If you’re getting married, understanding the protections offered by a prenuptial agreement is crucial, especially when it comes to future income. For more information and to secure the help of an experienced legal professional, continue reading and contact a skilled Morris County, NJ prenuptial agreement attorney at Townsend, Tomaio, Newmark, & Clancy, L.L.C.
Is New Jersey an Equitable Distribution State?
Yes, New Jersey operates under the principle of equitable distribution, meaning that marital property is divided fairly, though not necessarily equally, between the spouses during a divorce.
The court considers many factors when determining an equitable division, including the length of the marriage, the age and health of the parties, the incomes and earning capacities of the parties, the standard of living established during the marriage, and each party’s contribution to the marriage, both financial and non-financial.
Unlike community property states, where assets are generally split 50/50, equitable distribution allows a judge the discretion to divide assets in a way they deem just based on the unique circumstances of the case.
Is Income Generally Marital or Separate Property?
In New Jersey, property acquired by either spouse during the course of the marriage, up until the date a complaint for divorce is filed, is considered marital property. This includes assets like homes, bank accounts, investments, and personal property. Separate property, on the other hand, consists of assets owned by a spouse prior to the marriage, or acquired during the marriage via gift or inheritance from a third party. Separate property is generally exempt from distribution in a divorce.
A spouse’s income and earnings generated during the marriage are typically categorized as marital property. This is true regardless of which spouse earned the income. Since income earned while married is generally considered marital, any unspent income or assets purchased with that income are typically subject to division during divorce proceedings in New Jersey.
Can Income Be Protected With a Prenuptial Agreement in NJ?
Yes, a prenuptial agreement in New Jersey can be an effective tool for protecting a spouse’s income and earnings from equitable distribution in a divorce. Since income earned during the marriage is typically considered marital property, a prenup is one of the best ways to bypass this default and categorize it as separate property.
To protect income, the prenup must contain clear and specific language classifying future income, and any assets acquired with that income, as the separate property of the earning spouse. This provision overrides the general rule of equitable distribution for that specific asset. It’s also important to note that the prenuptial agreement can be specific and only protect certain income, such as earnings from business interests or certain investments.
However, the agreement must be executed voluntarily, with full and fair financial disclosure from both parties, and it cannot leave one spouse impoverished or dependent on public assistance. While a prenup can protect income in the context of equitable distribution, it generally cannot waive a spouse’s future right to alimony if doing so would be unconscionable.
For legal assistance, reach out to an experienced attorney today.
