Family lawyers, having lost the battle to block a new law restricting judicial interpretations of prenuptial agreements, are girding for its impact.
The law, signed June 28 by Gov. Chris Christie, mandates that judges evaluate the agreements as of the date of their signing, not the date of enforcement — effectively removing consideration of changed circumstances.
Attorneys now say they’ll be hesitant to advise using the agreements, at least until the waters are tested.
“I’m waiting to see how this law plays out before I dive into that pool,” says Brian Schwartz, who heads the New Jersey State Bar Association’s Family Law Section. “I think there’s just too much risk.”
Before the enactment, courts evaluated premarriage and precivil union contracts as of the date the enforcement was sought, typically years after execution. Generally, a contract would be found unconscionable if its enforcement would leave one spouse without means of reasonable financial support.
The bill, S-2151, which amends N.J.S.A. 37:2-32, requires judges to determine conscionability as of the signing date.
In addition, an agreement may be deemed unconscionable only if one party did not receive full disclosure of assets, was without counsel or was otherwise uninformed or disadvantaged.
Proponents said the legislation would ensure that prospective spouses pay for legal counsel that yields a strong, meaningful contract, while family lawyers maintained that circumstances such as children and changed employment status necessitate an equitable reading of the agreement in the present.
Prenuptial agreements typically aren’t proposed until 60 days or less before the marriage date — to maximize the wealthier spouse’s leverage — and their near-infallibility in light of the new law makes haste more perilous for lawyer and client alike, says Schwartz, a Summit solo.
“I don’t want to be the lawyer on the other end of that, to be honest,” Schwartz adds. When a divorcing litigant can’t recover from his or her spouse, “the person they’re coming after is me,” he says.
The simplest advice to give clients “is just to not get married,” but it’s “very rare that someone’s willing to walk away [from an upcoming wedding] because of prenup issues,” Schwartz says.
A more realistic way to avoid strict enforcement of a years-old agreement is the addition of provisions that void the contract after a certain number of years, or if the couple has a child, Schwartz says.
Alternatively, postnuptial agreements might become more prevalent as couples opt to redraft marital contracts every few years in light of changed circumstances.
Section chair-elect Jeralyn Lawrence, who testified in opposition to the measure, agrees that the law will give lawyers cold feet.
“There’s a lot of lawyers who will not even do a prenup,” says Lawrence, a partner at Norris, McLaughlin & Marcus in Bridgewater. “To me, this will just add to that because, for the $5,000 or $10,000 [in fees] … your exposure is so significant.”
Lawyers will need “a very clear, long paper trail” showing that the client understands enforceability, she says.
As for the client, “[y]ou now have to counsel the non-moneyed spouse … that they’d have to be borderline insane to enter a prenup,” says Lawrence.
Agreements can work against the wealthier spouse, too, as it’s not unusual for that spouse to confer significant benefits to the other in exchange for a waiver of alimony or pension rights, she adds.
Lawrence says the law could have the opposite effect of unburdening family courts because, with prenuptial agreements likely becoming less common, lawyers will be forced to litigate all issues in the divorce from square one.
One family lawyer says creative lawyers might try to dodge the law altogether.
“If the Legislature can write something, you can work around it, and it’s going to happen,” says Michael Pimpinelli, a Woodbury matrimonial lawyer.
A contractual provision could be added mandating that the agreement is to be assessed as of its enforcement date, including a note that the parties consented to such a term even despite the statute, Pimpinelli says. “What’s to stop somebody from putting it in there?”
Pimpinelli likens the law to an anti-Lepis clause in a divorce agreement, which is meant to limit future judicial discretion about child support obligations, even though Lepis v. Lepis, 83 N.J. 139 (1980), established that courts, notwithstanding those contracts, may modify payments in the face of equitable concerns.
The law’s main sponsor, Sen. Nicholas Scutari, D-Union, says: “They’re not going to be able to get around the law … but that doesn’t mean they can’t and shouldn’t” add new terms to the contract, says Scutari, a Linden solo who handles personal injury and municipal court matters.
Scutari adds that the change, contrary to what family lawyers say, will encourage use of prenuptial agreements because they will be more meaningful.
Contracts still will be challenged in court, but “if it just turns out to be a bad deal, you’re going to be stuck with it,” Scutari says.
S-2151 was introduced a year ago and amended in March. It now applies only to agreements executed after the effective date, but in its original form would have applied to all contracts that were not the subject of enforcement proceedings before that date.
The Assembly passed it 60-12-2 on April 29; the Senate, 34-1 on May 13.