BREAKING A PRENUPTIAL AGREEMENT
IN NEW JERSEY JUST GOT HARDER

 

August 15, 2013
By William F. White
Managing Director

 

The New Jersey state Legislature has just enacted changes to the New Jersey Uniform Premarital and Pre-Civil Union Agreement Act that makes it considerably harder to break, avoid or revise a prenuptial agreement in the event of a divorce. Gov. Chris Christie has already signed the amended statute.  The new rules will apply only prospectively to prenuptial agreements or pre-civil union agreements signed after the law was changed, as well as any agreements that were altered by the parties after the law was changed.

There is no question that the number of couples entering in to prenuptial agreements or “prenups” has increased dramatically in recent years. 73% of divorce attorneys cited an increase in prenuptial agreements during the past five years in a recent poll of American Academy of Matrimonial Lawyers (AAML) members. The full news release by AAML may be accessed at http://www.aaml.org/about-the-academy/press/press-releases/pre-post-nuptial-agreements/big-rise-prenuptial-agreements-sa

The popularity of prenuptial agreements has increased dramatically over the past few decades, in part because of the rise of divorce and remarriage. Persons remarrying later in life following a divorce generally have assets, and possibly children from a previous marriage, to consider in their financial planning and wish to minimize the impact of a possible divorce on their retirement and estate planning. Prenuptial agreements are one tool in achieving those objectives.

The new legislation in New Jersey makes it more difficult to break, avoid or modify the terms of a prenuptial agreement in the event of a divorce, primarily by making it more difficult to challenge either the entire prenuptial agreement or, certain provisions, as “unconscionable” and therefore subject to being struck or modified by the Court. Specifically, the new legislation sets forth requirements that must be met before a Court can make a finding of “unconscionability”, opening the door for invalidating or modifying the agreement.

Under the previous law, a Court may well find that the agreement, or certain provisions of an agreement were “unconscionable” simply because one person was leaving the marriage with most of the assets, or because the other party was unemployed or suffered from medical problems. In short, Judges had wide ranging discretion to take the facts at the time of the divorce, rather than the time that the prenuptial agreement was entered into, in determining whether the terms were so unfair as to be “unconscionable”. The new law substantially narrows or limits the definition of “unconscionable” and requires that the terms of the agreement must have been “unconscionable” at the time that the agreement was entered into in order to overturn or modify the agreement.

This is such an important change in the law that the full text of the new law is worth reviewing in full:

CHAPTER 72

AN ACT concerning premarital and pre-civil union agreements and amending R.S.37:2-32

and R.S.37:2-38.

BE IT ENACTED by the Senate and General Assembly of the State of New Jersey:

1. R.S.37:2-32 is amended to read as follows:

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;

c. (Deleted by amendment, P.L.2013, c.72).

2. R.S.37:2-38 is amended to read as follows:

Enforcement of premarital or pre-civil union agreement; generally.

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.

3. This act shall take effect immediately and shall apply to all premarital and pre-civil

union agreements entered into on or after the effective date, or entered into before that

effective date but voluntarily revised by the parties on or after the effective date in

accordance with the procedures for amending agreements set forth in R.S.37:2-37.

Under the new law, Courts will no longer be permitted to invalidate or modify prenuptial agreements simply because the outcome required by the agreement at the time of the divorce, and under the facts existing at the time of the divorce, strikes the Judge as “unfair”.  In short, if you follow the requirements of the new law, “a deal is a deal” and the agreement will be enforced, even if the resulting outcome seems unfair.

While the foregoing legal changes affect prenuptial agreements which are to be enforced in the state of New Jersey in the United States, they do signal a change which is likely to expand to other jurisdictions, particularly in the U.S.  There is a general consensus that Courts too frequently exercise to their discretion too broadly to produce what the Court feels is “fair” rather than what the parties agreed to voluntarily and willingly before entering into the marriage.

What lessons should be taken away from this change for Americans wanting to marry, and enter into a prenuptial agreement with a Thai, Khmer, Vietnamese, Philippina or other fiancées from SE Asia?

1)    There must be full disclosure of earnings, assets and financial obligations OR a voluntary and informed waiver of the right to full disclosure of earnings, assets and financial obligations.

2)    Your Thai, Khmer, Vietnamese, Philippina or other fiancée from SE Asia MUST have independent legal counsel or must voluntarily and expressly waive in writing her right to independent counsel. NOTE: We believe that, even under the New Jersey amended statute, it is a bad idea to allow your fiancée to waive her right to independent counsel.

3)    Your Thai, Khmer, Vietnamese, Philippina or other fiancée from SE Asia MUST be provided with a full translation of the prenuptial agreement in her native language or a language in which she is demonstrably and fully fluent.

Our law firm primarily represents foreigners entering into prenuptial agreements with fiancés or fiancées from the countries of SE Asia, including but not limited to, Thailand, Cambodia, Myanmar (Burma), Vietnam, Philippines, Indonesia, Malaysia and Laos. Our clients include foreign fiancés and fiancées from many other countries, including but not limited to, the United States (USA), Canada, the United Kingdom (UK), Australia, Germany, France, Italy and other Western countries.

For additional information or assistance with your prenuptial agreement, please contact our experienced attorneys at info@whiteweberlaw.com