PRENUPTIAL AGREEMENTS

The law governing prenuptial agreements has been amended several times over the decades. Each time, the New Jersey Legislature changed the statute to make prenuptial agreements stronger and more enforceable.

The standard for enforcement governing your prenuptial agreement will depend on when the agreement was signed. There are three possible scenarios:

1. If the agreement was signed prior to November 2, 1988, it is governed by case law;
2. If the agreement was signed between November 2, 1988 and June 27, 2013, the agreement is governed by the Uniform Premarital Agreement Act (“UPAA”) as it existed between 1988 and 2013;
3. If the agreement was signed after June 27, 2013, it is governed by the current version of the UPAA in New Jersey. [J.S.A. 37:2-41.]

This section of the SDFL Divorce Guide will address the current version of the UPAA in New Jersey. [N.J.S.A. 37:2-31.]

If you have questions or concerns about a prenuptial agreement signed previously, please reach out to discuss: [CONTACT US.] I would be happy to sit down with you free of charge to explore the details of your case.

Notably, the UPAA was also amended in 2006. Those amendments, however, did not change the substance of the law. Instead, they simply inserted reference to civil unions. Thus, as of the 2006 amendments, the UPAA governs both premarital agreements and pre-civil union agreements.

“Premarital or pre-civil union agreement” means an agreement between prospective spouses or partners in a civil union couple made in contemplation of marriage or a civil union and to be effective upon marriage or upon the parties establishing a civil union. [N.J.S.A. 37:2-32.] A “premarital” agreement is the same thing as a “prenuptial” agreement.

“Property,” as the terms is used in the UPAA, means an interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings [N.J.S.A. 37:2-32.]

“A premarital or pre-civil union agreement shall be in writing, with a statement of assets annexed thereto, signed by both parties[.]” [N.J.S.A. 37:2-33.]

“A premarital or pre-civil union agreement shall be in writing, with a statement of assets annexed thereto, signed by both parties[.]” [N.J.S.A. 37:2-33.]

You and your spouse-to-be are explicitly allowed to agree to any of the following:

1. The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;
2. The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;
3. The disposition of property upon separation, marital dissolution, dissolution of a civil union, death, or the occurrence or nonoccurrence of any other event;
4. The modification or elimination of spousal or one partner in a civil union couple support;
5. The making of a will, trust, or other arrangement to carry out the provisions of the agreement;
6. The ownership rights in and disposition of the death benefit from a life insurance policy;
7. The choice of law governing the construction of the agreement; and
8. Any other matter, including their personal rights and obligations, not in violation of public policy. [N.J.S.A. 37:2-34.]

You are not allowed to make any agreement in a prenuptial agreement that negatively affects the right of a child to child support.

“A premarital or pre-civil union agreement shall not adversely affect the right of a child to support.” [N.J.S.A. 37:2-35.]

A prenuptial agreement takes effect on the date of your wedding ceremony.

“A premarital or pre-civil union agreement becomes effective upon marriage of the parties or upon the parties establishing a civil union.” [N.J.S.A. 37:2-36.]

Notably, you cannot simply change a prenuptial agreement once it has become effective. To do so, you need to execute a new, signed agreement to modify or set aside the prenuptial agreement.

“After marriage of the parties or the parties establishing a civil union, a premarital or pre-civil union agreement may be amended or revoked only by a written agreement signed by the parties[.]” [N.J.S.A. 37:2-37.]

Enforcement of a prenuptial agreement is easier than ever. As of the 2013 amendments to the UPAA, the Court’s inquiry is very limited. The Court will only examine the circumstances in which the agreement was signed, focusing on whether the agreement was signed voluntarily, whether there has been a full and fair disclosure of relevant financial information, and whether both parties were represented by their own, independent attorneys (or waived that right).

You may have noticed that all three of these requirements relate to circumstances that existed on or before the agreement was signed. This is a result of the recent changes to the UPAA discussed earlier. Previously, the Court would also consider unconscionability as of the date of enforcement (generally after the parties have separated and are seeking a divorce). Being legally required to consider facts only as they existed when the agreement was signed prohibits the Court from considering things like the birth of children or, perhaps, one spouse or the other having won the Mega Millions jackpot a few years into the marriage. The amendment, consequently, dramatically increases the enforceability of prenuptial agreements, and it indicates the New Jersey Legislature’s intent to promote the use of prenuptial agreements in the future.

Also, the burden on the person trying to set aside the agreement is unusually high. In civil proceedings, the burden of proof normally requires you to prove your case by “preponderance of the evidence.” [In re Evans, 227 N.J. Super. 339, 347 (Law Div.1988).] This is a complicated-sounding legal term that, in truth, only means “more likely than not.” When you claim that a prenuptial agreement is unenforceable, however, the burden of proof requires “clear and convincing evidence.” That higher standard falls somewhere between the ordinary civil standard of preponderance of the evidence and the criminal standard of beyond a reasonable doubt. [In re Perskie, 207 N.J. 275, 289-290 (2011).] Clear and convincing evidence should produce in the mind of the trier of fact “a firm belief or conviction as to the truth of the allegations sought to be established.” [Matter of Purrazzella, 134 N.J. 228, 240 (1993).] It must be “so clear, direct and weighty and convincing as to enable either a judge or jury to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue.” [In re Seaman, 133 N.J. 67, 74 (1993).]

As discussed above, there are three basic requirements for enforcement. First, the prenuptial agreement must be signed voluntarily. That requirement seems fairly obvious, at least at first glance. If someone signs an agreement involuntarily, the Court will not enforce that agreement. Take, for example, someone who forces you to sign a contract with a gun to your head. Enforcing that contract afterward would be absurd. Nevertheless, there are contexts in which “involuntary” is less clear. If you give your spouse-to-be an ultimatum on the day of the wedding: “Sign the agreement or I walk,” would that be considered involuntary? It is critical that a prenuptial agreement is signed as far in advance of the wedding as possible, and in the most neutral and detached circumstances as possible, to ensure that the agreement is ultimately enforced.

Second, when entering a prenuptial agreement, both parties should be represented by their own, independent attorneys. While it is possible to waive that requirement, I strongly discourage doing so. There is little worse than being married for years, perhaps decades, believing with certainty that you are protected by a prenuptial agreement only to have the agreement thrown out during your divorce. Moreover, ensuring both parties have their own, independent attorneys typically goes a long way to convincing the Court that the agreement was signed voluntarily.

Third, before signing the agreement, the parties need to exchange complete financial disclosures so that each know what or she is waiving by entering into the agreement. Specifically, each party must provide a full and fair disclosure of his or her earnings, property, and financial obligations to the other party; each party has to voluntarily waive, in writing, any disclosure beyond the disclosure provided; and each party must have an adequate knowledge of the property or financial obligations of the other party. To ensure that the financial disclosures were proper, I encourage clients to swap complete lists of their assets and debts with current values and to provide backup documentation including tax returns with all attachments, W-2s/1099s, and recent paystubs. In certain circumstances, for example when one person owns his or her own business or intellectual property like a patent, it may be necessary to obtain expert valuations.

The section of the UPAA governing enforcement of a prenuptial agreement reads as follows:

“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

. . . .

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.” [N.J.S.A. 37:2-38.]

Further, “[a]n agreement shall not be deemed unconscionable unless the circumstances set out in subsection c. of this section are applicable.” [N.J.S.A. 37:2-38.]

Prenuptial agreements signed after enactment of the UPAA in 1988 but before the amendments in 2013 are somewhat more difficult to enforce. Under the 1988 version of the UPAA:

“The burden of proof to set aside a premarital agreement shall be upon the party alleging the agreement to be unenforceable. A premarital 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. The agreement was unconscionable at the time enforcement was sought; or

c. 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.”

The critical addition here is a mandatory inquiry by the Court into whether the agreement is “unconscionable” at the time enforcement is sought. This permits the Court to consider a broad range of circumstances that occurred during the marriage. For example, the Court might consider long-term unemployment of one spouse or the other, the birth of numerous children, or a party having become disabled or seriously ill.

The 1988 version of the UPAA defines unconscionability as follows:

“Unconscionable premarital or pre-civil union agreement” means an agreement, either due to a lack of property or unemployability:

(1) Which would render a spouse or partner in a civil union without a means of reasonable support;

(2) Which would make a spouse or partner in a civil union a public charge; or

(3) Which would provide a standard of living far below that which was enjoyed before the marriage or civil union.”

Again, this inquiry is performed at the time enforcement is sought, which is typically at the time of divorce. The primary goal of the statute is to prevent one spouse or the other from being left penniless, especially under circumstances in which the State of New Jersey might have to pick up the tab (e.g., welfare). Another important consideration is that the analysis requires the Court to compare a spouse’s premarital lifestyle to his or her post-divorce lifestyle. If the premarital lifestyle is “far below” the post-divorce lifestyle due to the prenuptial agreement, then the agreement might be held unenforceable.

Lastly, the most ambiguous part of the “unconscionability” analysis is whether the agreement provides a means of “reasonable support.” Whether a means of support is determined to be reasonable or not is inherently a subjective question. If asked, three different judges might arrive at three different answers.

While these questions were eliminated by the 2013 amendments to the UPAA, the vast majority of divorces currently being litigated are for marriages that took place between 1988 and 2013. If you hope to have your prenup signed between 1988 and 2013 enforced, I strongly recommend retaining a skilled attorney to assist you.

“If a marriage or civil union is determined to be void, an agreement that would otherwise have been a premarital or pre-civil union agreement is enforceable only to the extent necessary to avoid an inequitable result.” [N.J.S.A. 37:2-39.]