Prenuptial Agreements in New Jersey Explained
Prenuptial agreements, also called “antenuptial” and “pre-marital” agreements, are complex arrangements with many intricacies and requirements. This video provides a brief overview of the law governing prenuptial agreements in New Jersey: what a prenuptial agreement can do, what it cannot do, what the requirements are, and how they can be vulnerable to attack. Below is a transcript of the above video:
“All right. One of the topics I get asked about a lot is that of prenuptial agreements, and I’m going to state at the outset that what I’m about to say is really specific only to New Jersey law. These things are governed by different laws in different states, and if you’re looking for any information on any state other than New Jersey, this is really the wrong video to watch, so go ahead and watch something else. That having been said, here’s the deal with these things. These are very, very complicated and barely enforceable. Even when they’re done well, these are not the sort of thing you can do by yourself. I see all these services like LegalZoom that sell these wills and powers of attorney and medical directives and various business contracts, and those things are barely worth the paper they’re written on in the first place, but you can sometimes get away with them for some things.
You cannot do that for prenuptial agreements. They are very, very complicated and take a great deal of expertise. And like I said, even when they are done absolutely right, these things are barely enforceable in New Jersey. Judges do not like to have their discretion taken away.
One of the things you have to understand about family court in New Jersey is that it is not a court of law. It’s a court of equity and there’s a huge difference because a court of law enforces the letter of the law, but a court of equity just enforces its own nebulous concept of fairness. And that can mean a lot of things to a lot of different people. So you really should get an attorney number one, and number two, under New Jersey law, both sides are required to have an attorney anyway in order to execute a prenup.
So you and the other party that you’re intending to marry must both be represented by an attorney. Otherwise, the agreement’s not valid. So understand going into one of these, you’re going to have to pay for two attorneys. And I’m going to tell you right now, I’ve done these things. I know how much work they are. And an attorney in a family context is probably going to charge you about $400.00 an hour to do this, and you can expect it to take up to about 10 hours. So even though it’s somewhat expensive to hire an attorney, first of all, it’s required. And secondly, imagine how expensive it’s going to be if you don’t have the prenuptial agreement or if you have one that’s done incorrectly.
To be clear, this is not just for rich people. Even a middle-class marriage is going to acquire significant money assets in the form of houses and retirement accounts that you would rightly want to protect.
So what can you do with a prenuptial agreement and what can’t you do and how is it that you’re able to do it? Well, first of all, you can’t do anything involving the kids. A prenuptial agreement will not impact child support or child custody or visitation or anything like that. Child support is not the property of you or your spouse, or your spouse to be, it’s not something that’s really supposed to be negotiated. Child support belongs specifically to the children. So you can’t negotiate that one way or the other in the prenuptial agreement and you can’t negotiate custody ahead of time or anything like that. Custody is always governed by what the court believes is in the best interest of the child.
You can however, negotiate and come to agreements when it comes to equitable distribution, which is to say how you divide up assets and spousal support and things like that: What happens with the house? What happens with the other property acquired during the marriage? How much spousal support should be paid and for how long? What is each side’s interest in retirement accounts and pensions. And if you’re a public employee and you’re part of the New Jersey pension system, that’s a big deal. Those are the sorts of things you can negotiate up front and it behooves you to do so.
Now, of course, there are also certain requirements associated with this. Number one, I said both sides have to have an attorney, not just the opportunity to have an attorney. Both sides must actually be represented by an attorney.
Number two, both sides must be competent. You can’t deal with somebody who’s not mentally sound or under the influence of drugs or alcohol, and you really want to make a record of that.
Number three, the other spouse can’t be operating under fraud or misrepresentation or duress or anything like that.
Number four, and this is really important, there has to be a full and complete financial disclosure. You know, I talk to people when I’m doing these prenups and sometimes they’ll say, “Oh, do I have to include this? Do I have to disclose that whatever?” And it’s like I’m pulling teeth with them and they don’t understand. You want to include everything because those are the things you’re trying to protect. You’re protecting not just the things you’re going to acquire during the marriage, but also the things that you’re going to be entering the marriage with. And people will say, “well that’s premarital anyway.” Yeah, but it gets commingled.
And secondly, the other person has to have an idea of your earning power going into the marriage because you don’t want them turning around later saying, “Oh yeah, well, when I signed the prenup, I was thinking I was marrying somebody who didn’t have a lot of money and hadn’t made a lot of money, but had I known how wealthy he was, I would have had a better and more accurate understanding of what he was going to earn during the marriage.”
And that’s the kind of thing that can just untangle everything. I’m telling you, New Jersey law can be like the Wild West. So the bottom line is you want to fully disclose all of your assets up front and the assets have to be incorporated into the prenup in order for it to be valid.
Interestingly, the case that really wrote the law on this is called the DeLorean case named after John DeLorean, who made those, you know, famous DeLorean cars from Back to the Future. He did not fully disclose all of his assets. And so it was thought he would lose the case. However, he got kind of lucky. And even though the case was litigated in New Jersey, the prenuptial agreement had a provision in it that it should be governed by California law, and California law was different at the time.
But again, that’s an example, and he got lucky but the point is you won’t. So you need to make a full disclosure of all your assets and that’s really to your benefit.
Also, the prenuptial agreement has to be entered into voluntarily, and this is where you have problems. The agreement, even though it does not have to be fair and equitable, cannot be unconscionable. In other words, you can’t win by too much. An unconscionable agreement is one that would render the spouse without a means of “reasonable support,” whatever that means, either due to a lack of property or unemployability, or would make the spouse what’s called a “public charge.” In other words, they’re going to wind up on welfare or something like that. And this is kind of where they always go. You can’t have a prenuptial agreement that would provide for a standard of living that’s far below that which was enjoyed before the marriage.
So notice there’s a lot of subjective language there, a lot of talk about what is fair and what is reasonable. Notice though that the standard is not “would it provide a standard of living far below that was enjoyed during the marriage,” which is generally the rule of thumb and divorce, but rather “far below that which was enjoyed before the marriage.” So that’s the governing principle.
Now, there are obviously a lot of pitfalls here. The key to doing these things and any good attorneys should know this, is you want to create layer on top of layer of protection. You have to kind of think of a prenuptial agreement the same way you would think of home security. Nothing is going to be 100% airtight. If you talk to anybody who does home security, they’ll tell you that nothing’s 100% secure, but the key to security is to have system on top of system.
So you don’t just lock your door, you don’t just get an alarm. You have a fence, and then you have a lock on the fence, and you have a door and you lock the door and you lock the windows. You have a security system, and even then if somebody gets in, maybe you have a dog, then your valuables aren’t out in the open. They’re hidden and not just hidden, they’re in a safe, you, and the safe can’t move because it’s bolted down. If you give someone enough time, they can defeat all of these measures and steal anything. But the idea is if you create layer after layer, you maybe won’t make something perfectly, 100% airtight, but you’re making it as hard to crack as possible. You’re minimizing the risk of damage and you’re minimizing the overall damage even if the risk is incurred.
That’s the thing with prenuptial agreements. There’s no such thing as a perfectly airtight prenuptial agreement because the standard is still too subjective. But if you put layer on top of layer, you can greatly minimize the odds of you getting damaged. And if you do get hit, you can greatly minimize the damage itself.
Now, how does all this work? Well, as a practical matter, what’s going to happen is if you do get divorced, and 50% of marriages are ending in divorce, the other side is going to sue you for equitable distribution anyway and ask for half of all the assets acquired during the marriage and spousal support. And you’ll say “yeah, but we have a prenuptial agreement,” and you’ll think that’s all well and good until the judge calls your attorney into his chambers. And he’ll say, well, you know, guys, there are some very interesting issues being raised here and maybe you guys should go outside into the hallway and talk this one through. And what he’s really saying is you have to settle this because he doesn’t want to decide it or at least come to some agreement.
And again, your spouse can always say she was not competent, or she was under the influence of drugs or alcohol, she was going through a rough patch in life and operating under distress, or you made some misrepresentations to her outside of the prenuptial agreement before she signed it but off the record, or there wasn’t full disclosure. I’m not kidding, a good attorney could probably defeat, or at least compromise severely, most poorly written prenuptial agreements, by which I mean agreements written by other attorneys who don’t know what they’re doing, but were just trying to make money. But a good attorney will know how to create a prenuptial agreement for you that protects against all of these different defenses ahead of time.
And I think it’s not even a terrible idea to put the whole thing on video because to be honest with you, if somebody is going to claim duress down the road or anything like that, I want a video there showing what this person’s state of mind was when they’re signing this thing and I want them saying, “look, this is what I want to do. I’m not under the influence of any drugs or alcohol or anything like that. I’m entering into this freely and voluntarily, I’m satisfied with the financial disclosure that’s been made to me. Every request I’ve made has been satisfied. Every question I’ve had has been answered and I’m satisfied with the representation of my attorney.” It’s just the same sort of thing you would ask and the same sort of factual basis you would get if you’re, you know, doing a divorce on the record in front of a judge.
All of which is to say, don’t think for a minute that these things are completely fireproof. They’re not and anyone who tells you otherwise, just doesn’t know what they’re talking about.
And don’t think for a minute you can do it yourself. You don’t know how to do it and you’re not allowed to do it in New Jersey anyway. So you have to get an attorney and if you go talk to some attorney and they tell you like, “Oh yeah, I’ll do it for like 500 bucks,” that’s probably someone who doesn’t know how much work it’s going to do to how much work is going to take to do it correctly. I remember the first couple I did, I thought I would charge something like that, and I wound up doing way too much work, and I just said “the heck with this, I’ll just charge an hourly rate like I always do.” And you can expect it to take about 10 hours, if not more, depending on the circumstance. But you’d pay a lot more if it’s not done correctly.
So I hope this answered some of your questions. Thanks for watching. If you’re interested in scheduling a consultation for a prenuptial agreement or any other family law service, please give my office a call. Thanks. And take care.”