An Article by:
Janine Danks Fox, Esq.
Statistics have shown that nearly 50% of all first marriages end in divorce. That percentage increases to 60% for subsequent marriages. While no one wants to consider the possibility of divorce when contemplating marriage, the statistics make clear that at least one half of all marriages will fail. Divorce in most circumstances causes both an emotional and financial toll on all parties involved. This toll can be minimized, however, if an agreement is put into place in advance of entering into a marital partnership.
New Jersey adopted the Uniform Premarital Agreement Act (the “Act”) on November 3, 1988. The Act permits parties to contractually enter into a premarital or pre-civil union agreement to address a variety of issues, including but not limited to, the disposition of property both acquired prior to and during the marriage, a determination of spousal support, estate entitlements in the event of a termination of the marriage or any other matter, including personal rights and obligations, not in violation of public policy. N.J.S.A. 37:2-34.
Although parties may choose to enter into a premarital agreement with the goal of minimizing litigated issues at the time of the divorce, premarital agreements can be set aside for a variety of reasons. Thus, when entering into a premarital agreement it is vital that certain protocols be followed in order to avoid the agreement being deemed unenforceable. First, the agreement must be entered into voluntarily. Essentially, this means that a party must be entering into the agreement freely without the presence of pressure or coercion. The best way to ensure the voluntariness of the agreement is for the agreement to be executed long prior to the intended marriage date. This will avoid an appearance of any party feeling rushed or pressured into signing an agreement in close proximity to the marriage date. There must also be a full and fair disclosure of the earnings, assets and liabilities obligations of both parties entering into the agreement.
This disclosure of each party’s respective financial circumstances must be attached to the premarital agreement so that both parties can knowingly waive or minimize their rights in the other’s respective property. Another key requirement is that both parties to the agreement must be advised of their right to have the premarital agreement reviewed by independent counsel of their own choosing, and should they waive the right to independent counsel, that waiver must be in writing. Finally, a premarital agreement can be set aside if deemed to be unconscionable at the time of execution. The Act was amended in 2013 to change the unconscionability standard from being evaluated at the time of enforcement to the time of execution. This new standard, however, only applies to premarital agreements entered into on or after June 27, 2013. The former unconscionability standard applies to those premarital agreements entered into prior to June 27, 2013.
When I first began private practice 16 years ago, the trend for entering into a premarital agreement was predominantly geared toward parties who were considering a second or third marriage. In those instances, the parties had already experienced a divorce and wished to protect assets accumulated in equitable distribution from prior marriages, address the issue of spousal support and preserve their estate for their children from prior marriages. In recent years, however, that trend has now changed and extended more frequently to parties entering into premarital agreements for first marriages. With the increasing trend of parties getting married for the first time later in life, those parties are more likely to have purchased a home, acquired significant investment or retirement savings, or started a business which they wish to protect and address as part of a premarital agreement. Although every person’s particular financial circumstances differ, when entering into any marital relationship, it would behoove all parties to explore their options of entering into a premarital agreement with independent legal counsel of their own choosing well in advance of their marriage date.
Janine Danks Fox, Esq. is a member of Szaferman Lakind’s Family Law Group.