If you are considering a prenuptial agreement, carefully review all aspects of the contract before signing. A recent revision to the New Jersey Uniform Premarital and Pre-Civil Union Agreement Act makes it harder than before to break that agreement, even if circumstances change. (1)
A prenuptial agreement, also referred to as a premarital or pre-civil union agreement in New Jersey, is a contract between two people contemplating a lifelong union. The contract outlines, among other things, distribution of assets should the relationship end. (2) One of the biggest problems is that couples enter into these contracts at a time when the dissolution of their relationship is the last thing on their minds. It is important not to let your emotional bliss stand in the way of looking at the contract realistically.
When drawing up prenuptial agreements, decisions are based on present circumstances. Over time those circumstances can change, making the agreement less equitable. The loss of a job, illness, injury or other disability can leave one person in need of greater support than when the original agreement was written. Under such circumstances, courts previously could be petitioned to revise the agreement so neither party is left living below the standard they enjoyed while in the relationship. (1)
Last month, Gov. Chris Christie signed into law revisions endorsed by the State Legislature making it more difficult to revise a prenuptial agreement. In short, courts now can only modify the agreement if it can be proven it was “unconscionable” at the time it was signed. Under the revisions, a prenuptial agreement would be considered “unconscionable” if one of the parties entered into it without being fully aware of the assets and liabilities of the other party and without waiving his or her right to be so informed. Such circumstances would still allow the court to invalidate the agreement. However, courts would no longer be able to invalidate a prenuptial agreement based on hardships that occurred after the agreement was signed. (1)
These revisions are not retroactive and apply only to pre-marital or pre-civil union agreements entered into or modified (by the affected parties themselves) after the revisions were signed into law, which was June 27, 2013. (1)
Despite these restrictions, prenuptial agreements, if done correctly, can save a couple both financially and emotionally should their relationship end. All 50 states recognize prenuptial agreements, meaning courts will defer to the terms of the agreement when ruling on distribution of assets in divorce cases, saving both time and court costs. What cannot be included in a prenuptial agreement, however, is anything to do with child custody or support. These matters are determined by courts based on a standard that takes the “best interests” of the children into consideration. (3)
In order for a prenuptial agreement to stand up in court, certain elements must be met. First, these contracts must be voluntarily executed, written agreements. Courts usually will not enforce oral agreements. Also, each party must make a full and fair disclosure of his or her financial rights and obligations, so that the agreement cannot be considered “unconscionable.” Finally, the involved parties themselves must execute the agreement and have it notarized. While it is recommended that each party have the agreement reviewed by their own attorneys, the attorneys cannot execute the contract.(3)
Prenuptial agreements are no longer something only the rich and famous bother with. They can be beneficial to anyone, so long as serious consideration is given to all terms before signing.