Many people know a divorce is coming long before the talk about separation starts getting serious. Other people have no warning signals that their spouse is about to walk out. They just come home one day and discover that their mate has left. You don’t need warning signals, however, to begin planning for what you would like to have happen if you and your spouse don’t live happily ever after. It is never too late to start divorce planning, and the sooner the better. Above all, divorce planning depends on having knowledge: knowledge about the law and about your spouse.
Written contracts (Prenuptial and Antenuptial agreements)
One device that couples can use in advance of a dissolution to protect themselves financially is a written contract addressing topics such as property ownership, property division, and alimony. A properly drawn up contract on these topics will usually be binding in North Carolina, as courts are very reluctant to set aside promises that are voluntary, knowing and bargained-for exchanges. Setting aside spousal contracts regarding property and support almost always requires clear proof of coercion, duress, fraud, undue influence, or some similar bad intent on the part of one of the parties to the contract. The general enforceability of such contracts is a major impetus for the use of written agreements as devices for divorce planning.
More and more common these days is a contract entered into between future spouses prior to their marriage. This kind of agreement is known as a Premarital, Prenuptial or Antenuptial Agreement. These agreements are especially popular with people who have been married before and didn’t like what happened to them when their former marriages ended.
The primary advantage in having a premarital agreement is that both parties know, ahead of time, what is going to happen if the marriage ever dissolves. They can write the contract to say what will happen to their property (who will get what), what will happen in terms of support (who, if anyone, will get how much and for how long), and what they might like to see happen with regard to any child of the marriage. Even if one spouse later wants to get out of the contract provisions affecting property and spousal support, the objecting party would most likely be held to his or her bargain. If, on the other hand, one party later objects to provisions that attempted to fix forever the parties’ agreements as to custody and child support, a court will make up its own mind about what will happen with regard to children. The court is never required to enforce prior agreements as to custody and child support, where the objecting party proves that a different arrangement is more appropriate.
Antenuptial agreements as to property and spousal support are enforceable in North Carolina as long as they meet the requirements of our Uniform Premarital Agreement Act. Our uniform act appears as Chapter 52B of the North Carolina General Statutes. In order to be enforceable, a premarital agreement must be in writing and it must be signed by both parties. The agreement becomes effective upon marriage. Basically, any subject matter can be put into the contract as long as the matter does not violate public policy or a statute imposing a criminal penalty. The crux to any written agreement, of course, is that the parties to the contract have been able to agree to the terms incorporated into their contract. Many prenuptial contracts say that what was mine before marriage stays mine, and what was yours remains yours; what we acquired together, we agree to divide. These contracts often have listings of each spouse-to-be’s assets and liabilities.
An important caveat in this area of contracting regards the complexity of most such contracts entered into in contemplation of marriage. Premarital agreements often involve complicated property rights, and therefore require extremely skillful drafting. Such agreements should only be drawn up by an experienced practitioner familiar with premarital divorce planning. If all the details are not written up correctly, you may later find out that what you had planned to have happen upon divorce isn’t really what your contract says will happen.
Still, a properly drafted premarital agreement is probably the best protection available to you against “bad” things happening to your property in the future. Such an agreement, for instance, can override our law of equitable distribution. Let’s say you own, prior to marriage, several rental properties and that you and your spouse plan to improve and manage the properties together after your marriage. Our equitable distribution law says that active appreciation on those properties from items such as improvements by the marital unit would be marital property, even if you keep the properties titled in your own name. Notwithstanding the law about active appreciation, however, you and your future spouse can enter into a premarital agreement providing that such increases in the value of the real estate during your marriage will not be deemed marital property that would otherwise be subject to equitable distribution. Such an agreement would be enforceable.
You and your spouse can also enter into a written agreement after marriage overriding our marital property law, whether or not you are contemplating separation. In fact, a so-called Postnuptial Agreement is most easily negotiated before there is even any talk at all of separation. Such contracts are valid under section 52-10 of the North Carolina General Statutes, provided the subject matter does not violate public policy and each party is of age. Where the subject matter touches on real property, or income from real property, the contract must be in writing and acknowledged by both parties before a notary public or its equivalent.
If your spouse presents you with a postnuptial agreement, telling you the contract is just for estate planning purposes, you would be well advised to discuss the draft agreement with an attorney. The attorney can point out what you might be giving up if you sign the proposed agreement. It is better, as they say, to be safe than sorry. Just because you don’t view your spouse as a potential adversary doesn’t mean that your spouse holds the same view. Your mate may be planning for a separation that you don’t yet know is in the cards.
Please continue on to read about the defining your goals.
Divorce and You
