How Enforceable Is Your Prenuptial Agreement? – Part Two

Categories: Divorce & Family Law

How Enforceable Is Your Prenuptial Agreement? – Part Two:
The New Jersey Premarital Agreement Act

by Curtis J. Romanowski, Esq.

Part One of this two-part article dealt with NJ Divorce Law Prior to the New Jersey Premarital Agreement Act. New Jersey divorce lawyers would do well to recognize that the New Jersey Premarital Agreement Act only applies to prenuptial agreements executed after November 3, 1988. The cases of Chaudry, Marshall, D’Onofrio, De Lorean, Orgler and Jacobitti, all discussed in Part One of this article, therefore, had to be decided based on pre-statutory case law.

All of the cases summarized in Part One, however, generally conform to the standards expressed in the Uniform Premarital Agreement Act, now codified in New Jersey. New Jersey divorce lawyers now measure the enforceability of prenuptial agreements against the standard set by the Uniform Premarital Agreement Act. In Part Two, we will discuss this Act, as well as New Jersey’s codification; the New Jersey Premarital Agreement Act.

The Act applies to agreements between prospective spouses made in contemplation of marriage and to be effective upon marriage. The Act specifies that all New Jersey prenuptial agreements must be condensed to a writing. The writing must then be signed by both parties. There is no requirement that consideration be exchanged for the agreement to be enforceable.

Unfortunately, prenuptial agreements are not automatically enforceable. This, despite the unquestionable benefits of expeditiously settling financial issues and notwithstanding the intentions of the parties. NJ Divorce lawyers must be quite conversant with the applicable law, to adequately protect the interests of the prenuptial agreement client.

When couples considering marriage enter into a prenuptial agreement, they can resolve in advance any potential issues involving the distribution of assets and spousal support. Notably, however, such an agreement may not adversely affect any party’s obligation to pay child support. Other than that, the issues that can be addressed and planned for in a prenuptial agreement are fairly broad. While all such agreements must be in writing, any modification or revocation of a premarital agreement must likewise be in writing.

If any party chooses to contest the enforceability of a prenuptial agreement, the burden of proof is always on the party opposing it. That party must prove that the agreement is unenforceable because of the existence of certain specific conditions prior to or at the time of the agreement’s execution. Voluntariness is an essential requirement. Premarital agreements will not be enforced in cases where any party did not sign on voluntarily.

Although the Uniform Premarital Agreement Act does not specifically define what is meant by “unconscionable”,it does specify that a lack of fair and reasonable disclosure of assets, unless that disclosure is specifically waived, along with a complete lack of knowledge of one party’s part as to the financial status of the other party, are factors to be explored and weighed.

The Act also addresses the issue of a spouse who would be rendered a public charge as a result of the enforcement of a prenuptial agreement that does not provide for spousal support, and provides a remedy. That remedy permits the Court to award alimony to the disadvantaged spouse in contradiction to the terms agreed to prior to marriage. This is reflective of the same sort of thinking that impeded the enforceability of such agreements historically.

There are some differences between the New Jersey Premarital Agreement Act and the Uniform Premarital Agreement Act. The New Jersey Act adds a definition for the term “unconscionable premarital agreement”. According to the New Jersey Act, an agreement is unconscionable if it leaves a spouse without a means of support, makes a spouse a public charge or provides a standard of living far below what the spouse enjoyed before marriage. The definition has a familiar ring to it, since it is quite similar to implied definitions and dicta contained in the case law we discussed earlier.

The enforceability of a premarital agreement executed after the enactment of the New Jersey statute was contested in the case of Hawxhurst v. Hawxhurst. The husband in Hawxhurst claimed that he had signed the agreement under duress and that it was unconscionable, regardless of the fact that the agreement was his idea and that it was drafted by his attorney, with whom he had at least two consultations. The Court held that the premarital agreement was not unconscionable. The Trial Court found that the husband received exactly what he had bargained for at the time the agreement was entered into, and that he could not complain about the deal five years down the road. The Court found that the husband did not sign the agreement under duress.

The Appellate Division, on review, cited both Marschall and D’Onofrio for the enforceability of premarital agreements, holding that prenuptial agreements that establish post-divorce rights and obligations should be held to be enforceable and valid. The Court added that such agreements should be encouraged by the courts at least to the extent that the parties have developed comprehensive and particularized agreements responsive to their particular circumstances.

The Court held that a prenuptial agreement would not necessarily be rendered voidable just because one spouse would receive a disproportionate amount of the assets as the result of the enforcement. A finding of fraud, duress or overreaching would, on the other hand, bar the enforcement of a prenuptial agreement.

As far as fairness is concerned, the Appellate Division stated that it is for the parties themselves to decide what is fair and equitable. The Appellate Division held that so long as a spouse had the opportunity to reflect on his or her actions, providing that the spouse was competent and had access to legal counsel, a Court should not substitute its own assessment of what is fair and equitable for the parties, except in rare instances under unusual circumstances.

In addition to the signed written agreement requirements of the Uniform Premarital Agreement Act, New Jersey specifies the statement of assets must be appended to the agreement. This mandate results in a clear footprint being left of the required full and fair disclosure.

New Jersey embellishes on the Uniform Premarital Agreement Act by placing the burden of proof on any party who alleges after the fact that the agreement is unenforceable. The burden of proof is quite high. The burden the party must prove his or her case for unenforceability by clear and convincing evidence. Clear and convincing evidence borders on the beyond a reasonable doubt standard required in criminal cases. Hawxhurst addressed the statutory provision.

Then came D’Onofrio v. D’Onofrio, which concerned itself with more fully developing the requirement of mutual disclosure. In that case, Ms. D’Onofrio sought to have the premarital agreement that she had entered into without the benefit of legal counsel set aside. In making its decision, the Court examined the husband’s disclosure of the assets that had been given to his wife. The prenuptial agreement included statements that acknowledged the disparity between the holdings of the parties.

Further statements illustrated the wife’s acceptance of the monetary settlement she would receive in the event of a divorce. Interestingly, the wife acted as the husband’s bookkeeper prior to marrying him. This fact provided proof that the wife fully understood what it was she was signing.

New Jersey also requires disclosure of the earnings, in addition to the disclosure of property and financial liabilities. New Jersey also preconditions enforceability on both parties either having the benefit of legal counsel prior to entering into a prenuptial agreement, or upon a waiver of the right to legal counsel. Any such waiver of the right to consult with an attorney must be in writing.

In New Jersey, prenuptial agreements are fairly difficult to set aside, provided that the procedural aspects of the act are abided by. Unconscionability is difficult to prove and the burden of proof is quite high. Parties contemplating premarital agreements should not take the waiver of the right to assistance by a competent New Jersey divorce attorney lightly.