Crafting Ironclad Prenuptial Agreements or Getting Ready to Challenge a Bad Agreement: Recent Case Law Update
Recent case law shows not only the expertise needed in negotiating and drafting Prenuptial Agreements (“PNAs”) to protect their enforceability, but also the actual proof that a challenging party needs to have in order challenge its enforcement. In order to ensure that a PNA is done correctly there needs to be proper disclosure, both parties should have counsel or acknowledge their right to counsel, there needs to be sufficient time between the PNA and the wedding date, there should be a waiver of further disclosures and the terms need to not be unconscionable. By their nature these agreements often include a deviation from what parties are entitled to under the law and because of that litigation around these Agreements sometimes happens.
Regardless of whether or not your PNA was done correctly, the person who has waived entitlements under the law, might feel like there is nothing to lose in challenging the Agreement. Especially, given the fact that prolonged litigation over PNA issues can sometimes create leverage for the waiving party to try to get at a more beneficial settlement. The most common challenges are that the person felt coerced or was under duress to sign the agreement in order to get married or that the disclosures that were made in negotiating the PNA were not accurate. Unfortunately, the backlog in the Court system as well as the fact that trial Courts don’t often make hard and early decisions on these issues can create litigation attrition.
On March 7, 2024, the Appellate Divisions decided the case of Papetti v. Papetti, 2024 N.J. Super. Unpub. LEXIS 365. This case is interesting in that the trial Court rejected some of the standard arguments to set aside the PNA in a summary manner (without requiring an enforceability hearing). The case in Papetti, involves the appeal of a Family Court order denying a motion to set aside a PNA. The parties were married for 26 years before divorcing in 2019. Before their marriage in 1993, they had executed a PNA waiving the Wife’s entitlement to alimony and other marital assets in the event of divorce. Instead, the Wife would receive a lump sum payment based on a schedule in the agreement. After filing for divorce in 2019, the Wife moved to set aside the agreement arguing it was unconscionable. The Family Court denied her motion and granted the Husband’s cross-motion to enforce the agreement, finding that the Wife had voluntarily signed the agreement after being advised by counsel and failed to show the agreement was unconscionable.
The Appellate Court affirmed the Family Court decision, disposing of the Wife’s argument that she did not have an opportunity to consult with independent counsel as the agreement had specific language that each party had the right to seek and obtain independent legal counsel. The Court specifically found that these assertions lacked actual proof. The Court likewise found that the Wife did not meet her burden to of proof by clear and convincing evidence that the financial disclosures made in negotiating the PNA were inadequate, and that the Wife had signed a waiver of her right to additional disclosures.
Whether you are seeking to enter into a PNA or have entered into a PNA and have concerns about its enforcement, recent case law is instructive on what should be in your PNA, and the proof needed to determine is enforceability. For more information on Prenuptial Agreements contact Georgia Fraser, Esq. of Fraser Family Law Office, LLC for a consultation. 609-223-2099.