All About Prenuptial Agreements in New Jersey: What to Know

Prenuptial Agreements Defined

A prenuptial agreement is essentially a contract to which both prospective spouses agree prior to getting married. The contract can cover a broad range of issues that are virtually limitless. There are several areas that are commonly agreed to and those areas include how premarital or inherited assets would be addressed in the event of divorce, what the distribution of assets would be, a waiver of alimony and child support, the liability for premarital debts, the amount of non-divisible marital assets, alternative dispute resolution, no-fault divorce, waiving the right to interfere with a trial or settlement of a lawsuit, agreement not to move out of state and various other considerations. It is important to note that there are areas that cannot be the subject of a prenup pursuant to the statute . They include provisions that address child custody, child support, visitation or an agreement not to have children at all.
These agreements are often the subject of negotiation between both parties and their respective counsel. It is typically done a few weeks to some months prior to the wedding. It is also advisable that the agreements include a waiver of the full disclosure of asset documentation requirements that would normally be required in a property settlement agreement. This is due to the fact that the parties are normally reluctant to disclose all of their finances to the prospective spouse prior to the marriage. The most common practice is to provide a balance sheet with significant assets and minimum Liabilities in order to establish the overall estate of each party. The purpose of a prenup is to avoid prolonged litigation, costs and the uncertainties of the litigation process.

Legal Considerations for NJ Prenuptial Agreements

Variable aspects of prenuptial agreements that are not contractual in nature can only be enforced provided they meet a higher legal standard for enforceability. While New Jersey courts have been known to void non-contractual provisions if the provision is substantively unreasonable, it has remained unclear what type of evidence is necessary to meet the higher standard. Loring v. Loring, 242 N.J. Super. 81, 86 (App. Div. 1990) ("Although the contract contained provisions which were void ab initio, the enforceable provisions remained valid unless we found them unconscionable when the circumstances changed."). New Jersey courts have consistently held that the legal requirements for the validity of a prenuptial agreement must be satisfied by the party seeking to enforce the agreement. Radley v. Hutchins, 299 N.J. Super. 289, 298 (Ch. Div. 1997).
The statute further requires that at least seven days before the marriage ceremony, each party must provide to the other with the document executed or advised against by the attorney. It is important that both parties provide the executed document to their respective attorneys at least seven days prior to the marriage ceremony. Inadequate time to review and/or seek advice from counsel can also serve as a basis for invalidating the agreement. See Roccamonte v. Roccamonte, 346 N.J. Super. 124, 130 (App. Div. 2001). If this notice is not provided, the agreements are not enforceable except when the party against whom enforcement is sought did not wish to be represented by individual counsel, was made aware of the contents of the document and voluntarily waived counsel.
The statute also requires that both parties be provided with the approximate monetary amount of support that would be awarded under any applicable formula used by the court if the marriage fails. An approximate valuation of assets is also required. A new disclosure requirement can be found in the amendment to the statute requiring a notice to be provided when each party wishes to avoid presenting to the other an incomplete asset disclosure.
A party opposing the enforceability of a prenuptial agreement may seek discovery of a spouse’s income. It is the intention of the legislature with this provision to permit the court to perform a more thorough inquiry into the issue of whether attorneys’ fees should be permitted when there is a need for further evaluation as to the enforceability of the marital agreement. The failure of one party to make an adequate financial disclosure may alone be sufficient to deny enforcement of the agreement. The burden, however, is on the party challenging the financial disclosure.

Typical Provisions in NJ Prenuptial Agreements

When talking about a typical prenuptial agreement in New Jersey that is referenced above, you will typically see the following provisions in a New Jersey prenuptial agreement:
Asset Division. This will assist in the distribution of the assets during a divorce. A common clause in a prenuptial agreement in New Jersey will state that once the marriage is dissolved, the parties will divide the marital assets pursuant to the terms of the prenuptial agreement and that they will waive all claims to equitable distribution, as provided by the New Jersey statute.
Spousal Support. A common clause will be regarding spousal support. For example, that alimony shall be waived without further discussion.
Retirement Benefits. With regard to retirement benefits, a clause that states that the parties have the right to waive any claim or interest to the other spouse’s retirement benefits.
Debt Distribution. A typical clause in a New Jersey prenuptial agreement will state that in the event the marriage is dissolved, the parties will distribute the debts in accordance with the terms and conditions of the prenuptial agreement and will each bear the responsibility for their one half of it. Typically, this means the property will be distributed and then the debt equally assigned to have each party assume 50% of the debt.
Estate Rights. There may be a clause in the prenuptial agreement that will state the parties acknowledge each other’s rights under wills, intestacy statutes, and similar procedures for the transfer of property upon death of a spouse, except as provided in the prenuptial agreement.
This is not an exhaustive list of the terms typical in a prenuptial agreement. The typical provisions for a New Jersey prenuptial agreement will typically relate to the terms stated above.

Advantages of a Prenup

Prenuptial agreements are beneficial for both parties for a number of reasons, even if no divorce occurs. If one party earns more than the other, prenups can ensure that they’re able to maintain their current lifestyle and establish long-term financial security post-divorce. A prenuptial agreement can also limit legal battles over property should a couple’s marriage end in dissolution. The elimination of costly court fees and attorney’s charges that would result from a typical equitable distribution of property helps to avoid a merger of assets. For planning purposes, a prenup that outlines the distribution of property and funds would be financially advantageous.
Some prenups safeguard data acquired during the marriage so that it remains separate property. This is particularly advantageous when one party inherits or receives assets from relatives. Other assets, such as pension funds, require prior agreement that the pre-marital portion of the fund will remain separate. Further, a prenuptial agreement can protect either party from debts acquired by the other party.
As you can see, there are several benefits of a prenuptial agreement. These include limiting liabilities, protecting assets, and establishing parameters for estate planning. Because these documents provide clarity and generally promote stability, individuals and couples considering marriage may want to pursue an agreement.

Validity of Prenuptial Agreements in NJ

Prenuptial agreements are valid and enforceable contracts in New Jersey. However, like all other contracts, they are subject to legal challenges and can be voided if they violate the law or public policy. The Uniform Premarital Agreement Act (UPAA) codifies the law related to prenuptial agreements in New Jersey. It delineates the criteria under which prenups are enforceable and lays out defenses that can be used to contest their enforcement in court.
UPAA Section 7 sets out the grounds for the legal challenge of a prenuptial agreement. These include: The first two defenses require showing that a party did not have full knowledge of the other party’s finances before signing the contract. If each party had a complete and accurate picture of the other’s significant financial rights and obligations, discrepancies after the marriage is not grounds for contesting the prenup. Likewise, if the terms of the prenup are so unreasonable as to constitute duress, it may be set aside.
Case law has addressed the question of what constitutes "unconscionable" terms enforceable under a prenuptial agreement. In Fass v. Fass (2002), the court found that adult child support provisions, where support terminates at emancipation age and child graduates from college, were unconscionable . Seven years later, in Becker v. Becker (2009), the court held that adult child support provisions, where support terminates at 19 years of age and paid at an amount greater than mandated by the applicable Child Support Guidelines, were not unconscionable. The Becker court distinguished the provisions in the two cases, taking into consideration the age at which the children were at the time of the divorce. The Becker court based its ruling on the principle that child support termination ages should be determined by the children’s needs and not be a "one-size-fits-all" determination.
In the case of Steinberg v. Steinberg (2010), the validity of a waiver of spousal support was held to depend on whether the agreement as a whole provided a fair and just distribution of property. The court will not set aside a waiver of spousal support solely on the basis that a spouse would not be able to satisfy reasonable needs, if the overall distribution of property is fair and just.
A few years earlier, in Nayyar v. Sethi (2006), the court ruled that, despite a waiver of spousal support in the prenuptial agreement, alimony could be awarded, if the circumstances evolved during the marriage in such a way as to make the agreement’s proscription of support unfair and inequitable.

How Prenuptial Agreements Are Drawn Up in NJ

Drafting a prenuptial agreement in New Jersey commences with both parties first consulting with their own attorneys. Each party should be expected to consult with a law firm separate and apart from their fiancé – never with the same attorney. In fact, while it is not required, it is strongly recommended that each person consults with the same law firm for consistency on those things that must be completed. Every attorney will usually have the same checklist in the preparation of a prenuptial agreement. While compliance with the attorney checklist may not be required and there may be some variations, as long as both parties prepare the necessary comprehensive financial disclosures, there should be uniformity in the agreements.
After both parties have satisfied their attorney consultations, they may decide to meet to work out any issues that are anticipated to be contested at the time of the divorce. This would typically include what happens if one of the parties commits adultery, runs up excessive credit card debt, the division of assets and accounts in the advent of divorce, and the considerations for spousal support/alimony. In other words, the parties will negotiate what will happen to these issues in the event that the marriage ends in divorce.
In the great majority of cases, the concerns and/or being slightly more aggressive are resolved in what is called a mediation session. This is basically an informal discussion between the two parties and two attorneys to discuss in a roundtable approach to resolve any potential issues. The review of asset distribution and a factor that must be considered is the duration of the agreement. The parties will discuss for how long the provisions of the prenuptial agreement will survive, and for how long the agreement will continue in effect.
Considerations for alimony would be addressing what happens if one of the parties either finds their earning ability significantly diminished or increased, what happens if one of the parties becomes disabled, and what happens if one of the parties passes away. In addition, consideration must now be given to health care coverage under the Affordable Care Act and how health insurance will be provided in the event of divorce.
Once the parties have reached an agreement, it is then reduced to writing and signed. The agreement is not required to be filed with the court up to the time of the divorce.
In addition, the agreement can include provisions for property, marital lifestyle, and inheritance. These factors include where the parties will live, how often they will travel, and whether there will be any children born to the marriage. Specific arrangements can be agreed to for each of these events if any parties would like to set the parameters.
Not all agreements will be negotiated through mediation. It is possible that one of the parties may elect to use a third-party who is trained as mediator. If this occurs, both parties must agree to the terms. This is beneficial particularly to those individuals that are somewhat combative and do not have an open mind in which to negotiate, let alone be comfortable in the mediation process. Mediation sessions are usually scheduled within approximately a six to eight week period prior to the wedding.

Common Myths about NJ Prenuptial Agreements

One of the most common misconceptions is that prenuptial agreements are anti-feminist. This is a flawed perspective that fails to recognize that both men and women stand to benefit from a clear understanding of their financial responsibilities and expectations. A prenup can actually be empowering for both individuals, as it allows them to define their own terms of marital success and failure.
Another misconception is that prenuptial agreements are only for the wealthy. While it is true that prenups are more common among high-net-worth couples, they can be equally valuable for those with more modest assets. A prenup can help protect both people’s financial interests, ensuring that each person is treated fairly in the event of divorce.
Some people believe that a prenuptial agreement is only a tool for the wealthy husband-to-be to protect his assets in the event that his wife commits adultery. In reality, this is only one of many reasons why couples might consider a prenup. A prenup can also provide important legal protections in the event of a divorce, such as determining how property will be divided or whether spousal support will be awarded to either party.
It is also important to be aware that a prenuptial agreement is not a substitute for strong, ongoing communication and a healthy conflict-resolution strategy. Rather than simply signing a prenup as a way to avoid conflict, couples should discuss the terms of their agreement openly and honestly. By doing so, they can ensure that both parties feel heard and respected, and that their prenup is truly reflective of their individual needs and desires.

Selecting an Attorney for Your NJ Prenup

When looking for a New Jersey attorney to draft a prenuptial or pre-marital agreement, the difference in cost and personality can be all over the map. In general, like any other service you may be considering, cost should be a relevant factor but it should not be the only factor. Suppose you are with a group of friends and they hire a magician for the party. The magician is expensive, but you have to say "wow," he is the best magician you have ever seen. You have seen a lot of magicians for free. You bid your friends adieu like some joker. A magician is a magician, right? How different can one be from another? In that case, there are probably not too many differences and therefore, cost should drive the bus. On the other hand, when you hire a divorce or family lawyer to help you with your prenuptial agreement, it is safe to assume that every practitioner is not like the other. The differences may not be obvious to you at the outset when making the choice. It is important, that in matter of this potential consequence, that you take the time to make a good decision.
I recommend that you find an attorney who specializes in divorce and family law. If you want to make a particular adjustment, you want someone who has done that before. It is fine for the lawyer to describe what it is that they did. They should tell you how they handled the issue the last time they saw it, and they should have told you that that client will tell you that they did a good job if you call them for a reference.
I am not saying that only bigger firms are suitable for this work or that no solo practitioners can do a good job. But I am saying that if the fancy name partner of a big firm is going to do the work on your agreement , you want that kind of experience. A second or third year associate is not likely to be able to give you the comfort that someone who has been doing it for more than a decade can give you.
In this day and age, everybody practices law and claims to be an expert. Tell me I’m wrong. There are lawyers who do sales in the off hours, lawyers doing insurance in off hours, practitioners doing criminal defense while they work the family law side. All of which is to say that you should ask the lawyer how long they have been doing this practice area. Depending upon the nature of the business that you are in, names of prestigious clients may be fine here or it could be a turn-off. Make sure that the person or people who will be doing the work are truly experienced. Deal directly with the person who will actually be doing the work. When you meet them, trust your instincts. Are they blustery, arrogant, impatient or condescending? Listening to your instincts at this juncture is incredibly important. You have to feel comfortable asking questions when something is not clear. Given the potential implications of the document, you do not want to be intimidated into silence before you sign.
From a dollars and cents standpoint, whether the lawyers knows other lawyers in the practice area and does cross-referrals for him or herself, or perhaps uses them as a resource is also important. Do not underestimate the value of being able to communicate or interact in a quick way with attorneys who may be advising the other spouse. Do they have a reputation for getting irritable and creating problems where they can be avoided? I suggest that you ask around a bit to see if you can get a sense of the lawyer’s reputation. Some online search engines may have testimonials or reviews that can be helpful, but in my experience, referrals from the trusted source are often the most reliable.