For many, dissolving a marriage or ending a cohabitive relationship can be the most difficult event in a person's life. Not only is there an emotional impact on all parties involved but, oftentimes, unraveling the property and financial ties between two people can be complicated and overwhelming. Although there may be no way to prepare oneself for the psychological effect such an experience can have on you, there is a way to lessen the financial impact: prepare yourself with a pre-marital or pre-cohabitation agreement.
A pre-marital agreement, also known as a pre-nuptial or ante-nuptial agreement, is a written contract entered into by two people prior to their marriage. Such an agreement anticipates the various financial and property issues which may arise during the relationship and which must be resolved between the parties if the relationship were to end. Likewise, a pre-cohabitation agreement is a contract similar to a pre-marital agreement entered into by two people who intend to cohabit, but will not be legally married. In light of the new New Jersey Domestic Partnership Law which provides certain benefits for couples who register with the State as domestic partners, a pre-cohabitation agreement is becoming essential for two people preparing to live together as a family.
In New Jersey, both types of agreements may be recognized as binding, enforceable contracts provided, by and large, that the parties fully disclose their assets and income to each other; that they enter into the agreement freely and voluntarily (that is, neither party is coerced or under duress to sign the agreement); and that each party has had the advice of competent counsel as to his or her rights and/or obligations under the agreement. Generally, such agreements anticipate the disposition of a couple's property and assets if they were to separate, divorce or end their relationship. For example, such an agreement may plan for how property (including liquid assets, retirement assets, real property and other tangible property) acquired by the couple during their relationship either jointly or individually, would be divided between them upon a dissolution of their relationship. It can also secure certain assets for the parties' children from prior relationships, keeping them free from interference by the other party. Additionally, a pre-marital or pre-cohabitation agreement may speak to the couple's future financial lives after their relationship ends, such as whether one party will be financially supported by the other, how much support will be paid and for how long. Also, it is common for a pre-marital or pre-cohabitation agreement to define the couple's individual assets prior to their marriage or cohabitation, and to specify how such property will be treated and disposed of between them in the event the relationship ends.
Because pre-marital and pre-cohabitation agreements anticipate and attempt to resolve issues that may arise between two people if their relationship were to end prior to such an end, such agreements are advantageous to people facing a dissolution of their relationship. They clearly lay out the intentions of the parties concerning their finances and property, and can avoid the tensions and uncertainties inherent in negotiating a settlement agreement incident to a dissolution. Furthermore, such agreements can reduce the involvement of the courts in parties' lives if they are unable to resolve their differences between themselves. The New Jersey courts long have recognized the benefits of pre-marital and pre-cohabitation agreements in that they are negotiated when a relationship is at its peak, and presumably when the parties are less likely to be guarded with each other. In this regard, courts generally will honor agreements between a couple and will uphold such agreements voluntarily negotiated by parties provided there was a full disclosure of the parties' assets and incomes, and each of the parties had the advice of competent counsel.
Although you and your partner are free to enter into a pre-marital or pre-cohabitation agreement without the involvement of attorneys, an agreement drafted by an attorney and entered into by the parties upon the advice of independent counsel is preferable, and more likely to be binding on the parties. Attorneys knowledgeable about family law will be able to advise you as to the current laws governing such agreements and their enforceability, as well as the benefits and drawbacks to you of entering into such an agreement with your partner. But remember: it is essential that each party consult with an attorney of his or her own so that the agreement reached is one that is balanced and fair to both parties.
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Authorities
Marschall v. Marschall, 195 N.J. Super, 16 (Ch. Div. 1984)
