Antenuptial Agreements

Litigating cases involving a prenuptial agreement can be frustrating at times. When prenups are done right, there is proper disclosure, both parties have counsel or acknowledge that they had a

Continue Reading Court Rejects Predictable Arguments on Setting Aside a Prenup, and on Summary Judgment No Less!

Is prenuptial agreement reform coming to New Jersey? It appears to be the case.

Prenuptial Agreements are meant to fix parties rights and responsibilities in advance, so as to avoid litigation and aggravation in the future.  In fact, right up front in many if not most prenuptial agreements there is a "Statement of Intention" as follows:

It is the intention of the parties in entering into this Agreement that in the event of the termination of the marriage by divorce or death, certain rights shall be fixed in advance. It is their intention to avoid litigation and intrusion into their professional and personal lives and the lives of their families and business associates, which would perhaps otherwise occur if this Agreement had not been entered into.

Unfortunately, unlike in many other states, where prenuptial agreements are ironclad as long as there was full disclosure and the other procedural requirements are met, that has not been the case in New Jersey.  The major reason for this is that in New Jersey, aside from setting aside a prenup due to failure to follow the procedural requirements, including full disclosure, agreements can be set aside if they are deemed to be unconscionable, not only when they are entered into, but when they are to be enforced at the time of the divorce.  As a result, I have heard judges say that they have never enforced a prenuptial agreement.  I have heard other judges give the rationale that because you don’t know what is going to happen in the future, it is unfair to enforce the agreement against a spouse where she/he waives alimony or the equitable distribution rights.  That rationale misses the point as that is the entire reason for a prenuptial agreement.Continue Reading Prenuptial Agreement Reform in New Jersey Appears Likely

Are prenuptial agreements entered into before the enactment in 1988 of the Uniform Premarital Agreement Act in New Jersey in New Jersey analyzed for enforceability under the standards set forth in the Act? The simple answer is no, since the standard for determining the enforceability was established by earlier cases addresses addressing the issue. 

There is a three (3) prong test to determine the enforceability of these pre-Act agreements.  To be enforceable: (1) there must be “full disclosure by each party as to his or her financial conditions;” (2) the party sought to be bound by the agreement understood and accepted the terms of the agreement; and (3) the agreement is fair and not unconscionable – it will not "leave a spouse a public charge or close to it, or . . . provide a standard of living far below that which was enjoyed both before and during the marriage."

 

The party seeking to enforce the prenuptial agreement bears the burden of proving that there was full financial disclosure to the other party, the simplest way of which is to point to schedules attached to the agreement setting out  – at least in general terms and with approximate values – the assets of the parties as well as their income over the past few years prior to the marriage.  Simply put, a lack of full and complete financial disclosure in the agreement by one party prevents the other party from truly "accepting" its terms.  The underlying rationale is that, with full and complete disclosure, the other party might have found the agreement unfair or might not have even gotten married. 

 

 Continue Reading PRENUPTIAL AGREEMENTS PRE-DATING THE UNIFORM PREMARITAL AGREEMENT ACT – A DIFFERENT STANDARD FOR ENFORCEMENT

What is it about this time of year? I’ve been told that the holidays are the most popular time of year for couples to get engaged. While this a special time for the engaged couple, it is also a time when some couples should consider a prenuptial agreement or premarital contract. A prenuptial agreement is a contract between the engaged couple that addresses equitable distribution, alimony, and other issues that may arise if the couple were to divorce.

A prenuptial agreement may not be for everyone, but in many instances it makes sense. For individuals with substantial assets, a business, family wealth or children from a prior marriage, a prenuptial agreement is usually a good idea. Sometimes people think a prenuptial agreement is a reflection of how an individual feels about the potential outcome of the marriage. But in reality, this is rarely the case. For instance, a family business or assets an individual would like to leave to children from a prior relationship, are assets that need to be protected.  Often the parents who own the family business insist that their children have prenuptial agreements to prevent the prospective spouse from ever having a claim to the business.Continue Reading The Season of Engagement – Should It Lead to the Season of Prenups?

On December 12, 2008, the Appellate Division released a reported decision in the case of Rogers v. Gordon which addressed the enforceability of a pre-statute prenuptial agreement.  To review the full text of the case, click here.  The case is interesting because it addresses again the standards to be applied to an agreement signed before the enactment of the Uniform Premarital Agreement Act in NJ.

In this case, the parties entered into a prenuptial agreement as a young couple.  The wife was a graduate of the Wharton School of Business and came from a wealthy family.  The husband was a high school graduate working for the Postal Service.

The parties married in 1981, had four children and were married for more than 24 years before the wife sought a divorce.  During the marriage, the wife went to work for her father’s business, which she eventually purchased from him during the marriage.  In 1990, the husband left the Postal Service to work as a machine operator for the business.  In 2002, he was promoted to plant supervisor.  Not surprisingly, when the divorce commenced, he was demoted to a machine operator again.  The trial court made a finding that at the end of the divorce, there was not a "snowball’s chance" that he was going to keep the job given the wife’s intense animosity for him evidence during the trial.  In fact, the judge found her to be totally incredible regarding this topic.

At the time of the divorce, the husband’s income was $63,000 – the wife’s was more the $600,000.

The Uniform Premarital Agreement Act was enacted in NJ in 1998 and applies to all agreements entered into after its enactment.  As such, because the agreement in this case was entered into prior to the Act, the Court had to apply the case law from prior to the act.

In citing the Marschall case, the court noted that there was a three prong test for enforceability, as follows:  1) there was full financial disclosure; 2) that the party sought to be bound knew and understood the terms and conditions and 3) that the agreement, be fair and not unconscionable, ie. that it not leave a spouse a public charge or close to it, or with a lifestyle far below what was enjoyed before or during the marriage.

The court also cited the D’Onofrio case which said that the alimony provisions in the agreement need not cover all contingencies because the Lepis or change of circumstances standard would apply.Continue Reading The Appellate Division Rules on a Pre-Act Prenuptial Agreement