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