Premarital Agreements

When a couple is engaged, the parties may enter into an agreement prior to the marriage that outlines what will happen to their property and assets in the event of their death or divorce. This agreement is known as a pre-nuptial ("pre-nup") or premarital agreement.

In the past, only wealthy couples entered into premarital agreements. Now they are common, especially with couples who are marrying for the second time and who want to preserve their property for the children born to their first marriages.

Prenuptial Agreement Laws in NC

A premarital agreement is only valid if it is in writing and signed by both parties (the engaged couple). When the couples marry, the prenuptial agreement takes effect and becomes a legal, binding contract. During the marriage, the premarital agreement can be amended or revoked in writing and signed by the married couple.

Prenuptial agreements should be tailored to the unique goals of the engaged couple. It can take weeks of discussions to carefully craft a premarital agreement that reflects the goals of the couple. It is recommended that each party be represented by a family law attorney.

What to Include in a Prenuptial Agreement

Premarital agreements can cover financial matters between the spouses, such as the rights and obligations to manage and control certain property, assets, debts, and other incomes. A prenuptial agreement can also outline what will happen to certain separate property should a divorce or death occur.

With respect to marital property, a couple can also decide what will happen to such property, including marital residences, joint bank accounts, and other shared assets.

A premarital agreement may establish the procedure for payment of joint expenses during the marriage. For example, the parties may agree to set up a joint household account to which each contributes, or one party may agree to pay all of the joint expenses.

Payment of the married couple's health insurance coverage and medical expenses may be carefully mapped out in a prenuptial agreement. The agreement may also spell out how debt will be incurred during the marriage and how payment on the debt will be shared. The method of filing taxes during the marriage, payment of tax liability, and receipt of tax refunds can also covered in a premarital agreement.

Spousal support upon separation and divorce can be addressed in a prenuptial agreement. The parties can waive their rights to alimony or set the amount of alimony based upon the duration of the marriage or the need of the dependent spouse. It should be noted, however, that a waiver of alimony will be dismissed by the court if one spouse becomes eligible for public assistance as a result of the break-down of the marriage. In that case the court will order the wealthier spouse to pay the amount of spousal support needed to lift the needy spouse out of his or her eligibility for public assistance.

A premarital agreement can also decide issues of inheritance, the making of a will or trust, and the deposition of retirement accounts and life insurance death benefits upon the death of one spouse.

What Makes a Prenuptial Agreement Valid?

Premarital agreements can be challenged in court after your marriage and held unenforceable on several grounds. For that reason, it is important to follow certain "golden rules" in negotiating and drafting your prenuptial agreement.

• Make full disclosure of your financial situation—all assets, debts, and liabilities—with your fiancé and demand full disclosure in return. If either party fails to make full disclosure, it can be grounds to set aside your prenuptial agreement as unenforceable.

• Conduct your negotiations over your premarital agreement in a way that avoids any impression of coercion, duress, or undue influence. Allow sufficient time—no less than 30 days before your wedding—to discuss and finalize your prenuptial agreement with the advice and counsel of family law attorneys.

• Make sure that your agreement is fair to both parties. Any contract, including your prenuptial agreement, can be set aside because it is "unconscionable." "Unconscionable" is defined as "unreasonable or not guided by conscience." Deal fairly and openly in discussing and finalizing your prenuptial agreement. Anything less will jeopardize the enforceability of your premarital agreement and, in a larger sense, your eventual marriage.

To discuss drafting a prenup, contact our team at (919) 348-2317.