Prenuptial Agreements 101
The Ins and Outs of a Prenuptial Agreement
The handy legal tool known as a prenuptial agreement (often referred to as a “prenup”) is available to protect your hard-earned assets and more in the event of a divorce. Our legal team is here to guide you through the basics of prenuptial agreements and determine if such an agreement makes sense for you.
The Basics of Prenuptial Agreements
Prenuptial agreements are legal contracts between two people who plan to be married and want to clearly detail their respective rights in the event that the marriage does not work out.
When spouses in New Jersey divorce, their assets and debts are subject to “equitable distribution” and, in some cases, one spouse or the other is entitled to spousal support (commonly known as “alimony”). Oftentimes, divorcing spouses will engage in lengthy, costly, and emotionally charged negotiations during the divorce process to agree on how they will divide their assets and debts and who is entitled to spousal support, for how much, and for how long. If the parties cannot agree between themselves, a trial must be conducted, after which a judge will issue an order setting forth how the parties’ competing claims to the marital estate will be resolved.
A prenuptial agreement can help sidestep that long, expensive, and often painful process. This legal document specifies how assets such as automobiles, real estate, investments, savings, and even financial liabilities, such as debt, will be distributed/allocated upon divorce. It can also specify who will be entitled to spousal support, how much that support will be, and how long that support will last. It is best to think of a prenup as a financial safety net of sorts, established in happier, pre-wedding days to ensure that you will not be fighting over it after the relationship sours.
Do You Need a Prenuptial Agreement?
If you have or are set to acquire wealth and assets, are a business owner, or the beneficiary of a trust, you should consider getting a prenuptial agreement before marriage. People in a variety of financial positions commonly establish prenuptial agreements to ensure they do not lose the majority of what they have earned or inherited in the event of divorce. Furthermore, even with modest earnings, if you desire protection for your future earnings during the marriage or wish to protect the prospective hard work you plan on putting into your business, you will also benefit from a prenuptial agreement.
Making Sure You Prenuptial Agreement Can Be Enforced.
While prenuptial agreements are technically a type of contract, the New Jersey courts impose special requirements on prenups due to the unique nature of the relationship between the parties to the agreement. For example:
- A prenuptial agreement must be in writing and signed by each party. You may have heard before that oral contracts are enforceable, and that is sometimes true. However, that is not true for prenuptial agreements in New Jersey. New Jersey law requires that prenuptial agreements be in writing and signed by the parties to be enforceable.
- Full disclosure of assets. New Jersey law requires not only that each party to a prenuptial agreement fully disclose their assets to each other, but that formal statements describing those assets be reduced to writing, separately signed, and attached to the prenuptial agreement.
- Separate Representation. Both parties to a prenuptial agreement cannot be represented by the same attorney. For maximum enforceability, it is recommended that each party retain their own, separate attorney to advocate for them and advise them about the meaning and consequences of any proposed prenuptial agreement.
- Sufficient Time. A prenuptial agreement entered into only days or even weeks before marriage may be considered a product of coercion, which can render the prenuptial agreement unenforceable. The parties should have enough time to reasonably consider a prenuptial agreement without the pressure of an imminent wedding ceremony and/or expensive reception hanging over their heads.
- Fairness. Normally, courts do not look into whether a contract provides a “good deal” for the parties. This is not so for prenuptial agreements. A central consideration for a court asked to enforce a prenuptial agreement will be whether the agreement is fair at the time it is being asked to enforce the agreement. As an extreme example, even if a prenuptial agreement satisfies all the other requirements, one that allows one spouse to retain all marital assets and the other responsible to pay all marital debts would likely be considered unfair and unenforceable.
At FSKS, we are familiar with these and other strict legal requirements and can help you navigate them so your prenuptial agreement does what it is supposed to – protect you and provide you with peace of mind.
Prenuptial Agreements Prevent Unnecessary Conflicts Upon Divorce
Many people are uncomfortable talking to their soon-to-be spouse about entering a prenuptial agreement, and view such a discussion as planning for failure or divorce. However, divorces happen despite everyone’s best intentions. Entering a prenuptial agreement is no more planning to get a divorce than purchasing car insurance is planning to get into a car accident. Divorces are inherently emotionally charged events that can be more unpleasant and costly if a prenuptial agreement is not in place. As discussed above, prenuptial agreements are designed to clarify precisely which spouse gets what in terms of property, savings, investments, trusts, business interests, and so on. Additionally, this important legal document also details whether a spouse will be provided with spousal support.
Prenuptial agreements can be designed to be granular to the point that it will cover the debts applicable to each spouse and the exact assets you and/or your spouse will retain. For instance, if your spouse runs up a considerable debt prior to or during the marriage, such as credit card or student loan debt, a well drafted prenuptial agreement can potentially prevent having to pay any portion of it if the marriage ends in divorce.
FSKS is on Your Side
If you are planning on marrying, considering divorce, or have another family law matter, our legal team is at your service. We will fiercely advocate on your behalf, helping you transition to the next chapter in your life as smoothly as possible. For more information about our Family Law practice and services, or to schedule an initial consultation, please contact Brian Kincaid, Esq. or Andrew Grenell, Esq.