A prenuptial agreement can prevent many disputes and litigation costs over property division in a New Jersey divorce. Any advantages are more likely if these agreements are well-drafted and address property that has the potential for a dispute. When negotiating and drafting these agreements, future spouses should also consider property that usually does not come to mind.
These agreements should be negotiated and drafted, with each party having their own attorney, long before the wedding day. The couple should specifically identify and address specific property instead of generally allowing each spouse to keep the property they owned before marriage. Otherwise, a prenuptial agreement may not cover any property during marriage and changes in its value or form.
It is important that the prenup separate property owned before the marriage from property acquired during the marriage which may be divided between the spouses. The agreement should discuss any increase in value, income earned from the property and any exchange from one form of property to another.
Marital property may be defined in the agreement as property accumulated in both spouses’ names or individually. Otherwise, with some exceptions, property acquired after marriage is marital property whether it was acquired as joint or single property.
Property division disputes often involve property that has sentimental value but low financial worth. Accordingly, prenups should address whether gifts between the spouses are marital property or owned separately. These agreements should also cover engagement rings and other jewelry that were gifts. Jewelry, particularly diamonds, is usually identified as separate property.
Retirement benefits are other valuable assets. A prenup should identify a 401(k), IRA or other retirement accounts that should be safeguarded for one spouse. The agreement should clearly state that any funds contributed to those accounts along with any increases or changes belong to one spouse.
Another spouse’s debt can be crippling. The agreement must clearly identify that a spouse is not responsible for any debt acquired by the other spouse before marriage.
Without a well-planned and properly drafted agreement, the risk of ambiguity and conflict increases. An attorney can assist a future spouse with identifying property and negotiating a prenup.
Source: PopSugar, “The most important things to put in your prenup (including items you probably didn’t think about),” By Nicole Yi, July 5, 2017