In March, 2013, the New Jersey State Legislature amended the Premarital Agreement Statute which in essence, makes it more difficult to vacate such agreement at the time of enforcement. A Premarital Agreement, or more commonly known as a Prenuptial Agreement, is an agreement between two prospective spouses or partners in a civil union, dealing with current or future property interests in real or personal property, as well as income and earnings. The agreement predominantly sets forth what would happen to this property and/or income upon divorce or termination of the civil union. For example, such agreements may determine that any pre-marital property, as well as any increases in value to that property during the marriage, irrespective of whose efforts or money that went into those increases, will not be subject to equitable distribution upon divorce. It may also deal with the issue of alimony upon divorce. In addition, the agreement many times has provisions concerning property interests or income upon death.
Since spouses, or soon to be spouses, may enter into an enforceable contract, they may agree to keep certain assets as exempt from equitable distribution, or they may agree on a percentage split of those assets irrespective of what the law in the State of New Jersey would dictate. While Premarital Agreements are enforceable, there are certain circumstances under which they may be vacated by a Court.
The new statute provides that in order to set aside a Premarital Agreement, the party seeking to set aside the agreement must prove by clear and convincing evidence that (a) he/she executed the agreement involuntarily, (b) the agreement was unconscionable when it was executed because (1) he/she was not provided with a full and fair disclosure of the earnings, property and financial obligations of the other party, (2) did not voluntarily and expressly waive in writing the right to disclosure of the property or financial obligations of the other party beyond that disclosed at the time, (3) did not have adequate knowledge of the property or financial obligations of the other party, or (4) did not consult with independent legal counsel and did not voluntarily and expressly waive in writing the opportunity to consult with independent legal counsel.
In the prior statute, in addition to the above reasons, a Premarital Agreement could be set aside if it was determined by a Court that the agreement was unconscionable at the time of enforcement. Unconscionability was defined as an agreement that either due to lack of property or unemployability, the terms of the agreement would render a spouse without a means of reasonable support, would make a spouse a public charge, or which would provide a standard of living far below that which was enjoyed before the marriage. None of this is in the current statute. Under this previous statute, we would advise clients that it would not be possible to determine at the time a Prenuptial Agreement was being executed whether it would be deemed unconscionable ten or twenty years down the road if the parties decided to get divorced, and one of the parties sought to vacate the agreement. As the law stands now, it doesn’t matter whether the agreement is unconscionable at the time of its enforcement. The only issue is whether it is unconscionable at the time the agreement is executed, and the current definition of unconscionability has nothing to do with a spouse being unemployable, having a lack of property, being a public charge, or having a standard of living below that enjoyed at the time of marriage.
Prior to this statute’s modification in March, 2013, many spouses who had entered into a Prenuptial Agreement years ago would attempt to vacate it at the time of the divorce, alleging not only lack of full and fair disclosure, but unconscionability based on circumstances many years removed from the execution of the Prenuptial Agreement. If you have a pre-March, 2013 agreement, you may still be able to argue unconscionability at the time of enforcement since the new statute applies to all pre-marital and pre-civil union agreements entered into after the effective date of the statute, or agreements voluntarily revised by the parties after the effective date.