Is a Prenuptial Agreement Right for Me?
A growing number of couples in New Jersey are choosing to begin their marital lives with a prenuptial agreement. While once prenups were often considered to be the domain of the ultra-wealthy and celebrities, many people who launch their marriages with businesses and careers that are already established are opting for the security that a prenup can provide. A family law attorney may help you decide whether a prenuptial agreement is right for you and your relationship.
What Does a Prenup Do?
A prenuptial agreement is a legally binding contract that couples agree upon before getting married. This kind of agreement focuses mostly on how assets will be handled in case of a future divorce. Other aspects of a prenup could also include estate planning issues, which are especially common for people with existing children from a previous relationship choosing to marry again. Because prenuptial agreements deal straightforwardly with the financial aspects of marriage and openly contemplate the possibility of divorce, some may want to avoid them as they may seem unromantic and fatalistic.
However, for others, a prenup may provide a greater sense of safety and security. This may be especially true for people with family-based assets. Business owners may also find a prenuptial agreement enticing and indeed a matter of practicality. In fact, many angel investors in startup companies expect founders and majority owners to have a prenuptial agreement covering their businesses in order to protect the future of their own stake in a project. A divorce attorney can provide detailed guidance and consultation about your situation and whether or not a prenup may be worthwhile for you.
Discussing a prenuptial agreement can also bring both future spouses’ ideas about money and values to the table. Having these challenging conversations in advance can help to prevent future conflict and ensure that both people feel confident about their choice to marry one another. It helps to prevent surprises later in the marriage.
Prenuptial agreements can address a wide range of issues. While they are most commonly used to plan in advance how property will be dealt with during the asset division stage of the divorce and setting potential terms for alimony, including those linked to the length of a marriage, they can cover a wide variety of issues. A prenuptial agreement may also address decision-making in case one party becomes incapacitated, cover estate planning matters or address existing and future debt, such as student loans. While one party’s existing student loan debt may be entirely outside the marital ambit, if one spouse plans to return to school in the future, the prenup could address how those future obligations will be handled in the case of a divorce.
Why Choose a Prenuptial Agreement?
New Jersey is an equitable distribution state. This means that property is divided in a fair manner between the parties in case of a divorce, but that division is not necessarily 50/50. Some assets may be treated differently as well. In general, both spouses may negotiate their marital settlement agreement in the case of divorce and, so long as it meets legal standards, a New Jersey family court will approve.
However, a prenuptial agreement can make it easier to decide on these matters when both parties are approaching the issue with generosity, love, and direct discussion rather than with leaving them to be handled through their respective family lawyers. People with children from a previous marriage may be particularly interested in having a prenuptial agreement in order to protect and provide for their kids explicitly. In addition, a prenuptial agreement remains in place even if you leave New Jersey. If a couple moves to a community property state before divorcing, those rules would apply without the presence of a prenuptial agreement.
In many cases, people may choose a prenuptial agreement because they already have significant assets to protect. With more people choosing to marry after they have already established careers, they may not only already have student loan debt but substantial investment portfolios or other assets. Because pre-marital assets can easily be commingled with marital property to become part of the marital estate, prenuptial agreements can provide more clarity.
However, people of modest means may also want to consult with a family lawyer about pursuing a prenuptial agreement. People who are planning to launch a startup or whose businesses are in their early stages of operations may want to work with a divorce lawyer to make a plan to keep their company outside the marital estate. This is important not only if the business could be divided in a future divorce but also for attracting wealthy investors and venture capital firms. In New Jersey, post-marital agreements are given a great deal of scrutiny by the courts, so a prenup can be particularly important for startup founders.
What Happens When You Decide to Craft a Prenup?
Deciding to move forward with a prenuptial agreement offers both parties the opportunity to discuss their views on money and marriage directly with one another and with their respective family law attorneys. Some people may also bring other professionals, such as a counselor or financial planner, into the discussion.
After all, deciding to pursue a prenup can be an emotional choice as well as a practical one. Some people are strongly opposed to prenuptial agreements because they consider it to be planning for divorce before the marriage. They may think that the other party wants to divorce them in the future or does not trust them. However, other people may find that they feel a greater sense of security by planning for the future.
The process of creating the prenup is essentially a negotiation. The more assets and the more complex they are, the longer the process of a prenup may take.
Each party should have their own independent family lawyer for the prenuptial agreement negotiations. One of the key factors that a divorce court will consider when evaluating whether a prenup is valid is whether both parties were treated fairly in developing the agreement. If both parties have their respective divorce lawyers reviewing, drafting terms, and negotiating for their client’s interest, the resulting prenup is far more likely to be upheld in court. Both parties should receive independent advice aimed at protecting their individual interests.
Prenups can be overturned in court although there is a presumption in their favor. Ensuring the initial drafting process is fair, equitable and with independent representation is one of the clearest ways to protect a prenup later in court. There may be side issues in which the parties are at odds about whether a certain asset is covered in the prenup, but the prenuptial agreement itself remains valid to guide the distribution process.
Consult a New Jersey Family Law Attorney
If you are considering a prenuptial agreement, you can consult with a family lawyer to learn more about the process. Contact the experienced New Jersey divorce attorneys at Lawrence Law by calling 908-645-1000 or by completing and submitting our online form in order to schedule a consultation at our Red Bank or Watchung, New Jersey, offices.