New Jersey courts have long held that prenuptial agreements are enforceable, provided that both spouses make full financial disclosure, consent to the terms and conditions of the agreement, and the agreement is fair and not unconscionable.
New Jersey has adopted the Uniform Premarital and Pre-Civil Union Agreement Act, N.J.S.A.37:2-31 to -41. Under the Act, parties to a prenuptial agreement may contract with respect to the “rights and obligations” of each party in any property in which either of them has an interest “whenever and wherever acquired or located.” N.J.S.A. 37:2-34(a).
The agreement may also provide for “the disposition of property upon separation, marital dissolution, dissolution of a civil union, death or the occurrence or nonoccurrence of any other event.” N.J.S.A. 37:2-34(c). The agreement may also affect “the making of a will, trust or other arrangement to carry out the provisions of the agreement” and “the ownership rights in and disposition of the death benefit from a life insurance policy.” N.J.S.A. 37:2-34(e)(f).
If a premarital agreement is disputed after it has been signed, the disputing party bears the burden of proving that the Agreement should be set aside. A prenuptial agreement is unenforceable if the party seeking to set aside the agreement proves by clear and convincing evidence that:
- The party executed the agreement involuntarily; or
- (Deleted by amendment, L. 2013, c 72)
- The agreement was unconscionable when it was executed because that party, before the execution of the agreement:
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- Was not provided full and fair disclosure of the earnings, property, and financial obligations of the other party;
- 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;
- Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party; or
- Did not consult with independent legal counsel and did not voluntarily and expressly waive, in writing, the opportunity to do so. (This section of the law has been invalidated as unconstitutional.
d. The issue of unconscionability of a premarital or pre-civil union agreement shall be determined by the court as a matter of law. (N.J.S.A. 372-38.)
In one case a court held “that there is no material distinction between” the requirement to provide “full and fair disclosure of the earnings, property and financial obligations” under N.J.S.A. 37:2-38(c)(1) and the requirement of “fair disclosure” under N.J.S.A. 3B:8-10.
The facts established in that case that the agreement in dispute disclosed decedent’s financial statement identifying and setting forth the values of his assets and liabilities as of the date recited. The agreement recited that plaintiff reviewed decedent’s financial statement and retained independent counsel “to review and represent her in conjunction with” the Agreement prior to signing it.
The court rejected the plaintiff’s argument that the decedent was required to produce more information, including appraisals and bank statements.
Here, the decedent attached his financial statement to the Agreement, which identified “a list of assets and their approximate values.” Plaintiff retained and consulted with independent counsel before signing the Agreement. In Article XVI of the agreement, plaintiff acknowledged that she read and understood the Agreement and “had ample opportunity to consult with legal counsel.” Neither plaintiff nor her attorney requested additional financial information before the Agreement was signed. Decedent did not “deliberately refuse to make such a disclosure” or “stonewall any such requests for additional financial information.
The plaintiff cited Orgler v Orgler, 237 N.J. Super. 342 (App. Div. 1989), an unpublished opinion in support of the proposition that a sufficiently “detailed financial statement should include not only the dollar values of the assets listed, but how the values were determined, as well as supporting documentation regarding the value of each asset listed.” Plaintiff’s reliance on this case was rejected.
The Appellate Court was satisfied that the trial court accurately interpreted and correctly applied the requirements of N.J.S.A. 37:2-38.
To discuss your NJ estate planning, please contact Fredrick P. Niemann, Esq. at (732) 863-9900 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Estate Planning Attorney