Premarital (Prenuptial) Agreements in New Jersey

Premarital agreements, also called “prenuptial” or “postnuptial” agreements in some states, are contracts made between prospective spouses considering marriage, which become effective at the time of the marriage.

 

The general purpose of premarital agreements is for prospective spouses to define, prior to marriage, their rights and obligations on financial issues, including the division of property or spousal support in the event they separate or divorce.

 

If properly drafted, these agreements can save both spouses major emotional and financial expenses if their marriage comes to an end. Premarital contracts also speed up and streamline the divorce process because it can avoid the time-consuming process of having a court resolve issues that have already been addressed in the premarital agreement.

 

Issues that can be addressed in New Jersey premarital agreements:

 

  • The rights and obligations of both spouses regarding joint and separate property, whenever and wherever acquired or located.
  • The right to buy, sell and otherwise manage and control property.
  • The division of property upon separation, divorce, death or the occurrence or nonoccurrence of any other event.
  • The modification or elimination of spousal support.
  • The making of a will, trust or other arrangement to carry out the provisions of the agreement.
  • The ownership rights in, and disposition of, the death benefit from a life insurance policy.
  • The choice of law governing the construction and interpretation of the agreement
  • Any other matter, including personal rights and obligations as long as it’s not in violation of public policy.

 

Limitations of premarital agreements in New Jersey

Prospective spouses may not predetermine issues related to children which include child support payments and custody in their premarital agreements. These are issues that are typically decided by a court using a “best interests” standard. Child related provisions in a premarital agreement would also go against public policy because they are not dealing with the spouses but the child.

 

Requirements for a valid premarital agreement in New Jersey

New Jersey enacted its version of The Uniform Premarital Agreement Act (UPAA) in 1988. The UPAA provides that all premarital agreements must be in writing, signed by both spouses and a statement of assets is to guarantee that there will be fair and reasonable disclosure of the spouses’ financial information. After the marriage, the premarital agreement may be amended or revoked only by a written agreement signed by both spouses.

 

It is advisable, although not required, that both spouses consult with an attorney before entering into a premarital agreement. In situations where one spouse does not hire an attorney, a statement must be made in the premarital agreement that he or she freely, knowingly and voluntarily waived the right to be represented by counsel.

 

Challenging premarital agreements

The spouse that’s contesting the premarital agreement has the burden of proof and must show by clear and convincing evidence that either:

 

  • They executed the agreement involuntarily
  • The agreement was unconscionable at the time it was signed
  • He or she was not provided with a full and fair disclosure of the earnings, property and financial obligations of the other spouse before the signing of the agreement.
  • Before the signing of the agreement, he or she 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.
  • Before the signing of the agreement, he or she did not consult and did not voluntarily and expressly waive, in writing, the opportunity for counsel.

The court will find the premarital agreement unconscionable if it is shown that the challenging spouse would be without reasonable support, would have to depend on public assistance or would be provided a standard of living far below the one he or she enjoyed before the marriage.

Will Lawmakers Find Compromise on Alimony Reform?

New Jersey lawmakers agree that the state’s alimony laws need an overhaul, however, they will need to reach a compromise in order to come up with a solution. Compromise is often hard to come up with when dealing with divorce.

 

Under the current law, alimony terminates when either party dies or there is the remarriage of the recipient spouse. It is often difficult to adjust the payments when the parties’ financial situations change after the divorce. Often, spouses who pay alimony can find themselves paying well into retirement.

 

Despite the general agreement that New Jersey’s out of date alimony laws are severely flawed, the path to changing them is not very clear.

 

Assembly Bill A845/S488, sponsored by Democratic Assemblyman Charles Mainor, has the support of the N.J. Alimony Reform Group, which has criticized the unfairness created by New Jersey’s existing alimony laws for a long time.

 

The bill establishes specific criteria for modifying or terminating alimony payments under several circumstances, including when the paying spouse retires, loses his job, has any other reduction in income or when the recipient spouse cohabits with another person. The proposed legislation also eliminates the phrase “permanent alimony” in the statutes and replaces it with “alimony of indefinite term” to reflect the fact that alimony orders can be modified by the court when situations require.

 

Meanwhile, the New Jersey Bar Association calls for more subtle changes. It supports Assembly Bill A1649/S1808, which is sponsored by Democratic Assembly members Thomas Giblin and Pamela Lampitt. The bill calls for substantial changes to the current system and closely resembles the Massachusetts “Alimony Reform Law of 2011.”

 

Mainor and the NJBA propose changes that would eliminate permanent alimony and establish guidelines for determining the amount and duration of other types of alimony. For example, the term of limited duration alimony would be largely based on the length of the marriage. For a marriage of five years or less, alimony would be equal to 50 percent of the number of months a marriage lasted; for a marriage of five to 10 years, alimony would be 60 percent of the total months; for 10 to 15 years, 70 percent; for 15 to 20 years, 80 percent.

 

The bill would also provide that the amount of a limited duration alimony award should generally not exceed the recipient’s need or 30 to 35 percent of the difference between the divorcing spouses’ gross income. However, a court would have leeway to deviate from the guidelines, if it submits a written finding that justifies such a move.

 

Critics of the Mainor bill argue that it is too rigid and fails to take into account the individual circumstances of the parties. However, detractors of the Giblin/Lampitt bill argue that it does not reflect the time and money needed to seek a modification from the court.
To come up with a compromise, both sides will have to do what many divorcing couples can’t, take the emotions and ego out of the equation, focus on the facts, and work toward an agreement that protects the best interests of everyone involved. In this case, everyone’s main concern should be the thousands of couples going through a divorce who rely on the New Jersey court system to help them through the confusing and difficult process.