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Are Prenuptial Agreements Affected By Changed Circumstances?
People who go through the bother and expense of entering into prenuptial agreements, sign the agreement with the expectation that the agreement will be enforceable and will give them the future protection that they seek. Fundamentally, we are talking about a contract between competent adults, which should ordinarily be enforceable and not subject to modification. Unfortunately, prenuptial agreements are routinely attacked at the time when party or the other seeks to invoke its terms.
Clients must therefore understand that contracts for goods or services are different than contracts between married people, or between those who plan to be married. In New Jersey, the New Jersey Supreme Court in the case known as Lepis V. Lepis, created the quintessential loophole, enabling potentially endless modifications of family support provisions, regardless of whether they were ordered by the Court or stipulated to by the parties. The only requirement for this review is a significant and relevant change of circumstances.
Such contract-loosening changes are typically required to be unanticipated, substantial and non-temporary. The powder keg language of Lepis reads as follows: “contract principles have little place in the law of domestic relations.” That being said, NJ divorce lawyers must pay close attention to five key points.
First, it is important to note that properly drawn prenuptial agreements are given the initial presumption of validity. By “properly drawn” we mean that the parties were independently represented by counsel, that there was no coercion or duress, that there was an appropriate level of financial disclosure, and that the agreement was essentially fair.
At the time of attempted enforcement by one party, the burden of proof for showing that the agreement is somehow unconscionable is borne by the party seeking to avoid enforcement. Otherwise, the prenuptial agreement should be enforced.
Second, a prenuptial agreement will not be considered to be unconscionable unless it can be shown that enforcement of the agreement will result in a standard of living for any party that is “far below that which was enjoyed before the marriage.”
Third, soon after the Supreme Court’s finding in Lepis, clever New Jersey divorce attorneys came up with the idea of incorporating anti-Lepis clauses into their property settlement agreements. This sort of thinking can be applied to the drafting of a prenuptial agreement as well. Such clauses can prevent alimony liabilities, or can ostensibly limit them in the event of divorce. To add yet another level of complexity, the anti-Lepis clause itself can be the subject of a modification motion. As equivocal as this may sound, sometimes these clauses are enforceable, and sometimes they are not.
Fourth, if the objective is to attack an antenuptial agreement at the time of attempted enforcement, the New Jersey divorce lawyer is wise to read the case of Marchall v. Marchall. In Marchall, the Court stated that antenuptial agreements should be regarded as subject to modification by reason of “changed circumstances” in the same manner as property settlement agreements. This statement, however, was only in dictum, and does not fall into the category of binding precedent. Notably, Marchall was only a Trial Court decision, and therefore not binding on the courts of other counties, as an Appellate level or Supreme Court level decision would be. The Marchall decision was also decided four years prior to the adoption of the Uniform Premarital Agreement Act in 1988. Furthermore, the Marchall decision predated the Appellate level decision in Morris v. Morris, which case expressed the teter totter viewpoint that sometimes anti-Lepis clauses are enforceable and sometimes they are not.
Fifth, the case of Pacellii v. Pacelli must also be explored. In Pacelli, a mid-nuptial agreement was involved. This agreement was entered into between the parties some 11 years after their marriage and after having two children. The Appellate Division refused to enforce this agreement. The Appellate panel found that the agreement was unfair when it was entered into in 1986 and likewise unfair when enforcement was sought in 1994. The Court did not believe that such mid-nuptial agreements should be treated the same way antenuptial agreements are treated. The Appellate Division opined that “the dynamics and pressures involved in a mid-marriage context are quantitatively different.”
When a prenuptial agreement is executed under circumstances devoid of coercion or duress and where the requirements of the Uniform Premarital Agreement Act are met, Lepis should not apply, and the agreement should not be modified. The only exception would be under the unconscionability standard of the act. Ironically, that is exactly the same standard that was used for modification of New Jersey matrimonial agreements prior to Lepis, under Schiff v. Schiff. Apparently, sometimes the old ways are the best ways.
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