For over the past twenty years as an attorney practicing divorce law here in New Jersey, I have had countless folks ask me about my opinion regarding post-nuptial agreements (as opposed to a pre-nuptial agreement, which is obviously negotiated, drafted and executed before the marriage). On the other hand, a post-nuptial agreement is executed during the marriage in an attempt to resolve any and all financial issues between the husband and wife just in case a divorce occurs in the future.
Simply put, I am not a big fan of these types of agreements. First, the very fact that this is part of the conversation between a husband and wife is clearly not a good indication of the viability of the relationship. Frankly, this lawyer would suggest either marriage counseling or, in the alternative, to start preparing for a divorce before I would recommend a post-nuptial agreement. This is also because, more times than not, such agreements are “thrown out of court” (legally known as vacated). This is due to the fact that, under New Jersey law, a judge of a New Jersey Family Court is mandated to meticulously and thoroughly analyze post-nuptial agreements. Consequently, it is greatly dubious whether the Family Part of the Superior Court of New Jersey will ultimately deem such an agreement enforceable.
In Pacelli v. Pacelli, the New Jersey Appellate Division reviewed the enforceability of a “mid-marriage” agreement that resolved issues of alimony and equitable distribution in the event of a divorce. In this case of first impression, the Superior Court of New Jersey, Family Part of Passaic County found the agreement was enforceable, and wife, Francesca Pacelli appealed to the New Jersey Appellate Division.
Antonio and Francesca Pacelli got married in June 1975. At the time of the wedding, Francesca was twenty years old, and she had migrated to the United States from Italy when she was fourteen years’ old. Antonia was forty-four years old at the time of the wedding, and worked as a builder, real estate developer, and also owned a restaurant. He testified that he was worth about three million dollars when he got married, but failed to provide any evidence to support that claim.
Francesca and Antonio had two children together, and enjoyed a very high standard of living. While Francesca was a stay at home mother, the couple’s tax returns showed that they received a gross income of $ 540,000 in 1984, and $ 476,000 in 1985. In the middle of 1985 Antonio told Francesca that he would file for divorce unless she agreed to specific terms about their financial relationship. To show his wife he was not kidding, Antonio moved out of the marital bedroom, and moved into an apartment above their garage.
As of 1985, Antonio’s net worth was $ 4.7 million, which was $ 1.7 million more than he had before he got married. Antonio wanted Francesca to sign an agreement stating that he would pay her $ 500,000 as complete satisfaction of his alimony and equitable distribution obligations, in event of a future divorce. Francesca’s attorney advised her not to sign this agreement, because in the event of a divorce, a judge would award her far more than $ 500,000 in alimony and equitable distribution. However, she did not take her attorney’s advice. She told her attorney, Gary Skoloff, that she did not want the marriage to end, and did not want her children to “grow up in a broken home.” Mr. Skoloff testified that Francesca told him that she would sign anything to keep the marriage intact. He further testified that the agreement was not negotiable, and if it was not signed as is, Antonio would file a complaint for divorce.
The agreement was signed in 1986, and the couple resumed their marriage up until 1994. When Antonio filed for divorce in 1994, his assets were worth $ 14,291,500, and he had a net worth of $ 11,241,500. The issues at trial were: whether the agreement stemmed from duress or coercion, and thus unenforceable; and whether the agreement was unenforceable because it was unfair. The trial court found that the agreement was not signed under duress or coercion, and it was fair as measured in 1985. On appeal, the New Jersey Appellate Division found that the mid-marriage agreement in Pacelli, was different from both pre-nuptial agreements, and post-nuptial property settlement agreements entered into when a marriage terminates. At the time this mid-marriage agreement was signed, the marriage did not yet lose all of its validity, and at least one party, Francesca, wanted to preserve the marriage. In fact, Antonio also wanted to preserve the marriage, but only according to his terms.
Unlike a pre-nuptial agreement, Francesca had entered into a legal relationship, precisely when Antonio gave her this ultimatum. She already had two children and had a far more difficult decision before her than a bride signing a pre-nuptial agreement. She faced the destruction of her family, and the stigma of a failed marriage. She stated numerous times that she signed the agreement to keep the family intact, and to ensure that her sons were raised in an intact family.
The mid-marriage agreement in Pacelli was also different from a post-nuptial agreement. In a property settlement agreement executed at the end of a marriage, both parties realize that the marriage is over, recognize that the relationship is adversarial, and can look to exercise their economic rights. As such, the New Jersey Appellate Division found that Antonio’s demand was intrinsically coercive. Francesca’s decision was not based on her legal rights, but her wish to keep the family together.
While there was no case law addressing a “mid-marriage agreement” at the time of this case, New Jersey Courts had reviewed “reconciliation agreements.” In the 1985 New Jersey Appellate Division case of Nicholson v. Nicholson, a reconciliation agreement was signed after the husband cheated on his wife for the second time. As a condition for resuming the marriage, the wife demanded that the marital home be in her name alone. When the couple divorced twelve years later, the trial court enforced the reconciliation agreement, and found that the house was not subject to equitable distribution. In Nicholson, the New Jersey Appellate Division stated that a reconciliation agreement would be enforced in some circumstances if it was fair and equitable. Furthermore, a prerequisite would be that the “marital relationship has deteriorated at least to the brink of indefinite separation or a suit for divorce.” However, in Pacelli, Antonio’s main interest was protecting his money and finances. Therefore, the New Jersey Appellate Division found that any marital “crisis” was artificial, and was created by Antonio to take advantage of his wife’s dedication to the family.
The New Jersey Appellate Division held that mid-marriage agreements are most closely analogous to reconciliation agreements, and therefore present the opportunity for one party to use the threat of divorce “to bargain themselves into positions of advantage. The appellate panel concluded that these type of agreements must be very closely scrutinized and evaluated with the greatest of care. Upon a careful evaluation, the New Jersey Appellate Division found that the terms of the agreement were in fact not fair and just. A careful evaluation and close scrutiny of a mid-marriage agreement requires a consideration of what the impact of the agreement would be when enforced. This is because a marriage might survive for several years after a mid-marriage agreement is executed, as was the case in Pacelli, and during this time, the family could continue to prosper financially, partially due in part to the contributions of the mother, homemaker and helpmate. Therefore, it would not be equitable to exclude her from the post-agreement prosperity. Furthermore, the converse could occur, and the family might lose wealth, resulting in the family’s assets being worth less than they were at the time the agreement was signed. Therefore, the New Jersey Appellate Division reversed the order of the trial court that deemed the mid-marriage agreement enforceable.
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