Prenuptial Agreements to Protect Your Assets in Case of Divorce or Death
By Kenneth A. Vercammen, Esq.
Today, many persons may be planning into entering into second or third marriages. They question whether the marriage will work out and if it doesn’t will they lose ownership of their property if they get divorced. Most people want to leave substantial portions of their assets to their natural children. Yet, it is not uncommon for individuals to get married several times. If you wish to protect your assets from loss in divorce and permit your children to inherit your entire estate, consider entering into a prenuptial agreement prior to a marriage.
A prenuptial agreement requires full disclosure of assets by both man and women. Each must be represented by a licensed New Jersey attorney. These are minimum requirements in New Jersey. If this provided we cannot prepare the prenuptial agreement. Consult fee only is $200 without document review. Our office’s minimum fee to review or draft the agreement is $2,000.
Additionally, you should make advance plans regarding ownership and transfer your assets in the even of death or disability. In addition to having a formal Last Will and Testament individuals are encouraged to plan ahead prior to a second or third marriage. People who are about to marry can fix, limit and determine, by agreement, the interest, rights and claims that will accrue to each of them in their property. To this end, the prenuptial statute requires that each party be represented by separate independent counsel.
By signing a Prenuptial Agreement ("Agreement") each party is willing to accept the provisions of this agreement in lieu of any rights which she or he may have in the property and assets of the other. All property owned, whether real or personal, must be fully disclosed and revealed to each of the parties prior to the execution of the agreement. It must be signed in ample time prior to a forthcoming marriage.
Divorce, alimony or elective share against the Will can cost you more. A prenuptial agreement cannot prevent Medicaid from asserting a lien or payment if a spouse goes into a nursing home.
The following is the New Jersey "Uniform Premarital and Pre-Civil Union Agreement Act."
NJSA37:2-31. This article shall be known and may be cited as the "Uniform Premarital and Pre-Civil Union Agreement Act."
37:2-32 Definitions. 37:2-32. As used in this article:
a."Premarital or pre-civil union agreement" means an agreement between prospective spouses or partners in a civil union couple made in contemplation of marriage or a civil union and to be effective upon marriage or upon the parties establishing a civil union; b."Property" means an interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings;
37:2-33 Formalities; consideration.
A premarital or pre-civil union agreement shall be in writing, with a statement of assets annexed thereto, signed by both parties, and it is enforceable without consideration.
37:2-34 Contents of premarital or pre-civil union agreement
Parties to a premarital or pre-civil union agreement may contract with respect to:
a.The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;
b.The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;
c.The disposition of property upon separation, marital dissolution, dissolution of a civil union, death, or the occurrence or nonoccurrence of any other event;
d.The modification or elimination of spousal or one partner in a civil union couple support;
e.The making of a will, trust, or other arrangement to carry out the provisions of the agreement;
f.The ownership rights in and disposition of the death benefit from a life insurance policy;
g.The choice of law governing the construction of the agreement; and h.Any other matter, including their personal rights and obligations, not in violation of public policy.
37:2-35 Premarital or pre-civil union agreement not to adversely affect right of child support.
A premarital or pre-civil union agreement shall not adversely affect the right of a child to support.
37:2-36 When premarital or pre-civil union agreement becomes effective. 37:2-36. When premarital or pre-civil union agreement becomes effective. A premarital or pre-civil union agreement becomes effective upon marriage of the parties or upon the parties establishing a civil union.
37:2-37 Amendment or revocation of premarital or pre-civil union agreement
Amendment or revocation of premarital or pre-civil union agreement. After marriage of the parties or the parties establishing a civil union, a premarital or pre-civil union agreement may be amended or revoked only by a written agreement signed by the parties, and the amended agreement or revocation is enforceable without consideration.
37:2-38 Enforcement of premarital or pre-civil union agreement; generally . The burden of proof to set aside a premarital or pre-civil union agreement shall be upon the party alleging the agreement to be unenforceable. A premarital or pre-civil union agreement shall not be enforceable if the party seeking to set aside the agreement proves, by clear and convincing evidence, that:
a.The party executed the agreement involuntarily; or
b.(Deleted by amendment, P.L.2013, c.72)
c.The agreement was unconscionable when it was executed because that party, before execution of the agreement:
(1)Was not provided full and fair disclosure of the earnings, property and financial obligations of the other party;
(2)Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided;
(3)Did not have, or reasonably could not have had, an 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. d.The issue of Unconscionability of a premarital or pre-civil union agreement shall be determined by the court as a matter of law. An agreement shall not be deemed unconscionable unless the circumstances set out in subsection c. of this section are applicable.
37:2-39 Enforcement of premarital or pre-civil union agreement; marriage or civil union determined void
If a marriage or civil union is determined to be void, an agreement that would otherwise have been a premarital or pre-civil union agreement is enforceable only to the extent necessary to avoid an inequitable result.
37:2-40 Construction of article.
a.This article shall be construed to effectuate its general purpose to make uniform the law with respect to the subject of the article among states enacting the "Uniform Premarital Agreement Act."
b.This article shall be construed to apply to pre-civil union agreements executed on and after the effective date of P.L.2006, c.103 (C.37:1-28 et al.).
The following are some sample clauses used by attorneys in drafting the prenuptial agreements.:
WHEREAS, the parties have known each other for a period of time and desire to marry and each has the utmost respect and consideration for the property and personal rights of the other and each is unwilling, because of marriage, to assert or succeed to any right or privilege whatsoever in certain property of the other during or after the lifetime of either party;
and WHEREAS, both parties also believe that the modern and realistic approach to marriage is to further contemplate the effect of a separation or divorce and to outline the expectations and responsibilities of the parties which, in fact, will promote the stability of their marriage;
and WHEREAS, both parties understand that no marriage would be solemnized between them without this agreement as to their respective rights in the event of the death of either party or separation or divorce; , and WHEREAS, each of the parties represents that his or her attorney, as the case may be, has privately, and without the other being present, read and explained to such party the provision of the following laws of the State of New Jersey, and has had the opportunity to obtain independent legal advice prior to the execution of this Agreement and has been fully advised as to his or her rights hereunder and has been fully advised as to his or her rights in the absence of such Agreement. WHEREAS, each of the parties hereto recognizes that in the event of the death of the other, providing they shall first marry, the survivor would be entitled to share in such decedents estate in an amount ranging from one-third of the estate to the entire estate depending upon what other distributes survive such decedent;
and WHEREAS as a condition of marrying, the parties desire to enter into an agreement before marriage, waiving the right of election to take against and Last Will and Testament of the other whatsoever;
and WHEREAS the parties desire by this agreement to mutually restrict the rights which each might otherwise have to take against the terms of the others Will, as such rights are set forth in the Laws cited above as well as any other law or decision of the State of New Jersey; and WHEREAS each desires to preserve his or her right to dispose of her excluded assets by Will as though no marriage had even taken place; and WHEREAS, each party expressly desires to retain the power to have his or her estate vest in his or her legatees or devisees as may be prescribed by his or her Last Will and Testament; and Full disclosure
Each party hereby acknowledges that she or he has had the opportunity to ascertain, has been fully informed by a full and frank disclosure of, and is fully acquainted with and aware of, all of the income, debts, net worth, financial circumstances and value of the other and value of their property; and each party acknowledges that she or he is aware of, all pending litigation that may effect each of the parties to the within Agreement; and each has ascertained and weighed all of the facts, conditions and circumstances likely to influence her or his judgment in all matters embodied herein; that each has been given due consideration to all such matters and questions and clearly understands and consents to all of the provisions hereof, and is willing to accept the provisions of this Agreement in lieu of all of the rights in and to the aforementioned described property. Each Party keeps their own assets
Wife __________ shall during her lifetime keep and retain sole ownership, enjoyment, power, control and disposal of her property, and proceeds of sale thereto, whether by way of gift, devise or other, free and clear of any interest, rights or claims of the other (including rights under community property laws). Waive, relinquish and release any and all right Both parties do hereby waive, relinquish and release any and all right, claims or demand of any kind, nature and description which she or he might otherwise acquire or have at any time hereafter in the above-described property of the other, by reason of their marriage to each other (including rights under community property laws) or as surviving spouse, whether by way of intestacy or dower or courtesy, or any other rights which she or he may have as a surviving spouse to share in the estate of the other, or to receive any allowance or exception from the estate of the other or to any right to elect to take against the Will of the other, or the right to act as administrator/administratrix of the estate of the other. However, either party may expressly provide for their spouse in their Will.
Permission to make Will Nothing contained herein shall be deemed to constitute a waiver of any bequest or devise that one may choose to make to the other by way of Will or Codicil, or by any gift, grant or conveyance that one may choose to make to the other. However, each party to the Agreement agrees that no promise of any kind has been made by the other with respect to any such bequest or devise, or of any gift, grant or conveyance.
No property if divorce In the event of an annulment, separation, legal or by mutual agreement, or the pending of final divorce between the parties hereto either in the jurisdiction of the State of New Jersey or any other state or territory or foreign country, or in the event that the parties hereto have lived apart for a period in excess of ninety (90) continuous days and one of the parties has no intention of returning, each party agrees that there shall be no property settlement or division of property between them with regard to the aforesaid property of the other or any increment, substitute or proceeds thereof, to any of the properties set forth above, but each shall keep and retain sole ownership, enjoyment, control and power of disposal of all properties set forth in Schedule "A" Separate Property acquired during marriage.
It is understood and agreed by and between the parties hereto that any property acquired during the marriage in the name of one party or under circumstances in which it is clear that such property was intended to be acquired separately by one party or where the source of the funds or assets by which such separate property was acquired is premarital assets, shall remain the separate property of the party acquiring such assets, including but not limited to any property into which the same is converted. Property acquired by gift It is understood and agreed by and between the parties hereto that any property acquired during the marriage by either party by way of gift or inheritance from a third party shall be deemed the separate property of the party. Any assets acquired by the parties jointly during the marriage by way of gift or inheritance from a third party shall be deemed joint property acquired during the marriage. Responsibility for debts Each party hereto mutually warrants and represents to the other that whatever debtedness (including, but not limited to, any outstanding tax of any nature due any federal, state or local taxing authority) said party has at, or that has been accrued as of, the time of marriage shall be that party’s sole and exclusive responsibility, and said party shall indemnify and hold harmless the other for any indebtedness incurred previous to marriage.
The following are portions of the Probate law which may be avoided if a proper prenuptial agreement is signed:
(a) N.J.S.A. 3B:8-1 of Administration of Estates wherein it is provided that if a married person dies domiciled in this State, on or after May 28, 1980, the surviving spouse has a right of election to take an elective share of one-third of the augmented estate, subject to the limitations, conditions and exceptions contained therein;
(b) N.J.S.A. 3B: 8-10 of Administration of Estates wherein it is provided that the right of election and the rights of the surviving spouse may be waived before of after the marriage after May 28, 1980 by a written contract, agreement or waiver signed by the party after fair disclosure, subject to the limitations, conditions and exceptions contained therein;
(c) N.J.S.A. 37:2-31, et seq. Particularly N.J.S.A. 37:2-38C(2) of the Marriages and Married Persons Law, Article 5, wherein it is provided that a premarital agreement shall not be enforceable if a party proves that the party did not voluntarily and expressly waive in writing, any right to disclosure of the property and financial obligations of the other party beyond the disclosure provided.
(d) N.J.S.A. 3B:5-15 of Administration of Estates wherein it is provided that if a testator fails to provide by Will for his surviving spouse who married the testator after execution of the Will that the omitted spouse shall receive the same share of the estate as if the decedent left no Will, subject to the limitations, conditions and exceptions contained therein;
(e) N.J.S.A. 3B:5-3 of Administration of Estates wherein it provides for the interstate share of a surviving spouse; (f) N.J.S.A. 3B:28-3 of Administration of Estates wherein it provides for the right and possession of a spouse in the principal matrimonial residence;
(g) N.J.S.A. 2A:34-23 et seq. Of Divorce and Nullity of Marriage wherein it provides for alimony, maintenance and equitable distribution;