Prenuptial agreements in New Jersey: rules and enforceability

The law that governs NJ prenups

New Jersey adopted a version of the Uniform Premarital Agreement Act, now called the Uniform Premarital and Pre-Civil Union Agreement Act, at N.J.S.A. 37:2-31 and following. It applies to both couples planning to marry and couples planning to enter a civil union.

A premarital agreement is a contract you sign before the wedding that sets out what happens to property and support if the marriage ends by divorce or death. Without one, New Jersey's default rules apply, including equitable distribution of marital property in a divorce.

What makes a prenup valid

Under N.J.S.A. 37:2-33, the agreement must be in writing, must be signed by both parties, and must include a statement of assets attached to it. The law says it is enforceable without consideration, which means neither person has to give the other anything extra in exchange for signing.

The agreement takes effect on the day you marry or enter a civil union. After that, under N.J.S.A. 37:2-37, it can be changed or revoked only by a written agreement signed by both spouses.

Those formal steps are simple, but skipping one can give a spouse an opening years later. The statement of assets in particular does double duty: it is one of the statute's formal requirements, and it is strong evidence that each person knew what the other owned when they signed.

What a prenup can cover

N.J.S.A. 37:2-34 gives couples wide room. A New Jersey prenup can address:

• Each person's rights in property, whenever and wherever it was acquired.
• The right to buy, sell, use, transfer, lease, mortgage or otherwise manage property.
• How property is divided on separation, divorce, death or another event.
• Changing or eliminating alimony.
• Making a will or trust to carry out the agreement.
• Ownership of a life insurance death benefit.
• Which state's law governs the agreement.
• Other personal rights and obligations, as long as they do not violate public policy.

What a prenup cannot do

The clearest limit is child support. N.J.S.A. 37:2-35 says a premarital agreement cannot adversely affect a child's right to support. Child support is decided under the state's guidelines when the time comes, no matter what the agreement says.

Terms that violate public policy are also off limits. Under N.J.S.A. 9:2-4, custody is decided with the child's best interests in mind when the issue comes up, so couples should not expect a prenup to settle those issues in advance.

Parents can still agree on custody when they separate, and under N.J.S.A. 9:2-4 the court will approve an arrangement both parents agree to unless it conflicts with the child's best interests. That review happens at the time, not years earlier when the prenup was signed.

What happens without a prenup

It helps to know what a prenup replaces. In a New Jersey divorce, marital property is divided through equitable distribution under N.J.S.A. 2A:34-23.1. That means fair, not necessarily equal. The judge weighs a list of factors, including how long the marriage lasted, each spouse's health and income, and what each person contributed to the marriage, and generally has to explain the decision in written findings.

Many couples prefer more certainty than that. A prenup can say in advance that a business, a house owned before the marriage, or a future inheritance stays separate, or it can set a formula for dividing assets. It can also coordinate with an estate plan, for example by requiring a will, trust or life insurance policy for a spouse.

Alimony works the same way. Without an agreement, a judge decides whether alimony is appropriate and how much. With one, the couple can set the terms or waive support altogether, subject to the challenge rules described below.

When a court will refuse to enforce one

N.J.S.A. 37:2-38 puts the burden on the spouse who wants out of the agreement, and that spouse must prove their case by clear and convincing evidence. There are two main grounds:

• The agreement was signed involuntarily.
• The agreement was unconscionable when it was signed, because before signing that spouse was not given full and fair disclosure of the other's earnings, property and financial obligations, did not voluntarily and expressly waive that disclosure in writing, did not have and could not reasonably have had adequate knowledge of the other's finances, or did not consult independent legal counsel and did not voluntarily and expressly waive the chance to do so in writing.

The 2013 change and how to build a durable agreement

Before 2013, a New Jersey court could refuse to enforce a prenup that had become unconscionable by the time of the divorce, even if it was fair when signed. A 2013 amendment, which took effect on June 27, 2013, removed that rule for agreements signed or revised after that date. Now, unconscionability is judged as of the day the agreement was signed, and the court decides it as a matter of law.

The practical effect is that full financial disclosure and independent lawyers for each person carry a lot of weight. When both are present and the agreement was signed voluntarily, the grounds for challenging it later are narrow.

Start early. The statute does not set a minimum number of days before the wedding, but a contract signed under last minute pressure invites an argument that it was not voluntary.

Exchange complete financial information, attach the statement of assets the law requires, and give each person time to review it with their own lawyer. If someone chooses not to have a lawyer or not to receive full disclosure, that waiver should be voluntary, express and in writing.

Revisit the agreement when life changes in a big way, such as the birth of a child, the sale of a business or a large inheritance. Because any change after the wedding must be a written agreement signed by both spouses, informal side promises will not change what the prenup says.