Tag: prenuptial agreement
Are Prenuptial Agreements important regardless of wealth or amount of assets?
There is a common misconception that prenuptial agreements, or “prenups,” are only for the wealthy. While it is true that a prenup will benefit a person with significant assets, they are also quite beneficial to anyone, regardless of the size of their net worth.
Prenups define how you want your assets to be divided in the event of a divorce. In a way, with a prenup, you are acting as the legislator. Your prenup is the “law” telling the judge how you want your finances to be divided if you get a divorce. For example, you and your soon-to-be-spouse both agree that it would be unfair if your retirement accounts (401ks, IRA’s, pension, etc.) were split by the other party in the event of a divorce. In New Jersey, however, retirement accounts that accrue during the marriage are subject to equitable distribution and thus split between the parties. With a prenup, a provision can be added stating that the retirement accounts are excluded from equitable distribution. If there is a divorce, your retirement accounts are safe. Without this provision, your retirement account may be divided in a manner that you both agreed would be unfair for the other party.
Even if you only have $100 in your retirement account at the time of your marriage, it is still worth protecting. More often than not, a person’s retirement account will grow substantially while they are married due to contributions and market growth. A prenuptial agreement specifically excluding one’s retirement account could protect the growth of the account that occurred during the marriage. Therefore, while you may not have had much money at the time of your marriage, if you do wind up getting divorced, you can save yourself a substantial amount of money by protecting the growth of your accounts.
Another important point of a prenup is the waiver of alimony.
This waiver could be important if there is a disparity of income between the parties, even if neither of your incomes is substantially high. For example, a person earning $40,000 is probably not considered rich. However, if their spouse was earning $20,000 per year at the time of a divorce, they could have an alimony component. The payor earning $40,000 may not have considered themselves rich and thus thought that a prenup was unnecessary. In reality, the payor spouse could have potentially saved thousands of dollars if they entered into a prenuptial agreement. That is why it is important to realize that prenups are beneficial to everyone getting married, not just those who are wealthy. Statistically speaking, given the current divorce rates, it makes financial sense to enter into a prenup.
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Pre-Nuptial Agreements and Full Financial Disclosure Attorneys Brick NJ
As couples wait longer to get married, each person in the relationship has established their own income and assets singularly.
Frequently, a prenuptial agreement is put in place to protect those assets obtained individually before the marriage. Historically, prenups were usually seen as a way for wealthy people to protect themselves from “gold diggers,” but they are relevant to a much broader population in reality. Another common misconception is that prenups are divisive. In truth, they present an opportunity to understand each other’s financial expectations and give the marriage a healthy start. Conversely, settling financial arrangements after a relationship has soured can be an acrimonious and expensive proposition. A prenuptial agreement can ease the monetary stress that weighs on many marriages because it makes the financial future certain even if the marriage is not.
Why Do You Need A Prenuptial Agreement?
Often, a prospective spouse plans to sacrifice education, job training, or a promising or established career in the marriage and family’s furtherance. If you plan to make such a sacrifice, a prenuptial agreement can help you safeguard your financial future. If you have family property, you wish to keep separate; this can be accomplished with a prenup. If you are entering into a second or third marriage or marriage later in life, you likely have hard-earned assets (e.g., a professional practice) and children to protect. A premarital agreement can protect those assets and set aside property for your children.
When a marriage ends in divorce, property acquired during the marriage (“marital property”) and even some property acquired before the marriage (“separate property”) will be divided equally or equitably, depending on state family law statutes. When a married person dies, most states give the surviving spouse one-third to one-half of the estate, even if they will say otherwise. However, the terms of a valid prenuptial agreement usually supersede the state divorce and estate laws.
Are All Prenups Enforceable When One Spouse Dies?
Typically, yes, they are. In a recent decision In the Matter of the Estate of James J. Gillette, the enforcement of a prenuptial agreement upon the husband’s death is addressed when the wife sought to invalidate the agreement to claim her elective share from his estate instead of the terms of the agreement. The case tells us that the rules for prenuptial agreement enforcement upon a spouse’s death are the same as they would be in the event of divorce.
In this case, the parties entered into a prenuptial agreement on August 29, 2013, before their marriage in November 2013. Both parties had independent counsel. They affixed their full financial disclosure schedules to the prenuptial agreement and acknowledged within the document they had time to review the agreement with their respective counsel. The parties agreed to share in certain assets, keep premarital assets separate, and waive their right to an elective share of the other spouse’s estate.
The husband passed away on April 21, 2017. The wife received the proper notice of probate on May 11, 2017. She had six months to seek to enforce her elective share. However, she did not file a complaint until July 12, 2018 – fourteen months after the probate notice. As part of her complaint, the wife sought to invalidate the prenuptial agreement, claiming that the husband did not provide full financial disclosure. This is the key to the entire case.
The wife claimed that she was never provided full disclosure of her husband’s earnings, property, assets, and financial obligations and did not benefit from independent counsel at the time of the signing of the prenuptial agreement.
However, it was found that not only did she have an attorney, but both of their signatures are on the financial records of her soon-to-be spouse. The financial statement identified a list of assets with approximate values. His disclosure was complete and accepted by her. The wife had the benefit of the husband’s financial statement attached. The wife acknowledged that she read and understood the agreement within the agreement and had the necessary time to discuss the same with counsel to the agreement.
Do You Want To Know More? Reach out to a Monmouth and Ocean County PreNup Attorney
If you have questions about prenuptial or civil union agreements or need assistance in negotiating a prenuptial agreement under New Jersey law, at the Bronzino Law Firm, attorneys are prepared to guide you every step of the way. While no one enters into a marriage thinking of its end, our lawyers know that a divorce or death can have far-ranging effects on our clients’ lives. We work diligently to ensure that our clients take the right steps to plan and avoid costly, extended, and unpleasant litigation.
Understanding Prenuptial Agreements in Monmouth and Ocean County NJ
Read on to learn what a prenuptial agreement is, why it is used, and myths about prenups that may impact your premarital decisions.
Prenuptial agreements have gotten a bad name in modern culture because it appears to be a death sentence for a marriage – before the marriage has even begun. This is not the case. A prenuptial agreement serves many purposes, and its use is not solely to ensure that, in the case of a separation, each party will walk away with pre-determined assets still in their possession.
What is a prenuptial agreement?
A prenuptial agreement, or ‘prenup,’ is a legal contract a couple enters into before joining together in marriage or civil union that provides them with certain controls in their marital legal rights, whether the marriage ends in death or divorce. New Jersey law sets certain legal precedents regarding the rights of a spouse in the case of separation by death or divorce, including division of assets, the right to seek alimony, and fair distribution of the estate of the spouse. A prenuptial agreement, however, can supersede those precedents
Prenups provide legal rights to couples regarding more than simply division of assets, however. Read on to learn some common myths about what a prenup is – and isn’t, and the reality of prenuptial agreement.
Myths about prenups
Fact or Fiction? The existence of a prenuptial agreement means the marriage will end up failing
This is, of course, fiction. There are many reasons a prenuptial agreement is a wise contract into which to enter, and fearing for the worst is rarely one of them. According to Business Insider, there is no conclusive evidence that the presence of a prenup results in a higher divorce rate.
Fact or Fiction? Only people with lots of money enter into prenuptial agreements
This, too, is fiction. Because the legal rights addressed in a prenup cover more than the division of assets, they are not all about big money. Prenups include legally-binding agreements from whether a spouse will be legally entitled to alimony payments in the case of a divorce to who will get the pets. They can outline how assets will be separated amongst any children and how shared debt will be handled. Because a marriage or civil union is a business partnership, a prenup acknowledges the many financial and non-financial assets to be considered in a partnership, and upon its termination.
Fact or Fiction? New Jersey prenups can include child custody arrangements in the case of divorce
This is false. The New Jersey Superior Court: Family Part holds children at the central consideration in all divorce and custody arrangements. Because the court uses this ‘best interest of the child’ standard, they must take into account the living situation each parent would offer the child at the time of the divorce, no sooner. The inclusion of a child custody arrangement in a prenuptial agreement would be invalidated by a judge.
Fact or Fiction: A prenup can be drawn up and signed without a lawyer in New Jersey.
This is factual. New Jersey law mandates that prenuptial agreements must be in writing and signed by both spouses, and included an attached statement of the assets addressed in the agreement. While New Jersey couples are encouraged to seek the support of an experienced family law attorney before submitting a prenuptial agreement to the State, it is not legally required. If one spouse hires an attorney and the other does not, a statement of acknowledgment and consent to not having an attorney must be filed as part of the prenuptial agreement. After the entry of a prenuptial agreement into law, it can only be amended or nullified with signatures from both spouses.
Fact or Fiction: If you decide later that you want legal right over your assets after you get married, you can simply sign a post-nuptial agreement.
Easy there! It is not as easy to protect your assets after you get married as that. Any assets that you have accrued between your marriage and the time you decide to arrange a postnuptial agreement are considered marital assets, and as such, they are shared equally. The process of determining what assets will remain with whom will likely require the support of an attorney, and open communication and amiability between spouses.
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At Bronzino Law Firm, our experienced attorneys support clients in Point Pleasant, Brick, Wall, Sea Girt, Spring Lake, and the greater Ocean and Monmouth County Areas in their marriage and family arrangements, including prenuptial agreements.
Will my Retirement Account/401k/IRA be Protected in my Divorce?
Learn from an Ocean and Monmouth County Divorce Lawyer some strategies for maintaining your hard-earned savings when you legally separate from your partner.
The divorce process is full of moving pieces that can wreak havoc on your physical, mental, and emotional health. Having a skilled divorce attorney can ensure that financial distress doesn’t have to be part of the separation, too. The separation of assets is a key piece of any divorce, and when you have been in a marriage for a substantial amount of time, the chances are that you will have a large 401 (k) as a marital asset. How do you protect your retirement savings from being taken in the divorce?
Determine how you would like to handle your divorce: in court or out of court in settlement
The direction you choose to take in your divorce proceedings will impact how you go about handling the division of assets and protecting your retirement savings. If you choose to go through the courts to finalize your division of assets, ensure that you properly and transparently report all assets. A judge who learns that a person has been hiding assets will likely rule in favor of awarding an amplified amount to the spouse.
If you and your spouse decide to settle the division of assets outside of court, the process will likely be more rapid and less costly. This is a great option for a couple who is still on amicable terms. Because the proceedings are not open to the public and driven by a New Jersey Superior Court: Family Part judge, a separating couple can experience a much more flexible process, in many ways setting their own rules. The finalized agreement is, of course, subject to approval by the court.
To ensure a just division of assets and the protection of retirement savings, it is imperative that you ensure a fair settlement and, if possible, not take cash, or lump sum, payout, as it is subject to steep penalties. At the end of it all, one who receives a lump sum ends up receiving much less money and, unless immediate cash is required, loses out on their fair share in the division of assets.
Be aware of your assets, including your retirement funds
A divorce is a business transaction. While it is emotionally trying and exhausting physical, mental, and financial resources, it is ultimately a legal arrangement to determine who takes what in the split. As such, it is important to make sure that you are clear about what your marital assets and your shared debt are. It is also important to have a firm handle on what your personal assets are, as they may be taken into question during the course of the divorce proceedings. What was the balance of your retirement savings when you got married? What is it now? Taking the initiative to know this information will save you stress and potentially money in the long run.
Check your prenuptial agreement
All income added to a 401 (k) during the course of a marriage is considered a marital asset and is therefore considered to be shared with your spouse. In the absence of a prenuptial agreement, the court will take responsibility for dividing the assets among spouses. However, if you and your spouse signed a prenuptial agreement, the court will rule based on the legally-binding agreements outlined within.
Be aware of the Qualified Domestic Relations Order
A spouse may take a Qualified Domestic Relations Order to their ex’s employer to ensure that they receive their fair share of the retirement account. A Qualified Domestic Relations Order is a court-ordered document that enables the spouse’s retirement administrator to swiftly and legally transfer retirement funds into the partner’s bank account. The entitled amount will reflect a deduction if you have paid into your spouse’s retirement fund during the course of your marriage.
Attempting to hide or resist marital assets such as retirement funds to protect shared marital assets improperly is not worth it. Seek the support of a skilled and experienced divorce attorney to help you protect as much of your assets as you can while complying fully with New Jersey Divorce Law and avoiding lengthy and potentially costly litigation with your spouse.
Contact A Brick Retire Savings Attorney Today
Attorney Peter J. Bronzino is committed to serving our clients across Spring Lake, Sea Girt, Point Pleasant, Toms River, and the greater Ocean County area in all divorce and family law cases.
Our unique approach supports our clients’ financial well-being, leaving them to focus on their emotional and physical well-being as they move into the next chapter of their life.
Prenuptial Agreements for Those Considering Remarrying in Ocean and Monmouth County
Brick Divorce and Prenuptial Agreements Attorneys Serving Clients in Ocean and Monmouth County
People are building careers, marrying later in life, amassing assets and owning their first homes at a younger age. As serial marriages and life expectancies increase, in addition to people bringing significant assets into their committed relationships or civil unions, it makes perfect sense to start talking about your long-term financial futures together. Seeing friends and family go through the divorce process, couples are more aware that marriage does not mean “happily ever after” and want to take the steps to protect themselves. In considering a prenuptial agreement, they may want to establish the ground rules of how finances will be dealt with in the marriage, property and asset division or even attempt to understand their responsibilities for dividing debt, in the event of a divorce.
Through savings, investments or a longer work history, middle-aged individuals and senior citizens are likely to have more significant assets at stake than their younger counterparts, as well as other financial obligations (i.e., alimony or child support, and real estate) or business investments they may want to leave to their children.
Though it wouldn’t be recommended for one party to straight out ask their significant other to sign a prenuptial agreement, open and honest communication about their respective finances, plans, and values never hurts.
What Significant Factors Often Prevent Seniors in Sea Girt, NJ From Remarrying?
A traumatic marriage or a nasty divorce can contribute to seniors being reluctant to take another trip down the aisle. Fear of losing various medical insurance or Social Security benefits, spousal pension payments or the termination of alimony are a few other reasons.
They will be among the first to tell you that failing to carefully consider the economic consequences of a late-life divorce, can pose harsh consequences for seniors, especially those who may live on a fixed income.
Though seemingly unromantic, many seniors opt for cohabitation agreements which allow them to keep their assets separate and any inheritances for their family intact.
If you or someone you know are unsure if a prenuptial or a cohabitation agreement would more appropriately address your financial concerns, you should consult an experienced family law attorney that has a lot of experience drafting both.
Changing Face of Alimony: Divorce is Getting More Expensive For Women in NJ
While it was almost exclusively men who paid their exes spousal support, as women earn more, head households and are breadwinners in their relationships, the financial dynamic has changed. This shift is best seen in high-profile female celebrity divorces (i.e., Britney Spears, Halle Berry, Jennifer Lopez, Janet Jackson, and Sherry Sheppard). More woman with an eye to the future, seek creative agreements which protect them, their assets, and any potential family inheritances.
A 2018 study of the American Academy of Matrimonial Lawyers (AAML) found that among their members:
- 54% cited an increase in the number of mothers paying child support in the past three years,
- 45% saw a rise in women being responsible for alimony, and
- 78% saw an increase in parents sharing custody of children.
Practical Tips For Talking to Your Partner About a Prenup in Ocean County, NJ
If this isn’t your first rodeo, and you have a previous high-asset divorce under your belt or had to divide your retirement assets, you have learned that it may help to have a heart-to-heart about ensuring the financial well-being of your future marriage.
Be sure to:
- discuss the topic early and well advance of the actual wedding date.
- adopt a conversational tone and explain the purpose.
- be upfront about your reasons and fears.
- really listen to your partner’s feedback.
- encourage your partner to share their own ideas.
- try not to get emotional if your partner seems resistant to the idea.
- ask questions about your partner’s objections, concerns, or beliefs.
- take this chance to resolve any misunderstandings.
By being transparent, providing full financial disclosure, and seriously considering several scenarios that could affect future finances and support after a divorce, this practical look at the financial aspects of marriage and divorce could have the positive impact of making couples take a more realistic assessment of what’s overall best for each of them. If nothing else, a more slowed down approach could mean more thoughtful drafting of a prenup both parties can be satisfied with.
Contact a Monmouth County Family Law Attorney to properly File Your Case Today
A marriage can affect every aspect of your financial life. It´s recommendable to sit down as a couple to learn more about each other’s present financial situations and future goals together. Once you have organized your pros and cons, talk to specialized attorney Peter Bronzino who will guide you in your process.