Watch Out for These 16 Clauses in Prenuptial Agreements Before You Sign

While many couples view prenuptial agreements as tools for financial protection should their marriage fail, these agreements can contain clauses that many couples need to pay more attention to before signing. While prenups outline the division of assets and financial responsibilities in the unfortunate event of a divorce, some clauses could significantly impact your future if you ignore them – or forget to include them.

In this blog, we delve into the lesser-known aspects of prenuptial agreements – those hidden or overlooked clauses – and shed light on what you must watch out for to protect your interests fully. Whether drafting a prenup or revisiting an existing one, being aware of these special clauses makes sense for your future.

The Main Reasons Couples Sign Prenuptial Agreements

A 2023 Axios Harris Poll survey revealed that approximately one in five married couples have a prenuptial agreement, and 50% of U.S. adults favor their use. Prenups are increasingly popular, particularly among younger individuals, with 40% of those who signed one between ages 18 and 34.

While many couples still opt not to get a prenup when they marry, here are some of the most common reasons they do so:

• Clear asset protection: Prenuptial agreements help protect the property and financial worth each spouse brings into a marriage, ensuring these assets remain theirs in case of divorce.
• Debt protection: Prenuptial agreements can protect individuals from being held responsible for their partner’s debts incurred before or during the marriage if they split.
• Later-in-life marriages: As people marry later in life or remarry, they often have more significant assets and financial interests that they seek to safeguard.
• Children from prior marriages: For those with children from previous marriages, prenups can secure certain assets specifically for the benefit of those children, protecting their inheritance.
• Full financial disclosure: Prenuptial agreements require both parties to disclose their income and assets fully, promoting transparency and fairness in the economic aspects of the marriage.
• Business interests: Prenups can protect a spouse’s personal interest in a business, ensuring that the company remains with its original owner and is not subject to division in a divorce.
• Financial differences: If one spouse earns significantly more than the other, has more assets, anticipates receiving a significant inheritance, or is the beneficiary of a trust, that individual may want to create a prenup. Conversely, if one spouse is coming into the marriage with significant debts or student loans, a prenup could protect the other spouse in the case of a split.

Pay Attention to These 15 Clauses in Your Prenuptial Agreement

If you find yourself in a position where you want a prenup or your spouse-to-be presents you with one, look out for these particular clauses. In some cases, you will find one of these clauses in your prenup, which may require consulting with your attorney. In others, you may need to add some clauses to protect yourself.

1. Asset management: You and your partner can spell out which assets are separate in your prenup, such as the real estate you owned before getting married. Any other property you acquire during your marriage is considered joint marital assets and will be split equitably should you divorce.
2. Debt responsibility: Those lingering balances on your credit card bills or your student loan might not be at the top of your mind now, but they could be if you face a marital split. Your prenup should address debts and assets. Many couples often overlook clauses outlining which spouse is responsible for specific debts incurred during the marriage. These provisions help prevent future financial disputes and ensure clarity on debt management.
3. Business interests: One spouse may have an existing business or related interests. You can include a clause that addresses the division or protection of such interests, including the handling of business growth during the marriage. Please specify these terms to avoid complex disputes over business ownership and profits in divorce.
4. Retirement accounts: These clauses ensure that retirement accounts and benefits are fairly distributed during a divorce. Many people do not include or simply gloss over these clauses, which can be complex.
5. Inheritance rights: During your marriage, you may receive an inheritance from a relative or family friend who passed away. How would you handle that inheritance? Will it remain your separate property or will it become a joint asset? Our law is clear that is is separate property but it is helpful to also consider some in your prenup. If you want to ensure that any inheritance you receive stays separate, a clause can spell that out.
6. Family heirlooms: Whether it is your great-grandmother’s ruby necklace or antique furniture that has been in your family for generations, you might want to include what will happen to those items should you go through a divorce. That way, you can ensure your treasures stay within your family of origin.
7. Collections: Some people acquire a coin or stamp collection or build up a room of Beatles memorabilia over the years. You may even have a classic car you have restored lovingly. In the event of a divorce, you probably want to ensure that those items are not included in your joint assets. A way to do that is to include a clause in your prenup that excludes them from the marital pot.
8. Season tickets or memberships: Many people invest in golf club memberships or season tickets to sporting events, which can be expensive and represent an emotional investment. If these items are important, clarify ownership, usage rights, and financial obligations for recurring fees in your prenup to avoid future conflicts.
9. Intellectual property: If you or your spouse write, create art or music, or develop inventions, these are considered intellectual property. You may get a copyright, trademark, or patent to protect these works. Unfortunately, people often forget to address IP in prenups, which can be a mistake if there is a contentious split.
10. Alimony waivers: Some agreements may include clauses that waive the right to alimony, which could be financially devastating if one spouse becomes financially dependent on the other. For example, if one spouse stays at home to care for children and does not have a career or income, no spousal support in the case of a split would leave that person in very shaky circumstances. Consider your future financial security before agreeing to waivers like this one.
11. Custody and support limitations: Be wary of any clauses that attempt to dictate terms for child custody or child support. These decisions are typically not enforceable as they are made based on the child’s best interests at the time of divorce. Including such clauses can lead to false security and potential legal battles.
12. Infidelity penalties: Some people try to add clauses to prenups that impose financial or other types of penalties for cheating. These clauses are often unenforceable but might still appear in the agreement. Including such clauses can create unrealistic expectations, and the court may not uphold them.
13. Lifestyle clauses: These can dictate specific behaviors or habits within the marriage, such as weight maintenance, appearance standards, or household chores, which may not hold up in court. While often included to maintain specific standards, they can lead to disputes and are usually unenforceable.
14. Sunset clause: This type of clause stipulates that the prenuptial agreement will expire after a certain number of years, potentially leaving the parties unprotected after it lapses. One spouse or the couple may need to realize this expiration date and assume their agreement lasts indefinitely.
15. Dispute resolution: Should you find yourself at odds with your spouse or involved in divorce proceedings, you can include clauses that specify how to resolve disputes, such as requiring mediation or a collaborative approach instead of going to court. These provisions can save you time, money, and emotional strain, but you will need to understand what your chosen method entails and costs.
16. Life Insurance: Be sure to think about life insurance and obligations you may wish to inlcude in your prenup.

Could Your Prenuptial Agreement Be Declared Invalid in New Jersey?

There are several reasons why your prenup might not pass the legal test if you do not follow state guidelines, including:

• You did not put the agreement in writing.
• Both parties did not execute the agreement.
• The parties did not sign the prenup before the wedding.
• There was undue influence or coercion on one or both parties at the time of execution. As such, be sure you have ample time to negotiate the prenup.
• One or both parties failed to disclose their financial circumstances fully.
• One or both parties did not have the opportunity to consult with an attorney before executing the agreement or did not knowingly and voluntarily waive this right in writing.
• The agreement is deemed legally unconscionable at the time of execution.

Ensure You Have a Valid Prenuptial Agreement Before Signing

When preparing a prenuptial agreement, we recommend involving your family law attorney to ensure the document fully complies with New Jersey law. Misunderstandings about legal requirements can lead to mistakes that invalidate the entire agreement. Both parties must be honest and transparent, as hiding assets can cause future issues. Each person should have their own unbiased family law attorney to review the prenup and protect their interests. Additionally, coercion can invalidate a prenup; for example, presenting it right before the wedding with an ultimatum can render it unenforceable.

It is also important to note that prenuptial agreements have limitations. They cannot dictate child custody or child support arrangements. Prenups should not impose unfair or unreasonable conditions, such as demanding one spouse perform household chores or adhere to specific personal behaviors. Furthermore, while infidelity clauses are often included, courts typically do not enforce them, preventing one spouse from financially penalizing the other for cheating.

Contact the Experienced Prenuptial Agreement Attorneys at Lawrence Law for Your Family Law Matter

Do not risk drafting your agreement without a competent prenuptial agreement lawyer in your corner. The legal team at Lawrence Law is here to guide you through each step of the process and get you the peace of mind you deserve.

Call (908) 645-1000 to schedule your initial consultation or fill out our confidential contact form. With convenient office locations in Watchung and Red Bank, NJ, Lawrence Law is well-equipped to serve clients throughout New Jersey. Contact Lawrence Law today and take a crucial step toward resolving your family law challenges.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.