NJ Family Law Lawyers Know Mid-Marriage Agreements

A Mid-Marriage Agreement is a contract that delineates how assets and support will be dealt with upon the couples’ divorce and is voluntarily entered into after a marriage has occurred.  It is different than a pre-nuptial agreement in that a marriage already has taken place before the mid-marriage agreement has been executed. A mid-marriage agreement is different than a property settlement agreement in that the marriage has some viability and no divorce action has yet been filed at the time a mid-marriage agreement is executed.

These distinctions between the various types of marital agreements are important to the issue of enforceability of the agreement/contract. Generally, the law views pre-nuptial and divorce settlement negotiations to afford people a better opportunity to negotiate at arm’s length and without coercion. The law views mid-marriage agreements as being more susceptible to influence or coercion and less likely to be the product of arm’s length negotiations.

Spouses enter into Mid-Marriage Agreements with the intention of resolving issues that arise during their marriage. Some of the reasons often given for Mid-Marriage Agreements are:

  1. One spouse believes that the marriage is financially unstable and wants protection.
  2. The couple intended to draft a prenuptial agreement but never did.
  3. For use as an estate planning tool. For example, when one of the parties needs to secure steady income for a specific length of time.
  4. To update or modify an existing pre-nuptial agreement.
  5. To provide for children of a prior marriage(s).
  6. To specify the equitable distribution of the couples’ assets instead of relying on uncertain divorce laws.
  7. To protect the business/business partners of one of the spouses from a parties’ divorce.

Some of the literature indicates that Mid-Marriage Agreements are not generally recommended for couples who are:

  • Experiencing physical or mental abuse;
  • Dealing with infidelity;
  • Struggling with substance abuse; or
  • Planning to use a mid-marriage agreement as a “Trojan horse” settlement in an upcoming divorce battle.

Pacelli v. Pacelli, 319 N.J. Super 185 (App. Div. 1999), continues to be the leading case on Mid-Marriage Agreements. In Pacelli, the Appellate Division refused to enforce the “mid-nuptial” agreement, finding that it was unfair in 1986 when it was signed as well as in 1994 when enforcement was sought. The Court specifically criticized the Husband’s “creative accounting” of the value of the assets at the time the parties entered into the agreement and the potential for coercion inherent in Mid-Marriage Agreements because one party can use the threat of dissolution of marriage to “bargain themselves into a position of advantage.”

In Pacelli, the Court indicated that it need not decide whether such agreements are so inherently and unduly coercive that they should not be enforced (Ohio appears to be the only state that bans all post-nuptial contracting by statute, Ohio Rev. Code Ann sec 3103).  It stated, however, that such agreements must, at the very least, be closely scrutinized and carefully evaluated. There are those who feel that the requirement that the agreement be fair and equitable at the time of enforcement requires a crystal ball.

It is clear, therefore, that at a minimum for Mid-Marriage Agreements to be enforceable, there must be:

  1. Full disclosure,
  2. The negotiations  must free of duress, coercion, misrepresentation, fraud, etc.
  3. It must fair and equitable at the time of signing and at the time enforcement is sought; and
  4. Each party should have own counsel.

In an unreported opinion, Gallagher v. Gallagher, Docket No. A-1261-09T3 (2010), the Court stated “[g]enerally, mid-marriage agreements are unenforceable as they are ‘inherently coercive’ entered into ‘before {a} marriage los[es]all of its vitality and when at least one of the parties, without reservation, wanted the marriage to survive’”. Citing Pacelli.

In Ansin v. Ansin, 457 Mass. 283; 929 N.E. 2nd 955 (2010), which is the only reported decision citing Pacelli, the Court however upheld the Mid-Marriage Agreement, finding that it was fair and reasonable at the time of execution and at the time of the divorce.  In Ansin the divorce complaint was filed only two years after the parties signed the Mid-Marriage Agreement. There, the Court instructed that in evaluating the fairness of the agreement, a judge should make the same inquiry as when evaluating a separation agreement and consider the following factors:

  1. The nature and substance of the objecting party’s complaint;
  2. The financial and property division provisions of the agreement as a whole;
  3. The context in which the negotiation took place;
  4. The complexity of the issues involved;
  5. The background and knowledge of the parties;
  6. The experience and ability of counsel;
  7. The need for and availability of experts to assist the parties and counsel; and
  8. The mandatory and, if the judge deems it appropriate, the discretionary factors set forth in prior case law.

Given the complexities of Mid-Marriage Agreements and Divorce in New Jersey, we advise you to contact one of our experienced family law attorneys or divorce lawyers at 973-627-7300 at Einhorn Harris today. We handle mid-marriage agreements throughout New Jersey.