Prenuptial Agreements

What is a Prenuptial Agreement?
A prenuptial agreement is a contract between two prospective spouses made in contemplation of marriage and which becomes effective upon marriage, which dictates the rights and obligations of the spouses during the marriage and in the event of divorce or death of one of the spouses. Prenuptial agreements must be reduced to writing and signed by both parties. There must be a full financial disclosure between the prospective spouses prior to entering the agreement. A prenuptial agreement can be modified after marriage, so long as the modification is in writing and signed by both spouses under oath. 

When should you consider a prenuptial agreement?
A prenuptial agreement can be beneficial to all prospective spouses to avoid the expense and conflict that may arise if a marriage ends. A prenuptial agreement circumvents subjecting much of your marital estate to division by the court by defining what the other spouse will receive upon divorce or death. By discussing a prenuptial agreement prior to marriage, prospective spouses open the lines of communication about difficult subjects that many people avoid like finances, assets, debt, death, divorce, and life insurance. By promoting honesty and transparency in marriage, a prenuptial agreement can help individuals avoid the problems which often lead to divorce and promote marital harmony knowing that each spouse is fully aware of the financial implications of the marriage union.  
Prenuptial agreements can be especially helpful in the following situations:

• One spouse has children from a previous marriage and wants to provide for the children financially upon their death or divorce,
• One spouse is a high-income earner or has significant assets they wish to keep separate,
• One spouse has significant debt entering the marriage, and/or
• One spouse owns their own business or is involved in a family business in which third parties have an interest.

These are not the only circumstances in which a prenuptial agreement can be helpful. Please contact us if you are interested in learning if a prenuptial agreement is right for your individual situation.

What can be included in a prenuptial agreement?
Typically, prenuptial agreements are used to define the property rights, legal rights, and obligations of prospective spouses if they get divorced.
In a typical prenuptial agreement, the spouses agreed upon the following:

• Which assets will be marital property and which assets will be separate property,
• If either spouse will receive spousal support or alimony upon divorce and the amount (if any),  
• Whether either spouse is entitled to benefits from a life insurance policy,
• Spousal rights upon the death of a spouse (like the right to inherit),
• Whether premarital debts will be the sole responsibility of the debtor or a shared financial responsibility after marriage,
• The provision of financial support for children from previous marriages or relationships in the event of the death of the parent getting remarried,
• Whether profits from business earnings are separate or marital property, and
• Whether contributions to retirement accounts will be separate or marital.

What cannot be included in a prenuptial agreement?
In North Carolina and South Carolina, premarital agreements cannot waive child support or pre-determine an amount for child support obligation, and premarital agreements cannot pre-determine child custody.
If your prenuptial agreement leaves your spouse without any means of support, and upon divorce, he or she must apply for public assistance, the waiver of support provisions of your prenuptial agreement would likely be deemed unconscionable and therefore unenforceable.

What is important in order for the prenuptial agreement to be upheld in the future?
The terms must be fair and reasonable.
Full financial disclosure: In both South Carolina and North Carolina, each spouse must make a full financial disclosure of their individual assets, debts, and incomes prior to entering into the prenuptial agreement.
Valuation of assets: Assets like a business might need to be valued by an independent business valuator before including the asset in the prenuptial agreement to ensure the business is valued properly for the full financial disclosure.
Independent legal counsel: The best way to ensure your prenuptial agreement will be upheld by a court is for each prospective spouse to have independent counsel and receive independent legal advice regarding the prenuptial agreement prior to signing the agreement.  
Time between the execution of the agreement and the upcoming wedding: You and your prospective spouse want to have time to discuss all the financial implications of marriage and all of the details of a prenuptial agreement prior to entering into it. If you ever find that you must enforce your prenuptial agreement, this will also help prevent the other party from arguing that the agreement was signed under duress or coercion because it was executed the day before the wedding when the deposits for the wedding venue and caterer were non-refundable. It is best to have an ample amount of time to review the Prenuptial Agreement draft, ask your attorney questions, and not be rushed to execute the agreement prior to your wedding date.
Please contact our office if you are considering a prenuptial agreement. We would be happy to assist you.  

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