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It’s perfectly understandable to want to protect your assets. In many circumstances, individuals who are considering marriage may have concerns about what will happen to the property they own if the marriage does not survive. In order to protect those assets, you may want to consider drafting a prenuptial agreement, which may limit each party’s rights to the other’s assets and may dictate what will happen to marital property in the event of a dissolution of your marriage.
Establishing separate property
Prenuptial agreements generally establish that all property owned prior to the parties’ marriage will remain the property of the person who has ownership of same. In order to properly establish this, it is extremely important that the parties each fully disclose their assets in a financial statement attached to the prenuptial agreement. These assets are considered to be each person’s separate property and are generally stated within the prenuptial agreement to remain the respective owner’s property in the event of a divorce. It is often very common that the prenuptial agreement will contain language that states each person can dispose of or utilize their separate property in whatever manner they wish to do so, and any property that is subsequently purchased utilizing separate funds or property shall also continue to be separate property.
What is marital property?
A prenuptial agreement also sets forth the definition of marital property. Generally, marital property is any property that accrues during the marriage, such as homes and/or vehicles that are purchased, and joint bank accounts. However, prenuptial agreements may provide that if the property purchased during the marriage can be traced back to either party’s separate property, then the marital property in question will be divided in proportion to the contribution from each party in the event of a marriage dissolution. Property that is determined to truly be marital property continues to be subject to the general laws of equitable distribution.
How might a prenuptial agreement affect your divorce?
If you signed a prenuptial agreement prior to your marriage, it likely set forth the terms of equitable distribution – and potential alimony – in the event of a dissolution of the marriage. If this is the case, then the only property to be divided is the marital property. As described above, many prenuptial agreements even provide for the division of marital property that can be traced to each party’s contribution of separate funds. In many ways, a prenuptial agreement resolves many, if not all, of the equitable distribution and potential alimony issues before the divorce even begins. Upon divorce, typically the only issues left unresolved are those related to any children born or adopted during the marriage. This may aid in keeping divorce costs down and removes much of the stress associated with the financial aspects of a divorce.
What if someone contests the prenuptial agreement?
There are limited circumstances in which a party might contest the validity of a prenuptial agreement. These are set forth in N.J.S.A. 37:2-38, which specifically defines the instances in which an agreement might be said to be unconscionable. These include: if one individual did not provide full and fair disclosure of their respective assets and earnings; did not voluntarily and expressly (in writing) waive full disclosure of assets; could not have had an adequate knowledge of the financial circumstances of the other party; or did not meet with legal counsel and did not expressly waive the right to meet with legal counsel prior to signing the agreement.
If you wish to contest a prenuptial agreement based on one of the above, you will need to file a motion with the Court in order to demonstrate why you believe the prenuptial agreement is invalid. If the judge agrees that you have demonstrated that there may be a claim, he or she will likely order that a short trial be held, during which they will make the ultimate decision about whether the prenuptial agreement should be upheld.
If you have questions about a prenuptial agreement, call the attorneys at DeTorres & DeGeorge today to schedule a consultation.
