What is the purpose of premarital
or prenuptial agreements?
In general, premarital agreements
determine financial matters
between the spouses. Premarital
agreements cover the rights and obligations of
the spouses to manage and control certain property
in all aspects of the sell, use, exchange, lease,
consumption, assignment, transfer, mortgage,
encumbering, and disposition of property. In
particular, a premarital agreement outlines what
will happen to certain property owned separately
by one spouse or jointly by both spouses in the
event of a spouse's death or the couples' divorce.
When
should my fiancé(e)
and I enter into a premarital
agreement?
You and your fiancé(e)
should enter into a premarital
agreement well in advance
of your wedding day, no
less than 30 days before
your wedding day. Having
your premarital agreement
negotiated and signed closer
in time to your wedding than
30 days gives rise to questions
of whether one spouse was
under some duress, coercion,
or undue influence to sign
the agreement in order to
have the wedding take place
after expensive wedding plans
had already been set in motion.
Duress, coercion and undue
influence are grounds upon
which the validity and enforceability
of a premarital agreement
can be challenged later in
court. To avoid this possibility,
you and your fiancé should
execute (sign and notarize)
your premarital agreement
no less than 30 days before
you plan to wed.
What
can my fiancé and
I agree to in our premarital
agreement?
Premarital agreements
deal with property. Under a
premarital agreement, the engaged
couple decide their individual ownership rights
to
certain property and the distribution of
that property during their marriage and upon
their
separation, divorce or death. Section Chapter
52B-4 lists the possible topics upon which
you and your fiancé(e)
can contract. It states that
parties to a premarital
agreement may contract with respect to:
1.
The rights and obligations of each
of the parties in any of the property of either
or both of them whenever and wherever
acquired
or located;
2. The right to buy,
sell, use, transfer, exchange, abandon, lease,
consume, expend,
assign, create a security interest in, mortgage,
encumber, dispose of, or otherwise manage and
control property;
3. The disposition of property
upon separation, marital dissolution,
death, or the occurrence or nonoccurrence
of any other event;
4.
The modification or elimination of spousal
support;
5. The making of a will, trust, or other arrangement
to carry out the provisions of the agreement;
6.
The ownership rights and disposition of the
death benefit from a life insurance policy;
7.
The choice of law governing the construction
of the agreement; and
8. Any other matter, including
their personal rights and obligations, not
in violation of
public polity or a statute imposing a criminal
penalty."
Do I need an attorney to draft
or review my premarital agreement
with me?
Yes. For several good
reasons, both you and your
fiancé(e) should each hire an attorney
to individually represent you in the drafting
and review of your premarital agreement.
An
experienced family law attorney can help you
define your short-term and long-term goals
in reaching a premarital agreement with your
fiancé(e). An experienced family law
attorney can advise you on your rights under
existing family law in North Carolina. It could
be that your rights are well protected under
our state statutes and a premarital agreement
is unnecessary. For example, our state statutes
make clear that property owned by you at the
time of your marriage is your separate property
and will remain your separate property throughout
your marriage if not comingled with marital
property. If you decide that you do need a
premarital agreement, then you will also need
to give
careful thought under the guidance of legal
counsel of what you want to achieve through
your premarital agreement.
An experienced family law attorney is ethically
bound by the legal profession to promote her
client's best interests and only her client's
best interests. You and your fiancé(e)
cannot share an attorney because one attorney
cannot represent two parties whose interests
may well end up divergent or in direct conflict.
The attorney representing the prospective wife
must advocate for her best interests. The attorney
for the prospective husband is working to promote
his best interests.
As an example, let's pretend that you and
your fiancé both have well-established
careers and well-paying jobs. You have agreed
between yourselves to enter into a premarital
agreement and designate your individual salaries
as your separate property during your marriage.
The attorney representing your prospective
husband agrees that this a good idea. Your
attorney, on the other hand, wants you to consider
the possibility that at some time in the future
you may want to have children and take time
from your career to stay home to raise your
family. During the period when you are a stay-at-home
mom, you will want your husband's salary to
be marital property designated to support you
and your children.
The example above illustrates that the parties
to a premarital agreement may well have divergent
or conflicting interests. A good family law
attorney is experienced in resolving the parties'
differences to their mutual satisfaction.
You also need an experienced family law attorney
to fully advise you on the legal significance
and future repercussions of each provision
in your premarital agreement. Your premarital
agreement is an important legal document that
can govern your financial well-being for many
years to come. You should fully understand
your premarital agreement before you sign it
and become legally bound to abide by its provisions.
If you and your fiancé(e) each have
their individual attorney, it will also further
guarantee that your premarital agreement will
survive any challenge to its validity. The
grounds to challenge a premarital agreement
are fairness, duress, coercion and undue influence.
If each side is represented by an attorney,
it is presumed that each party had an independent
third party to advise them on whether or not
it was it their best interests to enter into
the agreement.
Can
payment of spousal support
be waived under the terms of
my premarital agreement in
the event that my fiancé and
I separate and divorce?
Yes, receipt and/or payment
of spousal support can be
waived under the terms of
a premarital agreement. However,
North Carolina courts will
simply ignore that waiver
if the court believes that
the agreement was inherently
unfair to the spouse who
has waived his or her right
to spousal support. Also,
our state courts will ignore
a waiver of spousal support
if, as a result of separation
and divorce, one spouse becomes
eligible for public assistance.
In that case, the court will
order the wealthier spouse
to pay support to the other
spouse to the extent necessary
to avoid eligibility for
public assistance.
Will
I have to disclose my financial
situation to my fiancé(e)
as part of our premarital agreement?
In negotiating a premarital agreement, you should plan to provide your fiance(e)
with full financial disclosure of your income, assets and debts. Conversely,
you should also demand full financial disclosure from your fiancé(e) of
his (her) income, assets and debts. It is a common practice to attach exhibits
to premarital agreements which list each party=s specific assets and debts and
their value. In some limited cases, the parties may agree to only identify their
assets without revealing their value.
Full financial disclosure
between the engaged couple
is essential. A premarital
agreement can be found unenforceable
if one spouse later learns
that the other spouse failed
to disclose or hid an asset
at the time the premarital
agreement was executed.
Can
my fiancé(e) waive
his (her) right to my retirement
plan in our premarital agreement?
Yes,
your fiancé(e)
may waive his (her) right
to your retirement plan.
In the specific case where
your spouse is waiving his
(her) rights to survivorship
benefits under your retirement
plan then added attention
must be given. Federal law
(ERISA) requires that your
fiance(e) consent to the
designation of a non-spouse
as beneficiary of your retirement
plan must be executed after
your marriage, when in fact
your fiancé(e) becomes
your spouse. In your premarital
agreement, you and your fiancé(e)
can agree to the non-spouse
designation ,and then, after
your marriage, enter into
a post-marital agreement
wherein your new spouse expressly
