Prenuptial Agreements in New Jersey: Should you be asking “why”, or “why not”?

Pre-nups in New jersey are governed by statute (N.J.S.A. 37:2-31) known as the “Uniform Pre-Civil Union Agreement Act”, also known as “UPAA”, for short. Pre-nups can accomplish a variety of things, and most commonly, allow couples to clearly define separate property (as opposed to marital property) and how certain property will be divided in the event of a divorce. Notably, pre-nups cannot define custody or child support in the event of a divorce – those issues are fluid and not enforceable by way of pre-nup. For a pre-nup to be enforceable, generally, the UPAA requires, (1) full disclosure of assets, (2) independent legal counsel for each party, (3) pre-nup to be made in writing, (4) signature of both parties, and (5) an annexed statement of assets for both parties.

Traditionally (and still to date), there has been an ominous, perceived dark cloud hanging over the concept of prenuptial agreements (“pre-nup”), which are more homogenously known as premarital agreements in New Jersey. Couples who intend to marry oftentimes shy away from the mere conversation of entering into a pre-nup out of fear or concern that his/her spouse-to-be will interpret same as “setting the marriage up for failure”. The 21st century has brought about a mild change in perception here, with more and more couples opening up to the idea of a pre-nup, but still, many actively avoid even discussing pre-nups because of the negative historical connotation that comes with them.

Why do I need a pre-nup if I know I am marrying the love of my life?”

“Who would get a pre-nup unless he/she is already preparing for a divorce?”

“Why would I set my marriage up for failure before it starts?”

These are the types of thoughts that have pervaded many individuals’ thought processes regarding pre-nups for generations. These thoughts are, in some regards, fair. At the same time, these thoughts are short-sighted. Analogously (albeit imperfectly), nobody plans on dying, yet most adults carry life insurance and also have a Will. Analogously also (and again, albeit imperfectly), nobody plans on getting into a car accident, however everyone who drives a legally licensed automobile in New Jersey must have automobile insurance. Pre-nups are safety nets that provide clarity and certainty for couples in the unforeseeable and unfortunate event of divorce. Given that the divorce rate in New Jersey exceeds 50%, one is almost assuredly better off asking him/herself: “Why should I not have a pre-nup?”

Spring 2021 is upon us and it is officially “wedding season”. This wedding season will be busier than most since many 2020 weddings were postponed as a result of the coronavirus pandemic. Couples have quite literally been forced to isolate and quarantine with one another, putting their relationship and compatibility to the test. To those who have prevailed and forged an even stronger bond, bravo! To all who entered the pandemic in a relationship with an intent to get married, and/or now have plans to get married, it is prudent to consider and discuss a potential pre-nup with your significant other. Is a pre-nup right for everyone? Nope. Is it likely harmless to simply have such a discussion? Yes, however of course, bearing in mind that the “pervasive historical negative connotations” associated with pre-nups may “offend” one party or the other. Notwithstanding, it is often best to broach the topic as an open discussion, not as an ultimatum or a mandate, since a pre-nup is intended to be mutually-beneficial for both parties (as further explained precisely how so, below).

What is the downside? Virtually non-existent. There will be a legal expense associated with the drafting and execution of a pre-nup, which legal expense will pale in comparison to those faced by individual’s engaged in divorce litigation (e.g., ~$2,500 as opposed to ~$25,000 - $1,000,000+). The broaching of the topic may be sensitive and uncomfortable, but similar to obtaining a life insurance policy, entering into a pre-nup is not predisposing of the marriage before it starts, rather it is a precaution in the event the marriage does not work out. When individuals get married, they are at their peak of love for one another and happiness. Nobody gets married with the intent to get divorced, but nevertheless, the numbers speak for themselves and are staggering: more marriages end in divorce than happily ever after. So, this begs the question: What is the upside? The obvious rationale is to protect premarital assets (e.g., bank accounts, investment accounts, business interests, family inheritance(s) or trust monies). Perhaps one spouse has significant debt, for example, student loan debt à a pre-nup allows individuals to clearly set forth who is responsible and who is not, should there ever be a divorce. Similarly, pre-nups allow individuals to clearly set forth which premarital assets are exempt from any division of assets pursuant to a divorce, and which are subject to division. Divorce is oftentimes complex, expensive, and ugly. On the flip-side of individuals being at peak happiness and love when they wed is the reality that when couples decide to get divorced, individuals are (oftentimes, not always) at peak levels of distrust, disdain, and bitterness for his or her spouse. These emotions make settlement and compromise difficult, to say the least. Emotions cloud judgment and reason. What is sensible becomes lost, and “winning” against the other spouse becomes the goal. In turn, divorces drag on and litigation ensues. Lawyers are retained, significant legal fees are incurred, and years of litigation and legal expense lay ahead if the parties are unable to reach an amicable resolution to dissolve their marriage. Marital estates are eroded, if not entirely wiped out, on legal and expert fees. Monies that could have been set aside for a child’s first car or college tuition are instead spent on litigation to fight to “win” against the other spouse. But who actually “wins”? Certainly not the children oftentimes stuck in the middle as their parents duke it out. It is virtually unheard of for individuals to conclude a 4-year divorce litigation ending in a trial and come out saying, “Boy, thank goodness I spent those 4 years fighting, that was worth it, I got everything I wanted.” Nobody gets everything he or she wants. Frankly, nobody wins, except the lawyers.

Except for custody (which cannot be contracted through a pre-nup, rather is always subject to an analysis of what may be in the child’s best interests), disputes as to virtually all issues that commonly arise pursuant to a divorce can be avoided through an enforceable pre-nup that clearly defines each individual’s rights and entitlements in the event of a divorce. Will the initial discussion be awkward? Probably. Will one spouse or the other feel there is an ulterior motive? Perhaps, but hence the UPAA requirement for annexed statements of assets for both parties – to the extent an individual does hide or misrepresent the extent of his or her assets at the time of executing a pre-nup, that pre-nup will likely be found unconscionable and/or unenforceable in the event of a divorce, therefore rendering the “concerned” party protected. Will a marriage be doomed for failure because there is a pre-nup? Of course not, and to the contrary, individuals should view it as an “insurance policy” should anything go wrong with his/her marriage. Pre-nups are not for everybody – some couples may discuss it and decide there is no need, but at the same time, a simple discussion cannot hurt and may prove invaluable down the line.

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