North Carolina divorce law imposes many potential burdens on couples that divorce, so it is…
No one goes into a marriage planning for the relationship to end, but the reality is that around 40% of all marriages end in divorce. This means that you may have to divide property you've accrued together as well as debt, and even assets such as your business, pension, or retirement account may be subject to division.
With a prenuptial agreement in place before you get married, both you and your spouse have better protection, but what should go into the document? To help you get started, our divorce attorneys in Raleigh are sharing the seven things every couple needs to include in your prenuptial agreement.
Understanding Marital Property
When a couple divorces in North Carolina without a prenuptial agreement, marital property, including bank accounts, real estate, household goods, and vehicles are divided according to equitable distribution, which is designed to be fair but doesn't necessarily mean equal.
North Carolina family law does outline that any property obtained before the marriage belongs to the individual and is not part of marital property that is subject to being divided during a divorce. This means that if you own a car before you get married, it remains yours and can't be included in property distribution. However, if you buy a house before you get married, but your spouse moves in with you and over the course of the marriage, the mortgage is paid, updates are made, and the value of the home increases, the equity accrued can be considered marital property. So, as you can tell, there's gray area.
What Is a Prenuptial Agreement?
Most people think of marriage prenups as documents to protect high net worth or family fortunes, but in reality, a prenuptial agreement is simply a contract written between two people before marriage, outlining the property and debts owned and what each spouse's property rights will be both during the marriage and in the event of divorce or even if a spouse passes away.
For it to be valid, both parties must disclose all of their existing financial and property information, outlining all assets, including real estate, stocks, and retirement accounts, as well as all debts, including student loans, car loans, and credit cards.
7 Things to Include in Your Prenuptial Agreement
Now that you have a better understanding of marital property and how a prenup can protect you, here's a list of things you should include.
1. Premarital Assets
In addition to disclosing your premarital assets, it's important to outline whether any property will become marital property. This includes equity in a home or growth in an investment account. You can also determine how marital property will be divided in the event of a divorce.
2. Premarital Debts
If one spouse has debt going into the marriage, include in the agreement whether both parties are responsible for paying the debt as a part of household bills, or if it's the sole responsibility of the spouse. You can also protect your spouse from being subject to creditors during your marriage or in the event of a divorce.
3. Waiving the Right to Alimony
If two people divorce, the lower-earning spouse may be entitled to spousal support, but a marital prenup can reduce or waive the spouse's right. It's important to note that a judge may terminate this provision if it's deemed unfair.
4. Financial Responsibilities
Who will be responsible for taking care of household expenses? How much is each party expected to contribute toward retirement? These questions need to be answered before getting married, and financial obligations can also be outlined in your prenuptial agreement so that both parties are on the same page.
5. Provisions for Children from Previous Relationships
Before getting married, it's important to protect your existing children from a previous relationship, ensuring that if you pass away, your child will receive a fair portion of property and inheritance. This doesn't take the place of a will, but it does support your estate planning wishes.
6. Business Earnings
If you or your partner own your own business, you will want to include whether the profits are separate or marital property, especially if there is significant growth in the business.
7. Retirement Accounts
Even if you contribute to a 410(k) or pension through your work, that is considered marital property. If you want these to remain separate, it's important to include this in your prenuptial agreement.
Schedule a Consultation to Create a Prenuptial Agreement in Raleigh
Having a marital prenup doesn't mean your marriage will end and it doesn't mean you don't love or trust one another. It's simply there to protect both of you and outline your financial agreements both during your marriage and in the event of divorce. To ensure your prenup will hold up and both of your wishes are respected, it's important to have an experienced divorce lawyer assist you in drafting the contract. If you or your future spouse are ready to schedule a discussion, call (919) 301-8843 or complete the form below.