek to set aside the agreement is the one who bears the burden of proving the elements of the statute were not met

Prenuptial Agreements In New Jersey

New Jersey law provides that all premarital agreements must be in writing, signed by both spouses, and a statement of assets must be attached to the agreement. The purpose of the statement of assets is to guarantee that there will be fair and reasonable disclosure of the respective spouses’ financial information, because misleading a prospective spouse about assets or liabilities at the time of entering into the prenup can be a basis for invalidation of the agreement. After the marriage, the premarital agreement may be amended or revoked only by a written agreement signed by both spouses.

The spouse that contests the premarital agreement has the burden of proof and must show by clear and convincing evidence that either s/he executed the agreement involuntarily, the agreement was unconscionable (i.e., grossly unreasonable) at the time it was signed, that the other spouse did not make a full and accurate disclosure of assets and liabilities on the statement of assets, s/he did not have adequate knowledge of the property or financial obligation of the other spouse, or s/he did not consult with independent counsel or did not voluntarily and expressly waive the opportunity for legal counsel before signing the agreement. It is recommended that both parties retain independent counsel. If one party chooses not to retain an attorney, they can later claim that they did not fully understand the ramifications of what they agreed to.

Above all, the agreement must be fair to both parties. The court will find the prenuptial agreement unconscionable if it is shown that the challenging spouse would be without reasonable support, would have to depend on public assistance or would be provided a standard of living far below the one s/he enjoyed before the marriage.

According to the Uniform Premarital and Pre-Civil Union Agreement Act (N.J.S.A. 37:2-31 et seq.), a prenuptial agreement can address the following issues:

  • Alimony (aka spousal support)
  • Choice of law governing the agreement
  • Creation of a will and/or trust to carry out the premarital agreement in the event of death
  • Division and control of property
  • Divisions of assets and investment accounts
  • Ownership and disposition of the death benefit from a life insurance policy
  • Ownership of premarital debts (mortgages, student loans, credit cards, etc.)
  • Rights and responsibilities of both parties in other personal matters, if they do not violate public policy

Under New Jersey law, a prenuptial agreement cannot include provisions which adversely affect the rights of a child, such as support or custody.

How to Challenge a Pre-nup

1) The paperwork was not properly signed, witnessed, etc.

Prenups need to be written, signed by both parties, each in the presence of an appropriate witness, notarized, and executed prior to the wedding.

2) The agreement is deceptive

A valid prenuptial agreement requires complete financial disclosures. If there is evidence that one party was hiding premarital assets, or lied about the value of their premarital assets, a judge may rule to invalidate the agreement.

3) The agreement was signed under duress

If a party was forced to sign the agreement under threat of physical, financial, emotional, or any other type of pressure, the agreement is likely not valid. The burden of proof is on the alleged victim to provide evidence of the coercion. Signing on the eve of the wedding can be used to show duress, threats to call off the wedding causing embarrassment can also be used to show duress.

4) One or both parties lacked the mental capacity to consent

A prenuptial agreement may be rendered void if it can be proven one or both parties signed the agreement while under the influence of alcohol or drugs, or otherwise did not have the mental capacity to render consent.

5) The agreement was signed too close to the wedding date

If one or both parties did not have enough time to thoroughly review the contents of the agreement before signing, the judge may rule to invalidate the agreement.

6) The agreement was signed without legal counsel

Both parties should be represented by their own separate legal counsel. If both parties attempt to “share” the same lawyer, it presents a clear conflict of interest and may provide future grounds to void the agreement entirely. If one party pays the fees for the other lawyer, or otherwise has actual or perceived financial control of the other parties lawyer, that can lead to a claim of undue influence or duress. If one party refuses to hire a lawyer, they must sign a statement explicitly stating they were urged to seek legal counsel but chose not to do so.

7) One-sided, ridiculous, or otherwise unconscionable provisions in the prenup

If a judge believes the terms of the prenup are unconscionable, the agreement may be rendered invalid at his/her discretion. This can include (but is not limited to) terms causing unnecessary financial hardship, and conditions involving sexual acts, appearance, weight gain/loss, or other private behaviors.

8) Amend or eliminate the prenup with the consent of both parties

Prenuptial agreements can be amended after the marriage to reflect changes in life circumstances. To do so, both parties must sign a second agreement that is subjected to the same legal and ethical standards of an original prenuptial agreement.

If done correctly, a prenuptial agreement can be an effective tool for both parties to dictate what happens in the event of divorce or death.