Even during a day and age where half of the marriages are expected to end in divorce, there are still some outdated and antiquated views about premarital (sometimes called “prenuptial”) agreements. Some couples feel that even requesting a premarital agreement is a sign that the marriage will not last. Even if you fear your partner’s reaction, choosing not to have the discussion could be a huge mistake.
Despite their reputation, premarital agreements are not legal traps to prevent future spouses from building a life with their partner, or a way for a future spouse to say they do not trust their partner. They are useful tool that have a lot of benefits for couples during (or after) a marriage.
The benefits of creating a premarital agreement
A premarital agreement is a legally binding contract that specifically explains how the assets between two spouses will be divided if the need arises. One of the biggest misconceptions of “prenups” is that these contracts are only for married couples of a certain socioeconomic class, or who have substantial assets. But any couple can benefit from signing one.
One of the benefits of a premarital agreement is that it can serve as an opportunity for the couple to have open, honest communication about their expectations for marriage. Finances are one of the primary reasons why married couples divorce, so initiating a conversation about assets and finances will only benefit the couple in the long run. This can help build the foundation of trust upon which a successful marriage will be built.
Another benefit of a premarital agreement is that it ensures fairness with the distribution of a couple’s assets. Because there is no one-size-fits-all approach with these agreements, couples have an opportunity to structure them specifically to their circumstances. If one of the spouses comes into the marriage with more assets than their partner and wants to ensure that both partners exit the marriage with what they entered with, these conditions can be set forth in the premarital agreement. It can also outline how alimony will be dispensed in the event of a divorce, so that both parties can plan for the future. It also means that a court won’t be determining how much support either party pays or receives.
They are also helpful for protecting one’s children. If one of the spouses enters the marriage with children from a previous relationship and wants to ensure that their assets go to their children first, these conditions can be established in a premarital agreement. The same is true for one’s pets; they can be named in the agreement, too. A premarital agreement cannot, however, include provisions for child support, though it may allocate additional funds for things such as higher education costs.
Another benefit of establishing a premarital agreement is that it helps to clarify what marital property is for the couples and the courts. If a couple enters marriage without an agreement, the couple risks the chance of leaving the division of their marital assets up to the courts in the event that they divorce. These agreements can ensure that the spouses are the ones who determine what happens to their assets, not the court.
Finally, premarital agreements can reduce the amount of time it takes to go through the divorce process. Valuing assets is a an important – and time consuming – part of the divorce process. If certain assets or properties are set aside in a premarital agreement, the value of those assets may not matter, as they should not be divided as part of the marital estate.
Can a premarital agreement protect you from acquiring additional debt?
Premarital agreements may protect you from certain debts accrued by your partner. In a majority of states, including North Carolina, assets and debts are considered to be jointly owned by spouses. A premarital agreement can ensure that certain debts are the sole responsibility of the spouse who accrued them.
How does a prenuptial agreement protect your children and future?
As stated earlier, a premarital agreement can help a partner who enters the marriage with children from a previous relationship by designating certain assets to their children. It can, however, do more than this. A strong premarital agreement can contain estate planning actions, such as requests regarding life insurance payments or the creation of a trust fund, and it can outline who will pay for the children’s medical care and insurance. North Carolina also allows for postmarital agreements, which are created after a couple marries, and can contain the same types of information that a premarital agreement would.
Should business owners have premarital agreements?
Yes, they should. If we have learned anything from Bill and Melinda Gates, and Jeff and MacKenzie Scott, a premarital agreement is a critical tool for any business owners, regardless of whether their spouses were with them at the start of the business. It can ensure the same protections for partners who plan to enter a marriage with a business, too. With a premarital agreement, there are standards that a partner can put into place that can establish the business as a separate asset. In case the couple divorces, the business will not be considered marital property and the partner will not have to liquidate the business. This may be especially helpful if the company’s shareholders are the nervous type.
No matter how many assets you have, designing and drafting marital agreements can be complex. Pre-and postmarital agreements must be thorough and detailed – both to be enforceable and to protect you and your spouse. The Charlotte family law attorneys at Epperson Law Group, PLLC can work with you to ensure your contract protects your best interests. Contact us today. To reserve a consultation with one of our lawyers in Charlotte, Boone, Concord, or Weddington, please call 704-321-0031, or complete our contact form.