Dear Cassie: I am getting married in a few months, and my soon-to-be wife has asked me to sign a prenuptial agreement. How will a prenuptial agreement impact me if she and I get divorced in the future?
A prenuptial agreement is a contract between two people that identifies the terms for the payment of support and/or the division of assets and liabilities in the event of a divorce. The terms of the prenuptial agreement replace what would otherwise occur according to New Jersey law in existence at the time of the divorce. For example, a prenuptial agreement could provide that no alimony will be paid in the event of a divorce, even though a party might otherwise be entitled to alimony from the other party if the prenuptial agreement did not exist. Or, a prenuptial agreement could provide that a party’s premarital business is not subject to equitable distribution in the event of a divorce, even if that party continued to operate the business, and the value of that business appreciated, during the marriage.
Under New Jersey law, a prenuptial agreement is enforceable at the time of a divorce (meaning, its terms will be binding on the parties), unless:
1. The party who wants to set aside the prenuptial agreement executed the agreement involuntarily; or
2. The agreement was “unconscionable” when it was executed because that party, before execution of the agreement:
(a) Was not provided full and fair disclosure of the earnings, property, and financial obligations of the other party;
(b) 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;
(c) Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party; or
(d) Did not consult with independent legal counsel and did not voluntarily and expressly waive, in writing, the opportunity to consult with independent legal counsel.
Particularly in cases involving long-term marriages or complex financial circumstances, prenuptial agreements can have far-reaching consequences on both parties. Therefore, it is very important that a prenuptial agreement be entered into with both parties fully understanding and agreeing to the terms, including all of the risks associated with entering into such an agreement. It is also very important that any prenuptial agreement be clear, concise, and unambiguous, so it is clear at the time of divorce.
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Cassie Murphy is a divorce and family law Partner with the Law Offices of Paone, Zaleski & Murphy, with offices in Red Bank and Woodbridge.