Well intended people contemplating marriage never want to let the possibility of divorce or death interfere with the love, hope and promises that go along with the marriage.
It is difficult to talk about divorce, death, and the division of money and other assets at any time, let alone at this happy time of life. However, entering into a Prenuptial Agreement often helps people plan for the unexpected by forcing them to have conversations that many married people never have but should. Having this Prenup discussion builds a mutual trust between the couple and sets a tone for communicating openly about financial matters throughout the marriage.
Premarital Assets: Normally, even without a Prenuptial Agreement assets that are owned by a spouse prior to the marriage are not subject to equitable distribution in the event of a divorce. However, if premarital assets are not specified and segregated from the overall assets of the marriage, they can be in jeopardy. In a Prenuptial Agreement, each party specifically identifies assets and liabilities which they do not intend to commingle or make part of marital property. Each party gives and receives full and complete financial disclosure, so that there are no misunderstandings later.
Personal Assets: A Prenuptial Agreement can make your family assets or collectibles immune to claims from your former spouse. Prenuptial Agreements can also outline special financial arrangements, such as whether there should be alimony and/or division of certain assets, depending on the number of years in the marriage. Alimony can be waived regardless of whether a court might believe that alimony was appropriate.
Protecting Children: In New Jersey, a surviving spouse has a right to an “elective share” (approximately 1/3 of the aggregate of the parties’ assets) of the estate if you try to write them out of your Will. If you have children from a prior relationship, a Prenup can protect them by including a waiver by your spouse of his/her right to an “elective share” of your estate.
Business Protection: Prenuptial Agreements are essential when there is a family business that the family wishes to protect. To protect other shareholders or family members, a Prenuptial Agreement can determine what happens to shares in a closely held business. It can prevent a “nontitled” spouse from claiming that they have voting rights or other business participatory rights, in the event of divorce or death of a spouse. A Prenup can also insulate the increase in the value of a business (marital appreciation) from the nontitled spouse.
Are They Enforceable? Prenuptial Agreements are enforceable and governed by a Prenuptial Agreement statute. However, both parties should be represented by attorneys and give as much detailed disclosure of financial information as possible prior to entering into the Agreement. Undervaluing assets or holding back assets because you do not want to disclose them can render a Prenuptial Agreement unenforceable.
In addition, it is important that no undue pressure be placed on you or your future spouse to enter into the Agreement. It is ideal to create a Prenuptial Agreement at least two months prior to the wedding to avoid any assumption of duress. After the wedding, of course, both parties must abide by the Prenuptial Agreement. If the Agreement calls for there to be segregation of separate assets, that has to occur because commingling assets can render the Prenuptial Agreement ineffectual. An added bonus to maintaining certain assets as separate properties is that they may be shielded from the other spouse’s creditors.
Jeffrey K. Epstein, Esq. is a member of the Family Law department at the law firm of Szaferman, Lakind, Blumstein & Blader, P.C., of Lawrenceville. He is a State Certified Matrimonial Attorney and a Fellow of the American Academy of Matrimonial Lawyers. Mr. Epstein has been listed as a “2009 New Jersey SuperLawyer,” a distinction he has received for the past five consecutive years. He can be reached at jepstein@szaferman or by phone at 609-275-0400.