Prenuptial Agreement in North Carolina
A prenuptial agreement is an agreement between a couple about to be married that is used to set out the rules that will govern their property, debts, income and expenses should the marriage eventually dissolve.
Prenuptial agreements allow both spouses to protect the separate property they bring into a marriage. Otherwise, if one of them owns an asset now and sells it after marriage, the cash may become joint marital property. In addition, a prenuptial agreement allows both spouses to protect themselves from the other’s debts – those incurred before the marriage and those incurred during the marriage. And it may allow them to determine what level of support one of them will provide to the other if they divorce or if one of them dies.
When Is a Prenuptial Agreement a Good Idea?
North Carolina couples may seek a prenuptial agreement for any number of reasons, but the most common are concerns about finances, supporting children, planning for the future and ensuring the wishes laid out in your estate plan can be honored.
You should consider a prenuptial agreement if any of the following applies:
- You have children from a previous marriage.
- You own your own business or are involved in a family business.
- You have significant assets that you want to keep separate.
- You are concerned about the amount of debt of the other party.
- You are giving up a successful career to get married.
Many couples do not consider getting a prenuptial agreement unless one or both parties have considerable assets or income. However, a prenuptial agreement can benefit both spouses even if assets or income are currently sparse. Because a prenuptial agreement documents the separate property of each spouse, can be tailored to fit your estate plans and is written to fit you and your spouse’s specific needs and wishes, the agreement can help resolve differences over finances and estate planning that become irreconcilable in many marriages.
In other words, a prenuptial agreement doesn’t merely protect spouses in the event of divorce – it can also help couples prevent the kind of strife that causes divorce in the first place. A prenuptial agreement also helps promote honesty by demanding transparency – if both parties do not fully disclose their financial situations, the court may find that the prenup is void.
Nevertheless, a prenuptial agreement isn’t right for everyone. State law may cover all the issues you would address in prenuptial agreement. Or the timing may not be right – addressing financial plans and issues may be better reserved for a “postnuptial” agreement entered after you are married. In either case, it is wise to speak to an experienced attorney before deciding whether to create a prenuptial agreement.
What a Prenuptial Agreement Can Protect (and What It Cannot Protect)
A prenuptial agreement can do much to protect you, your spouse and your children’s financial interests. However, North Carolina law limits what prenuptial agreements may and may not do.
A prenuptial agreement can:
- Distinguish between property owned separately by each spouse, and property owned jointly by both spouses.
- Protect one spouse from the debts of the other.
- Provide for children either spouse has from a previous relationship.
- Keep family heirlooms, family business interests and other property in the birth family.
- Supplement and protect your estate plan.
- Make it easier to distribute property equitably in the event of a divorce.
- Specify which spouse is responsible for which financial items during the marriage – from managing separate businesses to who will prepare the tax returns.
However, a prenuptial agreement cannot:
- Require either spouse (or any other party) to do something prohibited by law.
- Pre-determine issues of child custody or child support.
- Waive either spouse’s right to alimony in the event of a divorce.
- Provide a financial or other incentive for divorce.
- Specify which spouse is responsible for non-financial personal or household matters, like who will do which chores or how the children will be raised.
Because part or all of a prenuptial agreement may be found void if it contains prohibited material, it is important to work with an attorney who can ensure your prenuptial agreement both follows the law and is more likely to be upheld by a court.
What a North Carolina Prenuptial Agreement Should Include
There are certain essentials to creating a valid prenuptial agreement:
- The agreement must be in writing and executed before the marriage.
- The agreement must be fair and reasonable and based on full disclosure by both parties of all assets and liabilities.
- One lawyer cannot fairly represent both parties. Each party to the agreement should have their own attorney to prepare and review the documents and answer all questions before signing.
Without a prenuptial agreement, assets could end up in the hands of your spouse’s children from a previous marriage instead of your own children, or they could go to a mate who achieved nothing financially while you became a success.
Common Prenuptial Agreement Disputes and How to Handle Them
Disputes involving a prenuptial agreement may arise while the agreement is being created or when one spouse attempts to enforce the agreement.
Common disputes during the agreement’s creation include:
- Whether to create a prenuptial agreement at all. Couples should work together to discuss the pros and cons.
- What to include in a prenuptial agreement. When a couple disagrees on the terms, mediation and the help of the partners’ respective attorneys can help resolve issues and forge an agreement both can support.
- How long the agreement should last. A “sunset” clause can be used to specify when a prenuptial agreement should expire, or the agreement can stand indefinitely.
Common disputes during the agreement’s enforcement include:
- One of the spouses claims he or she was pressured into the agreement. Unless you can both agree voluntarily to create a prenup, it may be wiser to wait.
- One or more of the provisions are invalid. When each partner works with their own attorney, these risks are reduced. However, even if a certain provision is invalid, the court may still choose to enforce other valid provisions that do not rely on the invalid provision.
- The information provided was false or incomplete. Complete transparency is necessary to create a valid prenuptial agreement – and it can help the partners start their marriage in an atmosphere of trust and openness.
- Each spouse did not have their own independent counsel. Each spouse’s separate interests are at stake, so each spouse must be represented by an attorney who is looking out only for that person’s interest.
- The agreement, or some part of it, is “unconscionable” or grossly unfair. These agreements will not be enforced by the court, even if both parties willingly agreed to the terms.