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Mediation and Prenuptial Agreements
With more people getting married later for the first time - often with substantial assets, and people getting married for the second+ time(s) with children from previous marriages and dealing with even lower odds of these marriage surviving, it is no wonder that I am getting more and more requests for mediation for prenuptial agreements.
A prenuptial agreement is a contract between prospective spouses. Most prenuptial agreements contain provisions limiting the distribution of marital property and alimony in the event of divorce and limiting the distribution of property to a spouse in the event of death.
Prenuptial agreements represent an almost perfect application for mediation. Whereas the family law (i.e. divorce) lawyer is trained to protect his or her client at the expense of the adversary, the mediator is trained to act as a neutral third-party, helping the parties to explore all options and their potential consequences.
During the mediation process, the mediator summarizes the agreements reached in the mediation process in a non-legal document called the Memorandum of Understanding. The couple then has separate lawyers review the Memorandum turn it into a legal agreement.
Often, the couple may use the mediation process to discuss financial issues that are emotionally difficult to bring up on their own, but may choose not to have a formal document drawn up. In some cases, this decision is based on the understanding that in most states, premarital assets, if kept separate from marital property, remain separate property and are not subject to distribution at the time of divorce. In other cases, a trust or a will may serve the same function as the intent of a prenuptial agreement.
While the standards for enforcing prenuptial agreements vary from state to state, in almost all states, five conditions are imposed:
Because of past uncertainty whether courts could enforce prenuptial agreements, a uniform treatment of prenuptial agreements was sought through the Uniform Premarital Agreement Act (UPAA). The UPAA was approved by the National Conference on Uniform State Laws in 1983, and has been adopted in whole or in part by approximately half the states including New Jersey (in 1988), but not neighboring New York and Pennsylvania. The statutory citation for New Jersey is N.J.S.A. 37:2-31 to 37:2-41. The full text is included as an addition to this article.
Some couples feel that discussing financial matters including what happens if the marriage fails hinders the romance and shows a lack of commitment towards the marriage. Let's face it... at the end of the marriage, few couples agree on how to split their assets and I hear a lot of "I assumed" statements. Whether you choose to have a prenuptial agreement, communicating about financial issues, strengthens the trust and starts the marriage off on the right foot. The signing of a prenuptial agreement, or not, finally comes down to a decision that the couple will have to make together. However, you don't need to have the prenuptial agreement to have the discussion and information sharing that is part of the prenuptial agreement process.
New Jersey Statutory Citation on Prenuptial Agreements
Uniform Premarital Agreement Act (UPAA)
37:2-31. Short title: This article shall be known and may be cited as the "Uniform Premarital Agreement Act."
37:2-32. Definitions as used in this article:
37:2-33. Formalities; consideration: A premarital 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 agreement: Parties to a premarital agreement may contract with respect to:
37:2-35. Premarital agreement not to adversely affect right of child support: A premarital agreement shall not adversely affect the right of a child to support.
37:2-36. When premarital agreement becomes effective: A premarital agreement becomes effective upon marriage of the parties.
37:2-37. Amendment or revocation of premarital agreement: After marriage of the parties, a premarital 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 agreement; generally: The burden of proof to set aside a premarital agreement shall be upon the party alleging the agreement to be unenforceable. A premarital agreement shall not be enforceable if the party seeking to set aside the agreement proves, by clear and convincing evidence, that:
37:2-39. Enforcement of premarital agreement; marriage determined void: If a marriage is determined to be void, an agreement that would otherwise have been a premarital agreement is enforceable only to the extent necessary to avoid an inequitable result.
37:2-40. Construction of article: 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."
37:2-41. Application of article: This article shall apply to premarital agreements executed on and after its effective date.
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