The Value of a Prenuptial Agreement

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The term prenuptial agreement sounds neither sexy nor romantic.  However, in many incidences, the importance of a prenuptial agreement cannot be disputed.  Although the mere request for the document may cause bad feelings, the end result may be worth the unintended insult.

Who Needs a Prenuptial Agreement?

Let’s face it.  It is unfortunate, but there is a 50/50 chance that a marriage can succeed, or fail.  In some respects, marriages should be looked upon as business arrangements.  After all, once you marry, your spouse becomes your partner.  More than likely, you would only consider a business venture with an agreement in place.  This same principle can be applied regarding premarital and postnuptial division of assets. 

Of course, half of nothing, is zero.  However, what happens when one of the prospective newlyweds owns property or has other assets?  This is a good example of the importance of  ensuring that a prenuptial agreement is in place.  In fact, there is New Jersey case law that discusses this very issue.

Premarital Property Divided Without an Agreement

Premarital assets are typically exempt from equitable distribution.  There are however some exceptions to that proposition.  For instance, if the premarital assets are comingled, there can be issues.  This could include the increased value or appreciation of a premarital assets. The Court  in Rei v. Rei, No. A-0036-09T3, (N.J. Super. Ct. App. Div. Apr. 11, 2011)  has given some insight in such a situation, as it dealt with the equitable distribution of premarital property.  The parties did not have a prenuptial agreement that might have made this a non-issue.

The Rei couple actually met when the wife became a tenant in a building owned by the man who would later become her husband.  After the two married, certain renovations were made to the building.  They were all paid from the couple’s joint bank account.  Mr. Rei contended that the building should not be subject to equitable distribution since he did not even know his wife when he purchased it.  At best, he felt his former wife was only entitled to appreciation of the premises.

The Appellate Division disagreed.  The court considered the fact that there were improvements made to the property.  In addition, the mortgage was paid from a joint bank account shared by the husband and wife.  These two factors made the building a marital asset.  It was therefore subject to equitable distribution.

When to Enter into a Prenuptial Agreement

The decision to draw up a prenuptial agreement should not be a last minute decision.  Premarital agreements may be ineffectual if they are filed near a wedding date.  The court may question whether the agreement was coerced.  It is also important that both parties retain their own attorneys. 

Contact Us

Whether you think you need a prenuptial agreement, or have been asked to sign one, Attorney Sam Stoia can advise you.  Sam’s background includes both legal and financial experience.  He is an astute negotiator and an excellent communicator.  Contact Sam to schedule a free consultation.