Welcome to our new monthly blog series! Just in time for wedding season, throughout the month we’re taking a look at some of the legal issues engaged and recently married couples commonly encounter. Please check back each week for special themed blogs featuring our latest tips and advice for boosting your marital savvy!
When prenuptial agreements make the news, it’s usually because of some celebrity or high profile split in which millions or even billions are at stake in a divorce, or because of the agreement’s outlandish terms, such as the “prenup” that made headlines recently for including rules about how much weight a wife could gain during marriage.
However, despite these super-sized agreements and/or strange conditions, in reality, the majority of couples who pursue a New Jersey prenuptial agreement before marriage put in place practical items that address their current financial status, how they would like their future finances to be handled after they are married, and issues related to other assets and debts each will bring into the marriage.
What does this look like on a piece of paper? Here are five common items that couples request in their New Jersey prenuptial agreements:
Real Estate: You bought your house before you met your soon-to-be spouse. After the wedding, you will both reside in the home. In the event of a divorce, is this property a marital or separate asset? To avoid the gray area that family homes can fall into, putting in place a prenuptial agreement is an easy way to legally outline home ownership, and what will happen to the home in the event of a divorce. For this reason, decisions concerning a home that one spouse owned before marriage is typically the most common item listed in most prenups.
Separation of Business Interests: You own a business. In the event of a divorce, can your spouse claim a part or percent, even if he or she didn’t participate in it? To keep business ownerships and business shares from divorce asset division, a prenuptial agreement can clearly define these types of investments and income as separate, or can outline the specific percent a spouse would be entitled to claim.
Retirement Accounts: Be aware that most retirement and pension accounts in New Jersey are subject to the state’s equitable distribution laws. With this in mind, it’s common to see language in prenuptial agreements exempting retirement accounts from consideration as marital property, or fixing a certain percentage/split if the couple does divorce.
Alimony: In the event of a divorce, how much will you pay or receive in spousal support? What if one of you becomes ill and can no longer work over the course of your marriage? What if your spouse cheats? What about spousal income loss when one spouse stays home to raise the children? In lieu of monthly payments, would a lump sum or equivalent (assigning over home ownership, for example) be an acceptable alternative? Many couples choose to make decisions about alimony now rather than fight about it later.
Assets Earmarked for Children: If you have children from a previous relationship and know that you would like certain assets you currently own — money, stocks, or furniture or other real property — to be inherited by these children, a prenuptial agreement can include language listing which specific property is to be kept separate for their interest.
Bank Accounts & Credit Cards: Have a hefty savings account, or likewise, have a wonderful spouse-to-be who made the mistake of over-spending on his or her credit cards a few years back? A prenuptial agreement can specify these types of separate items — individual bank accounts and personal debt — remain separate in the event of a divorce, rather than being open to division.
Personal Property: Antiques? Your personal collection of beer mugs? The furniture you bought solo before marriage? To avoid confusion in the event of a divorce, outlining in a prenup ownership of personal property can save much haggling and heartache down the road.
Pets: Your pooch has been by your side for years, but after years of marriage, could your spouse claim ownership? Since pets for some couples are as dear as children, there’s no surprise here that outlining pet ownership in prenup is becoming more and more common.
Want to know more about how to start the process of putting a New Jersey prenuptial agreement in place? Please see our relationship agreements resource section.