What is a Prenup?
In the realm of family law, the concept of a prenuptial agreement, or premarital agreement, is fundamental to understanding how the legal system approaches the often complex realities of marriage. According to the Uniform Premarital Agreement Act, a statute adopted by North Carolina, North Carolina General Statute § 52-7, a prenuptial agreement is defined as "an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage . " Its general purpose is simple yet subjective: to outline how a couple’s personal and financial interests will be addressed if the marriage lasts until death or divorce. By delineating responsibilities and expectations, prenuptial agreements can protect not only the personal assets of both parties in the event of a divorce but also their individual financial interests as a married couple.
What Does North Carolina Require to Form and Enforce a Prenup?
North Carolina law permits prenuptial agreements, which they refer to as "premarital agreements." Like many states, North Carolina recognizes premarital agreements as valid contracts that can cover a variety of issues between parties contemplating marriage.
The requirements in North Carolina are that the premarital agreement must be in writing and signed by both parties and must be executed before marriage.
However, to be enforced, the agreement must be entered into voluntarily, the parties must have provided full and fair disclosure of their property and financial obligations, and each party must have had an opportunity to consult with independent legal counsel. If, at the time of signing, a party fails to provide a fair and reasonable disclosure of his or her financial obligations or properties – including income, assets and debts – or if a party is not provided with a reasonable time within which to obtain that information, the agreement may not be enforceable.
North Carolina General Statutes, Chapter 52B outlines these requirements, as well as also the provisions that can be included in premarital agreements. Some of the provisions permitted include:
Benefits of a Prenup
A prenup offers several benefits for a couple who anticipates marrying and wishes to address financial issues in advance. Some people view prenups as unromantic, while others think they’re a hygienic measure for those following a previous divorce. In some cases, the spouse with significantly more assets will seek out the prenup so he or she can protect everything earned before the marriage from being divided during a divorce. However, these contracts aren’t solely for the wealthy. Every couple can benefit from having some financial arrangement in writing prior to getting married.
For example, couples who have children from a previous marriage may choose to protect their assets for the sake of those children. In this case, they may decide to stipulate that a spouse doesn’t automatically hear an inheritance from the other’s estate in the event of death, or doesn’t receive the previous account holder’s pension or retirement after a divorce. Prenups can also address how to divide up marital property, or define what is defined as marital property.
Even if you don’t foresee any particular future problem with your fiancée, a prenup allows you both to avoid making the legal system deal with your property in the event of a divorce. It’s a way to simplify the process—letting your prenup stand in as your law if you and your spouse ever find yourselves in the midst of a divorce.
Limitations and Prohibitions on Prenuptial Agreements
In general, a prenuptial agreement must be executed voluntarily without deception. A court may decline to enforce an agreement if doing so would be the result of fraud, duress or overreaching. There are also certain matters that cannot be addressed in a valid prenuptial agreement in North Carolina. For instance, the Family Law Act specifically excludes the following matters from consideration in a prenuptial:
- Decreasing or eliminating post-separation support.
- Decreasing or eliminating alimony or equitable distribution under N.C.G.S. 50-20 or 50-21.
- Custody or support of children born or adopted before the marriage.
- Modification or elimination of child support obligations.
- Any matter within the purview of the law applicable to marital agreements.
Additionally, to the extent the agreement includes terms that are contrary to the public policy or laws of North Carolina regarding divorce, child custody, child support and equitable distribution, those terms are deemed void and unenforceable.
Common Provisions Found in NC Prenuptial Agreements
Prenuptial agreements in North Carolina may contain a wide variety of terms, and their content is changing all the time. But there are some common terms that we see in many of our clients’ prenuptial agreements. Terms related to property are the most common terms we see. A good percentage of our clients want a full pre-marital disclosure, so the agreement will contain the full picture of all the parties’ assets and debts, but the agreement may then specify that the parties will keep their property as it exists at the time of the agreement as separate property of each party (in other words, no commingling once they’re married, and each person’s property will belong to that person alone). The agreement would then have many exceptions that the parties have agreed upon, for example the parties’ joint bank account that they will use for their bills after they get married, and any gifts that they may give to each other after the date of the agreement.
Some couples want to protect property that a spouse is bringing into the marriage that might be inheritable by the spouse’s children from a prior marriage if that spouse dies during the marriage . In those circumstances, the pre-marital agreement will contain terms to ensure that the surviving spouse cannot take under North Carolina law his or her spouse’s inheritance from the pre-marital spouse.
Alimony is also a common prenuptial agreement term. Sometimes parties will agree that upon the death of one of them their estate will not have to pay alimony to their spouse. While alimony is available to any dependant spouse in North Carolina at the time of a divorce, the parties can agree that, under their unique circumstances, alimony wouldn’t be available to them, or it would be available but only limited to a specific length of time or to a specific amount of money.
Some parties agree to waive their right to year’s allowance (a statutory allowance to provide for the expenses of a decedent’s last illness and funeral expenses) in North Carolina; in other words, the consent to allow the surviving spouse to waive it. There are also circumstances where one spouse will agree to waive his or her North Carolina homestead exemption in property of the other spouse if there would be an attachment, execution, or forced sale of the property for collection of a debt.
Steps to Creating a Prenup
The first step is to consult with a licensed attorney who specializes in prenuptial agreements. It is imperative that both parties each engage their own North Carolina attorney. Oftentimes, the typical practice will involve the parties sitting down together with their respective attorneys to discuss their individual needs, desires and concerns. At this point, it is of utmost importance to make clear to your attorney what your goals are for a prospective prenup and under what circumstances you think it may come into effect. Sitting with both attorneys can also help to build trust and rapport between the parties. It is very important that both parties are on board with their respective attorneys and have total confidence in their representation throughout the process.
Once the parties have consulted with their attorneys separately and have agreed on representation, then negotiations can begin. An attorney will usually draft the agreement and provide it to the other party’s attorney for review. It is very helpful at this point if everyone stays as open-minded and flexible as possible. If problems arise during negotiations, the attorneys will likely have to look into alternative dispute resolution such as mediation to help resolve disagreements without an expensive and time-consuming court battle.
Once a final draft of the prenup has been reached by all parties, it is best to sign the agreement at least 30 days prior to the wedding in order to give each spouse adequate time for review. In preparing to enter into an agreement, the parties should clearly understand their rights, assets and properties going into the marriage, and fully understand the ramifications associated with such an agreement. If you do not have full disclosure of all of your spouse’s debts, properties and income, your attorney will be able to help you with the process of getting the proper disclosure.
Finally, the prenuptial agreement must be signed voluntarily and without fraud, duress or undue influence. If any party believes that they were coerced into signing the agreement or if they can prove that the other party had an ulterior motive or hidden agenda for entering into the marriage, the agreement could be contested in court after the marriage is entered into. In order to avoid this type of issue, it is very important that each party has independent legal advice and representation, and that the agreement is entered into fully understanding each party’s rights and responsibilities.
How Family Law Attorneys Aid in Creating a Prenup
It is vital for individuals considering a prenuptial agreement in North Carolina to consult with an experienced family law attorney. While the terms and conditions of each prenuptial agreement will be different based on the couple’s individual preferences, there are certain legal requirements that must be met in order for the agreement to be enforceable. A family law attorney can help you understand the implications of the agreement and the specific needs and concerns for you or your future spouse. If the prenuptial agreement is not properly drafted or if each of the parties does not have an opportunity to read the document independently or have separate legal counsel, the enforceability of the prenuptial agreement may be at issue.
Frequently Asked Questions About Prenuptial Agreements in NC
Can a prenuptial agreement be modified after marriage?
Yes, a prenuptial agreement can be modified or revoked after marriage by a written agreement signed by both spouses.
Are there limits on what can or cannot be included in a prenuptial agreement?
A prenuptial agreement cannot determine whether a child of the marriage will be declared a child of the marriage for purposes of intestate succession.
Will a prenuptial agreement prevent me from bringing a claim for alimony or equitable distribution as part of a divorce proceeding?
It may. The court will first determine whether the prenuptial agreement was valid and enforceable. If the prenuptial agreement is found to be valid and enforceable , then it will control as long as the agreement was fair when made and both parties had full knowledge of each other’s financial circumstances.