When entering into marriage, many couples in New Jersey consider how to protect their assets, including inheritances. A prenuptial agreement can be an effective legal tool to clarify how inherited property will be treated during marriage or in the event of divorce or death.
However, understanding how New Jersey law governs these agreements, and the treatment of inheritance is critical to creating a valid and enforceable prenup.
Prenuptial Agreements Under New Jersey Law
A prenuptial agreement, commonly known as a “prenup,” is a written contract between two people who plan to marry. New Jersey Statutes Annotated § 37:2-34 outlines what parties may include in a premarital or pre-civil union agreement. It covers property rights and obligations, the ability to manage and transfer property, and how property is distributed upon separation, divorce, or death. Additionally, the two parties can agree on additional terms if those terms meet the legal requirements in New Jersey.
Couples often use prenups to protect individual property, clarify financial responsibilities, and avoid conflicts that could arise over assets in the future. Prenups are especially helpful when one or both parties have substantial assets, expect to inherit property, or have children from prior relationships. By specifying terms upfront, couples can protect their interests and can significantly reduce the potential for future disputes.
Legal Requirements for a Valid Prenup in New Jersey
Under New Jersey law, a prenuptial agreement must meet specific criteria to be legally binding. The key requirements include:
- Written Document: Prenups must be in writing to be legally enforceable.
- Full Disclosure of Assets: Both parties must fully disclose all assets, debts, and income. Incomplete or misleading information could invalidate the agreement.
- Voluntary Agreement: The prenup must be signed voluntarily by both parties, free of coercion or duress.
- Signed Before Marriage: The agreement must be signed before marriage.
Common Misconceptions About Prenups
Many people misunderstand the purpose and scope of prenuptial agreements. Some common misconceptions include:
- “Prenups are only for the wealthy.” Prenups can benefit anyone who wishes to protect specific assets, such as inheritance, regardless of wealth.
- “Prenups mean you expect the marriage to fail.” Prenups are a form of planning and protection, similar to insurance. They provide clarity and security in case of unforeseen circumstances.
- “Prenups are unfair.” A properly drafted prenup is designed to be fair and protect both parties’ interests.
How Inheritance is Typically Handled Under New Jersey Law
New Jersey Wills & Probate
In New Jersey, property left by a decedent (the person who has died) passes through probate, a court-supervised process. A valid will dictates how the deceased’s assets are distributed. If no will exists, the assets are distributed according to New Jersey’s intestate laws, which typically favor spouses and immediate family members.
Marital property generally passes to the surviving spouse when a spouse dies unless otherwise specified in a will or prenuptial agreement. Without a prenup, an inheritance received during the marriage could be subject to division under New Jersey’s marital property laws.
Equitable Distribution of Marital Property in New Jersey
New Jersey follows the equitable distribution principle for dividing marital property in a divorce. Equitable distribution does not necessarily mean equal; assets are divided fairly based on various factors.
- Separate Property: Inheritances are generally considered separate property and are not subject to division during divorce, provided they are kept separate and not commingled with marital assets.
- Marital Property: Assets acquired during the marriage are typically considered marital property and can be divided.
A prenuptial agreement can clarify and protect inherited property by explicitly designating it as separate.
Including Inheritance in Prenuptial Agreements
A prenuptial agreement allows couples to define how inherited property will be treated during the marriage and in the event of divorce or death. By including carefully drafted provisions, you can ensure that any inheritance remains separate property, protected from being considered marital property when divided in the event of a divorce.
Prenups can also address how marital property will be distributed upon the death of a spouse. Couples can agree on who inherits what portion of the marital assets, offering clarity and protecting each party’s interests.
Why You Might Want to Protect Inheritance
There are several reasons to include inheritance protections in a prenuptial agreement:
- Preserve Family Wealth: Ensure that inheritances stay within your family, especially if you have children from a previous relationship.
- Prevent Commingling: Avoid accidentally converting the inherited property into marital property through commingling.
- Clarify Intentions: Clearly outline your wishes for how inheritance should be treated.
- Minimize Disputes: Reduce the risk of legal conflicts in the event of divorce or death.
Sample language for inheritance protection in a prenup might include:
“Any inheritance received by either party before or during the marriage shall remain that party’s separate property and shall not be subject to equitable distribution in the event of divorce.”
Even if you have not yet received an inheritance, you can still protect future inheritances by specifying in your prenup that future gifts or inheritances will remain separate property.
Legal Challenges and Enforceability
A prenuptial agreement may be challenged or invalidated for reasons such as:
- Fraud or Misrepresentation: One party failed to disclose assets fully.
- Coercion or Duress: One party was pressured to sign the agreement.
- Unconscionable Terms: The agreement is excessively unfair to one party.
To strengthen the enforceability of your prenup:
- Transparency and Full Disclosure: Both parties must honestly disclose their assets and debts.
- Independent Legal Counsel: Each party should have their own New Jersey prenup lawyer to review the agreement.
- Sufficient Time for Review: Sign the agreement well before the wedding to avoid claims of duress.
Alternatives to Prenuptial Agreements for Inheritance Protection
If you did not create a prenuptial agreement, a postnuptial agreement (signed after marriage) can achieve similar inheritance protections.
Other estate planning strategies can complement a prenup, including:
- Wills: Specify how your inheritance should be distributed.
- Trusts: Place inheritance in a trust to control distribution and protect it from division in divorce.
- Beneficiary Designations: Ensure beneficiary designations on accounts align with your wishes.
Is Including Inheritance in a Prenup Right for You?
Protecting inheritance in a prenuptial agreement can provide peace of mind and financial security. Understanding New Jersey’s laws and working with an experienced attorney are crucial steps in this process.
If you’re considering including inheritance provisions in your prenup, Edens Law Group is here to help. Call us today at 908-529-0353 to schedule a consultation and ensure an experienced legal professional drafts your prenuptial agreement to ensure it is enforceable under New Jersey law.
