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New Standards for Prenuptial Agreements

November 17, 2013 | Posted In Family Law - Family Law, New Jersey Family Lawyer

Lawmakers in New Jersey recently modified sections of the state’s Premarital Agreement Statute, N.J.S.A. 37:2-32 and 37:2-38 to reflect more explicit laws for advising couples about and executing prenuptial agreements. Family lawyers in New Jersey say that these updated standards will hopefully eliminate confusion and contradiction for couples who sign prenuptial agreements before their marriage. 

According to the old statutes, a partner seeking to disband a prenuptial agreement had to prove, by “clear and convincing evidence,” that the original negotiation, execution, or enforcement of the agreement had an element of unfairness and inequality between the two partners. New Jersey judges looked at three determining factors in evaluating an agreement’s unfairness. Firstly, that the agreement was executed voluntarily on both sides. Secondly, that the agreement was unconscionable when it was enforced. Thirdly, that the agreement was unconscionable before or at the time of execution. 

Included in this statute is the definition of unconscionability, which varied depending on the scenario. Section 37:2-32(c) declared that it was unconscionable for one spouse to leave the other with a loss of property or employability, thus causing the spouse to be without means of support, at the welfare of the state, or living at a level of enjoyment below what had previously been established in the marriage. The statute also stated that is was unconscionable for one spouse to withhold earning or wealth information and prior financial obligations. The law also granted the challenging spouse the right to consult with outside counsel before the agreement was established. 

Under the previous terms, family lawyers in New Jersey struggled to ensure that their clients’ actions were not unconscionable at any point of the negotiation process. Many attorneys kept from including prenuptial agreement drafts as part of the services they offered, in fear that the client would someday return to lay blame at the attorney’s feet for unconscionable behavior, even if the circumstances were beyond the attorney’s express control. 

The recent amendments have rendered three major changes for prenuptial agreements going forward. The first amends the basis of the determination of unconscionability to reflect the circumstances as they stand when the agreement is signed, not when the enforcement is later sought. The second limits the court’s discretion in determining what is unconscionable to the grounds established in N.J.S.A. 37:2-38(c), including full disclosure limits, independent counsel, and so forth. The third change ensures that the new standard applies only to prenuptial agreements negotiated and executed after June 27th of this year. Couples who have signed prenups previously have the option to revise their agreement according to the new laws. Those who waive that right may have to wait for future legal precedent to establish how agreements made before this date will be handled in court. 

The family attorneys at New Jersey-based law firm Helmer, Conley, and Kasselman, PA, offer legal counsel and representation for couples who need advice in negotiating the terms of their prenuptial agreements, or reviewing the agreements they have previously made. 

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