A recent unpublished (non-precedential) decision, Steffens v. Steffens, suggests that the answer to the above question is “no.”

In Steffens, the Wife sought to set aside a prenuptial agreement, arguing that it was unconscionable, in large part because the alimony payments she was to receive under the agreement would not allow her to maintain

How many prenuptial agreements have language in them that the parties are entering into the agreement free from duress, coercion, undue influence, etc?  The answer is all of them.  Some even ask people to waive fraud – how you can do that I don’t know because if you knew you were being defrauded, you probably wouldn’t

We previously blogged on the Appellate Division’s notable decision in Rogers v. Gordon, which addressed the legal standard applicable to prenuptial agreements signed prior to New Jersey’s enactment of the Uniform Premarital Agreement statute.  There, the Appellate Division reversed a trial court Order to the extent that it set aside the entire prenup, since, as

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. 

 

 


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Whether an asset is exempt is a common issue that arises in divorce case.  The general rule is that an asset acquired prior to the marriage which is not commingled is exempt from equitable distribution.  In addition, an asset that is received via inheritance and/or third party gift is also exempt as long as it is not commingled.  Commingling is essentially putting an asset into joint names or depositing it into a joint account.  Changing something from someones own name into joint names is deemed as making a gift to the marriage.

Also, the law is clear that the person who seeks to have an asset deemed exempt has the burden of proving that the asset is exempt.

Because an engagement ring is a premarital gift, albeit a conditional gift, from one spouse to to the other, it is exempt from equitable distribution.  If the ring is replaced and/or enhanced during the marriage, while the original stone, if it exists, remains exempt, the new ring is not exempt.  In fact, any gifts between spouses during the marriage are not exempt and are subject to equitable distribution on divorce.  As such, some times we are required to have jewelry, furs, and other expensive presents appraised to determine their value for equitable distribution purposes.  Sometimes this task is made a little easier because parties have appraisals for insurance purposes which is why we often ask for the homeowners insurance policy riders.

The premarital portion of retirement assets, i.e. IRAs, 401ks, pensions, are typically exempt. For defined contributions plans (ie. the accounts with cash balances), the trouble may be finding or obtaining the documents to establish the premarital values.  That said, even though the premarital values are often commingled with contributions made during the marriage, the premarital portions are typically exempt.  Contrast that with a regular premarital bank account where deposits are made during the marriage using marital income.  Many would argue that this account has lost it’s exempt status.  Is that fair?  What is the real difference?  Perhaps the difference is that though money will usually go in and out of a bank account, there usually is not the same type of two way activity as to retirement accounts.


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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.


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I have blogged several times about the celebrity divorces that have been in the news, from John & Kate, to Christie Brinkley, to Stephanie Seymour, to Jim Nantz, to the McCourts who own the LA Dodgers and others.

Every day for the last few weeks, Tiger Woods has been front page news regarding what he first called "indiscretions" and now calls "infidelity."  We have heard in the news about potential sweeteners to his prenuptial agreement if his wife stays, to rumors that she will leave him and so on .  Obviously, since the information from Tiger and his wife is limited, people are left to speculate and gossip.

 As a New Jersey Divorce Lawyer, the best that I can offer is to give some comments on how New Jersey divorce and family law would apply to the facts (hypothetical, speculation or true facts that have been reported). 

In New Jersey, marital fault is largely irrelevant except in limited circumstances.  Though not particularly necessary anymore since we have no fault (irreconcilable differences) divorce, the fault ground of adultery can still be plead as a divorce cause of action.  That said, receiving a divorce based on adultery does not get you anything more financially.


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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.


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