Premarital Agreements, also known as Prenuptial Agreements (“prenups”) are authorized by North Carolina General Statute § 52B, the Uniform Premarital Agreement Act. A Premarital Agreement is “an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.” The agreement must be in writing and signed by both parties.
The premarital agreement is utilized most often when one party has significantly more assets than the other, a much higher income, or for second marriages, where a spouse wants to protect the interests of children born with his or her first spouse. Most prenuptial agreements provide that assets owned by a spouse as of the date of marriage shall remain that spouse’s separate property and shall not be subject to equitable distribution in the event of a divorce. However, there are several other reasons that a person may want to enter into a premarital agreement. It is generally wise to present a proposed prenuptial agreement to the intended spouse in plenty of time for review, not the day before the wedding ceremony.
What is included in a premarital agreement or prenup?
Here’s what the law states – N.C.G.S §52B-4 provides the content that may be included in a premarital agreement as follows:
Parties to a prenuptial agreement may contract concerning:
(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 another arrangement to carry out the provisions of the agreement;
(6) The ownership rights in 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 policy or a statute imposing a criminal penalty.
The power of a child to support may not be adversely affected by a premarital agreement. (1987, c. 473, s. 1.)
A prenuptial agreement can also indicate the treatment of the income generated by the separate property of a spouse; is it marital or different, is personal property purchased with such income marital or separate? Income earned during the marriage from employment may be addressed and, in the agreement, may be removed from the usual treatment as marital property subject to division upon separation.
How is a prenup written so it can be enforced?
To ensure enforceability, our Charlotte family law attorneys require a full disclosure exhibit from each party listing all assets including but not limited to, real estate holdings, bank accounts, investment accounts, retirement accounts and the like as well as all debts and liabilities. We advise the client on what not to say and how to negotiate with the other party to preclude allegations of undue influence and coercion. We also stress the desirability of a “fair” agreement since if a deal is unconscionable, a court may be more desirous of finding ground to overturn the deal.
How is alimony handled in a prenup?
Alimony or a waiver thereof can be addressed in the premarital agreement. A reservation is enforceable just like any other provision in the contract. However, if one spouse is eligible for public assistance as a result of a separation, the low-income spouse can petition the court to void the waiver to the extent necessary to provide spousal support enough to take the low-income spouse out of his or her eligibility for the public assistance.
When is a prenup void or unenforceable?
If the parties execute an agreement, but no marriage results, the deal is void and unenforceable. Likewise, if the agreement was obtained through coercion, threats, undue influence or fraud, the contract can be set aside, and all marital rights will be reestablished. This however generally requires a lawsuit and trial. Unfairness is not a reason to set aside a premarital agreement; there must have been some wrongdoing in procuring the execution of the contract. North Carolina case law has determined that a statement that “I will not marry you unless you sign the premarital agreement” is not a threat or coercion enough to void a prenuptial agreement. Likewise, not reading the contract or not having an attorney review the agreement before signing are not grounds for setting it aside.