Most of our cases dealing with enforceability of prenuptial agreements stem from marriages that end by divorce and involve one party seeking to enforce the agreement and the other party seeking to invalidate the same document, or vice versa. You can read about many of those cases on our NJ Family Law Blog. However, the recent unpublished (non-precedential) decision of In the Matter of the Estate of James J. Gillette, addresses the enforcement of a prenupital agreement upon the husband’s death, when the wife sought to invalidate the agreement in order to claim her elective share from his estate in lieu of the terms of the agreement. The case tells us that the rules for prenuptial agreement enforcement upon a spouse’s death are the same as they would be in the event of divorce. Interestingly, both prenuptial agreements and a spouse’s waive of his/her right to elective share require the same financial disclosure as described in N.J.S.A. 37:2-38(c)(1) (for prenuptial agreements) and N.J.S.A. 3b:8-10 (for waiving right to elective share).
In this case, the parties entered into a prenuptial agreement on August 29, 2013 prior to their marriage in November 2013. Both parties had independent counsel. They affixed schedules of their full financial disclosure to the prenuptial agreement and acknowledged within the document they had time to review the agreement with their respective counsel. The parties agreed to share in certain assets, to keep premarital assets separate and to waive their right to elective share of the other spouse’s estate.
The husband passed away on April 21, 2017. The wife received the proper notice of probate on May 11, 2017. Pursuant to the relevant statute, she had six months to seek to enforce her elective share. The wife, through counsel, provided letter notice of such intent on September 18, 2017. However, she did not file the complaint until July 12, 2018 – fourteen months after the probate notice and, thus, out of time. As part of her complaint, the wife sought to invalidate the prenuptial agreement, claiming that the husband did not provide full financial disclosure, which is the relevant issue for this post.
The wife was unsuccessful both in her initial application and her reconsideration application. Note that in her reconsideration application, the wife claimed to have “newly discovered evidence” as to the husband’s financial circumstances that she claimed demonstrated his failure to provide full financial disclosure for the prenuptial agreement, but the evidence was not new because the wife/her daughter had the documents for over a year before she even filed the complaint and, even if it was new, the court found that it did not demonstrate what the wife claimed. This appeal followed.
As noted by the Appellate Division, the plaintiff/wife bears the burden to demonstrate that the prenuptial agreement is unenforceable based upon the factors within N.J.S.A. 37:2-38(c)(1), which provides:
The burden of proof to set aside a premarital or pre-civil union agreement shall be upon the party alleging the agreement to be unenforceable. A premarital or pre-civil union agreement shall not be enforceable if the party seeking to set aside the agreement proves, by clear and convincing evidence, that:a.The party executed the agreement involuntarily; or
b.(Deleted by amendment, P.L.2013, c.72)
c.The agreement was unconscionable when it was executed because that party, before execution of the agreement:
(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.
d.The issue of unconscionability of a premarital or pre-civil union agreement shall be determined by the court as a matter of law. An agreement shall not be deemed unconscionable unless the circumstances set out in subsection c. of this section are applicable.
Regarding subsection (c)(1), the husband’s financial statement was attached to the prenuptial agreement and, importantly, Article X of the agreement explicitly stated that the wife reviewed the husband’s financial statement and “retained independent counsel ‘to review and represent her in conjunction with’
the Agreement prior to signing it.”
In order to support her claim that the financial disclosure was insufficient, the wife relied on the unpublished (non-precedential) decision of Orgler v. Orgler, claiming that the husband was required to produce proof of how the value of his assets were established and provide supporting documentation for same. The Appellate Division specifically rejected this argument, stating:
In Orgler, the court noted that the “‘easiest device’ to evidence” knowledge of a party’s financial condition “is by annexing to the agreement a list of assets and their approximate values.” Id. at 349 (quoting Marschall v. Marschall, 195 N.J. Super. 16, 33 (Ch. Div. 1984)). The court found the prenuptial agreement unenforceable in part because “the parties appended no schedule of their respective assets to the agreement.” Ibid.
However, in the matter at hand:
- The wife had the benefit of the husband’s financial statement attached to the agreement;
- The financial statement identified a list of assets with approximate values, as set forth in Orgler;
- The wife had independent counsel before signing the prenuptial agreement;
- Within the agreement, the wife acknowledged that she read and understood the agreement and had the necessary time to discuss same with counsel.
- The wife, nor her attorney, ever asked for additional financial information before the agreement was finalized.
The lesson here is similar to many of our prenuptial agreement cases and the guiding statute, above – always, always, always be sure to affix the financial statement of each party to the prenuptial agreement, ensure that each party has independent counsel and, here, we learn the importance of including language within the agreement acknowledging that each party had sufficient time to review the agreement and financial disclosure with respective counsel prior to signing the agreement. When dealing with a prenup, you want to be extra careful to follow these directives because you have to assume that at some point in the future, one party will be unhappy with the agreement at the time of divorce, or death. To protect yourself against what may be the inevitable, you need to make sure that the agreement can withstand efforts to invalidate the document.
Lindsay A. Heller is a partner in the firm’s Family Law practice, based in its Morristown, NJ office. You can reach Lindsay at 973.548.3318 or lheller@foxrothschild.com.
