A Mid-Marriage Agreement is a written document that explains how a currently married couple will divide their property upon divorce. It is different from a Pre-Nuptial agreement, which are made before a couple is married. New Jersey courts treat these two types of agreements very differently, enforcing a properly executed pre-nuptial agreement more frequently than a mid-marriage agreement.Arms Length – The Difference Between Pre-Nuptial and Mid-Marriage Agreements
One of the reasons courts enforce pre-nuptial agreements more than mid-marriage agreements is that pre-nuptial agreements have generally allowed the parties an opportunity to negotiate at “arms length”. This contract law principle means that the parties are acting independently. Since the couple has not yet wed when they sign a pre-nuptial agreement, they are acting as two single people. The chance for one party to coerce the other party into signing the agreement is lower in this type of agreement.
With a mid-marriage agreement, however, the couple has already married and thus the parties are not at arms length, they are not simply two independent people to a contract, but rather they are two separate people that are also a family unit. New Jersey courts closely scrutinize these types of agreements because the chance of one party coercing the other party into signing a mid-marriage agreement is higher. For example, if one spouse desperately wants to stay married while the other spouse wants to divorce, the spouse who wants to divorce may coerce the other spouse into parting with financial assets in order to stay married.Reasons for Mid-Marriage Agreements
Couples enter into mid-marriage agreements for varying reasons, but the underlying goal is to make clear their intentions for how to handle finances after the marriage ends. A couple does not need to be contemplating divorce in order to enter into a mid-marriage agreement. Significant changes in the finances of the couple or increasing marital conflict are common reasons for creating a mid-marriage agreement.New Jersey’s Leading Mid-Marriage Agreement Case - Pacelli v. Pacelli
Mid-Marriage agreements are relatively new to the courts, with a 1999 case being the first time the New Jersey courts dealt with them. In Pacelli, a husband and wife were married in 1975, had two children, and then signed a mid-marriage agreement in 1986. The agreement stated that the wife would receive $500,000 if they divorced. Against the advice of her attorney, the wife signed the agreement. The couple stayed married until 1994, when the husband filed for divorce and sought to enforce the mid-marriage agreement.
At the time the mid-marriage agreement was signed in 1986, the husband represented that his net worth was $4.7 million, $1.7 million more than when the parties married. In 1994 when the parties divorced, the husband was worth over $11 million.
The New Jersey Appellate Division did not enforce the mid-marriage agreement in this case. To be enforceable, the court said that the agreement must have been fair at the time it was made and at the time it was to be enforced. In Pacelli, the agreement was not fair when made nor when the husband sought to enforce it. The standard laid out in Pacelli is difficult to meet, due to changing economic circumstances over time.
If you wish to enter into a mid-marriage agreement or have been asked to sign one, you need legal representation. Call the Law Offices of Peter Van Aulen at 201-845-7400 for a consultation.Sources
Pacelli v. Pacelli , 319 N.J.Super 185 (App.Div.1999)