How do we create a prenuptial agreement and how does it affect divorce?
In order to create a prenuptial agreement, you and your fiancé each need to retain your own attorneys and indicate to them the reason you wish to have a prenuptial agreement. Some common reasons for prenuptial agreements include: to protect closely-held family businesses, to protect assets and liabilities from distribution at the time of a divorce, to limit or waiver spousal support, and to define the couple’s intended contributions to and expectations of the marriage.
Where one party previously experienced a divorce, it is also common for couples to want to limit their exposure should a second divorce occur, especially if the first divorce was acrimonious, lengthy, or expensive.
After you meet with your attorney and identify your goals, you will need to create a financial statement and make a full disclosure of any and all assets, liabilities, income, etc. A complete financial disclosure by both parties is required by the statute and is an integral part of the process.
In New Jersey, the statute indicates that a prenuptial agreement will be deemed unconscionable when it was executed because either party, before execution of the agreement:
- 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 consult with independent legal counsel.
Prenuptial agreements are critical if you or your spouse intend to keep certain assets or income separate in the event of a divorce. It is important to understand that commingling an asset that may otherwise have been exempt from equitable distribution will make the asset part of the marital estate and distributable. Similarly, although you may believe keeping an asset titled in sole names will not transmute the asset, this is not always true. These issues are very fact-sensitive and complex. It is critical to consult with an attorney and ensure your assets, income, and liabilities are protected as you intended. By properly entering into a prenuptial agreement, you can protect yourself and plan for future life events such as divorce.
Diana N. Fredericks, a family law attorney at Gebhardt & Kiefer, P.C. Diana works with clients whose needs lie in all areas of matrimonial and family law.