For most engaged couples, discussing prenuptial agreements is usually not on the wedding planning “to-do” list. The last topic a couple wants to discuss before tying the knot is how finances will be divided between the couple if the marriage ends. A Prenuptial Agreement can not only protect you if the marriage ends in divorce, but it can also ensure each spouse is aware of their individual rights and obligations after the marriage ends.
An experienced North Carolina family law attorney can help guide you through the process of drafting a Prenuptial Agreement. The attorney will advise you on what should be included in the agreement to best protect you. Here are important details you need to know before your first meeting with a family law attorney:
What is a Prenuptial Agreement?
A Prenuptial Agreement (often referred to by its shortened name “Prenup”) is an agreement entered into by two people in anticipation of marriage.
Under North Carolina law, Prenuptial agreement is only enforceable if signed by the parties to be bound by agreement. The agreement also does not become effective until the parties are married and not at the time of signing.
Under North Carolina’s Uniform Premarital Agreement Act § 52B-4, parties to a Prenuptial Agreement may contract to:
- 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. separation, divorce, death).
- The drafting of a will, trust, or other estate planning arrangement.
- 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 if it is not criminal or against public policy.
It is important to note a Prenuptial Agreement cannot adversely affect a child’s right to support.
What are the requirements for a Prenuptial Agreement?
For a Prenuptial Agreement to become effective in North Carolina, the contract must be in writing and signed by both parties. It will not be effective immediately after signing and is contingent upon the marriage taking place. If the spouses end their engagement after signing the Prenuptial Agreement, then the condition (the marriage) for it to become effective never took place and the parties will not be bound by its terms.
If you and your fiancé are contemplating a Prenuptial Agreement, you each should meet with your own individual attorneys to diminish any opportunity for conflict of interest. You and your attorney will be able to address many issues which can remain confidential under the attorney-client privilege. This allows you open and honest communication without fear that your fiancé will learn about the discussions without your permission to disclose.
What happens if you do not have a Prenuptial Agreement?
Since the division of assets can become one of the more contentious issues in a divorce proceeding, North Carolina courts will divide assets and debts through the process of equitable distribution. The intent of equitable distribution is to ensure the assets and debts are divided equally between the couple.
First the court will need to determine which assets are marital assets and which assets are separate from the marriage. Separate assets were typically acquired prior to entering the marriage. The court will then evaluate the following factors:
- Financial contributions made to marital estate.
- Non-financial contributions, such as a homemaker or stay-at-home parent.
- Alimony provisions.
- Child custody and support provisions.
- Length of the marriage.
While the law of equitable distribution has the intent of ensuring both spouses are treated equally, it can become increasingly frustrating and expensive to litigate these issues. The benefit of entering into a Prenuptial Agreement is it can save the couple time and money during divorce proceedings because it will detail how finances are to be handled upon divorce.
Can a Prenuptial Agreement be deemed unenforceable?
Pursuant to Uniform Premarital Act § 52B-7, a Prenuptial Agreement is deemed unenforceable if the spouse against whom enforcement is sought can prove two specific circumstances. The first is that the Prenuptial Agreement was not entered into voluntarily. An example of how this situation may arise is if the other spouse threatened to cancel the marriage if the spouse did not sign the agreement.
The second reason a Prenuptial Agreement may not be deemed enforceable is if the issues in the agreement are considered unconscionable at the time of execution. The three elements need to show the agreement is unconscionable are:
- The spouse was not provided a full disclosure of the assets and debts of the other spouse,
- The spouse did not in writing waive any right to disclosure of the assets and debts of the other spouse, and
- The spouse could know have reasonably known of the assets and debts of the other spouse.
All issues of enforceability must be determined by a judge. Additionally, if the Prenuptial Agreement contains a provision which modifies or eliminates spousal support and it causes one spouse to be eligible for support under public assistance programs at the time of the divorce, then the court may require the other party to provide spousal support.
Questions to Ask Your Attorney related to prenuptial agreement in North Carolina?
If you are considering a Prenuptial Agreement, the first step is to set up a consultation with an attorney to discuss your finances. You will also want to ask your attorney questions to ensure you have a complete understanding of Prenuptial Agreements.
These are five important questions you should ask:
- Do my fiancé and I need a Prenuptial Agreement if we do not have any assets or expect to inherit any assets?
- Can my fiancé and I use the same attorney to draft our Prenuptial Agreement?
- Would our Prenuptial Agreement be valid outside North Carolina?
- What happens if you breach a Prenuptial Agreement?
- Can a Prenuptial Agreement be revised or revoked?
A Prenuptial Agreement can provide your relationship with a foundation of how assets and debts are handled and provide for an efficient distribution if your marriage eventually ends in divorce. If you have any questions about Prenuptial Agreements, please call us at (336) 272-4299. When you choose to work with one of the knowledgeable family law attorneys, you are receiving a skilled, experienced and effective advocate.