Under the North Carolina family law, marital agreements are divided into four different types namely Premarital Agreement, Postnuptial Agreement, Separation Agreement, and Marital Settlement Agreement.
By seeking a consultation with an experienced family law attorney, you will be counseled as to which marital agreement is necessary for you and your partner.
Many people associate a family attorney’s job as assisting with the process of dissolving a marriage. However, there are many practical ways a family law attorney can help, including drafting marital agreements.
A Prenuptial Agreement (often referred to as a “Premarital Agreement” or its shortened name “Prenup”) is an agreement entered into by two people in anticipation of marriage. This type of agreement can only be effective if signed by both parties before the marriage. The agreement also does not become effective until the parties are married and not at the time of signing.
Many people do not like to discuss details of a Prenuptial Agreement because it is emotional to go through details which will become issues if the marriage ends. During the wedding planning process, people only want to focus on the happy details and beginning their new life together as a married couple. While it is understandable that discussing divorce before marriage brings a bad connotation, it is important to plan for an event that may occur in the future.
Under North Carolina’s Uniform Premarital Agreement Act there are 8 different issues the parties can include in their agreement. These issues are:
- Rights and obligations of property acquired at any time individually or as a couple.
- Rights to manage and control property.
- Disposition of property upon occurrence of an event (i.e. death or divorce).
- Spousal support.
- Arrangements for distribution of property upon death of a spouse.
- Ownership and disposition of death benefits from an insurance company.
- Choice of law to govern the agreement.
- Any other issues the couple wants to complicate as long as it is not criminal or against public policy.
It is important to note a Prenuptial Agreement cannot limit child custody or child support issues. Provisions governing child custody and/or child support issues will be discussed under the section on Separation Agreements.
A Postnuptial Agreement shares many similarities with a Prenuptial Agreement with the exception that the agreement is entered into after the couple has already married. There is no deadline from the date of marriage that a couple must enter into a Postnuptial Agreement for it to be effective and the couple can create a Postnuptial Agreement at any time during their marriage. These agreements typically address the division of their assets upon the occurrence of an event such as death or divorce.
Here are common occurrences which prompt a couple to enter into a Postnuptial Agreement:
- One spouse inherits a large asset, and he/she may wish it to remain separate from the marital assets.
North Carolina’s equitable distribution law allows a court to decide how to split the assets and debts equally between the couple during a divorce proceeding. However, there may be assets inherited and one partner does not want to include those assets as marital property if their marriage is dissolved. In order to protect their separate assets, a couple may decide a Postnuptial Agreement is necessary to make clear the couple’s desires in dividing their property.
- The couple had a Prenuptial Agreement, but their financial circumstances changed significantly after marriage and need to change the terms of their Prenuptial Agreement.
After a Prenuptial Agreement goes into effect upon the marriage occurring, a couple may amend or revoke the agreement usually through a signed document by both parties. However, the couple may decide their financial circumstances have changed so significantly it is better to write a Postnuptial Agreement and include that it is to replace the pre-existing Prenuptial Agreement. To determine which works better for a couple’s particular circumstances, it is important to discuss these options with an experienced family law attorney.
- The couple is planning to separate with the intent on attempting to reconcile in the future.
The significant difference of using a Postnuptial Agreement rather than a Separation Agreement is the couple is still intending to remain remarried when entering into the agreement. A Postnuptial Agreement can also be used if the couple is considering a trial separation and intends on trying to make their marriage work.
Similar to Prenuptial Agreements, a Postnuptial Agreement cannot dictate the payment of child custody and/or child support and must not violate public policy in North Carolina.
North Carolina’s Separation Agreements are entered into when a couple has separated and is intending to divorce. The Separation Agreement allow the couple to lay out terms regarding certain areas of their marriage which are agreed upon. If the marriage does eventually end in divorce, a Separation Agreement helps the process run smoothly and can save the couple time and money.
North Carolina law does not require a couple to enter into a Separation Agreement. For a Separation Agreement to take effect, the document must be in writing and signed by both parties and these signatures are notarized. While North Carolina court’s do not require the couple to enter into a Separation Agreement, the North Carolina divorce laws does require the couple be separated for one year prior to qualifying for divorce.
Unlike Postnuptial Agreements, Separation Agreements are broader in what issues are included. Here are some issues which may be included:
- Child Support and Custody
- Asset and Debt Division
- Life Insurance
The advantage of entering into a Separation Agreement allows a couple to decide the terms of the marriage ending. North Carolina courts allow the party’s agreement to remain confidential over terms regarding alimony, child support/custody, and division of assets and debts. This allows the couple to have more privacy about their lives and avoids a judge deciding a plan for them.
Separation Agreements can be voided under circumstances where a party signed under duress, coercion, fraud, or undue influence. There must be an agreement by both spouses and a spouse cannot be compelled to sign an agreement. Additionally, the Separation Agreement cannot contain provisions which would be criminal or go against public policy.
Divorce can be a draining experience, both emotionally and financially. If the parties are able to agree to all issues of the divorce, then seeking an uncontested divorce is the most efficient process. However, if the parties are unable to agree on the issues then the divorce is considered a “contested” divorce and will involve more legal work and legal fees.
The goal when starting the divorce process is for the parties to reach an agreement to avoid drawn out litigation and trial. This agreement is known as a Marital Settlement Agreement. The Marial Settlement Agreement will outline the parties agreement on three necessary terms in divorce: child custody and division of time-sharing between parents, spousal support, and division of the marital assets and debts.
Here are ways the parties may reach a Marital Settlement in both an uncontested and contested divorce.:
- If the divorce is uncontested and the parties are able to agree to all issues, then their attorneys will help draft a Marital Settlement Agreement to be signed by both spouses. Once the parties enter into a Marital Settlement Agreement, then the they only need to file for divorce and submit their agreement and any other supporting documents which will be reviewed by the judge at a hearing.
- If the divorce is contested, then there is more legal work required to obtain the final order dissolving the marriage. Often, courts will require the parties mediate with hope the parties will reach a Marital Settlement Agreement on all issues. During the mediation, the mediator, a non-biased third party, will work to help the parties reach an agreement. If the parties are able to reach an agreement, then the mediator will draft a report documenting the parties’ agreement. Both parties’ attorneys will then prepare the Marital Settlement Agreement to be provided to the court to finalize the divorce proceeding. However, if the parties are unable to reach an agreement, then the remaining issues not agreed upon will need to be determined by the judge at trial.
Once the Marital Settlement Agreement is signed both parties will be bound by its terms. Once the judge executes the final judgment, the Marital Settlement Agreement will be the terms for the parties and the court to conduct themselves going forward. If either party breaches the settlement, they are subject to the court’s enforcement powers. A defaulting party can also be required to pay the other party’s legal fees and court costs if forced to bring the matter before the court to enforce the agreement.
If you have questions about drafting a marital agreement, or about how an existing agreement will affect your divorce case in North Carolina, contact our experienced attorneys at Culbertson & Associates by calling (336) 272-4299. We are ready and able to help make drafting and negotiating marital agreements easier for you.