There are three types of agreements that commonly govern how a married couple's property is divided if the marriage ends in separation or divorce: premarital agreements, postnuptial agreements, and separation agreements.
In this section, we'll discuss two similar types of agreements: premarital agreements and postnuptial agreements. While it can be difficult for a couple to contemplate the potential end of their marriage, these agreements can be very beneficial, even if a marriage does not end in divorce.
What Happens to a Couple's Property When They Divorce?
For many people, ending a marriage may be one of the most stressful experiences of their lives. Property division is often one of the most contentious aspects of an already-painful process.
In the event of divorce, North Carolina law requires that a couple's property is distributed fairly and impartially. Note that this doesn't mean that a couple's assets will be divided evenly. When dividing property, the court will consider things like the duration of the marriage, the physical and mental health of each spouse, debts accrued by each spouse, whether the spouse who has custody of children will remain in the marital home, and contributions made by one spouse to support the career of the other.
When dividing a couple's property, North Carolina law categorizes property in different ways:
- Marital property means possessions and assets that are acquired during a marriage. This is usually divided "fairly and impartially" by the court if the marriage ends.
- Separate property, which is the property that was acquired before a marriage, or during the marriage as a gift or inheritance from an outside party. If a court decides that a possession is a separate property, the spouse that the court determines owns it will typically get to keep it after a divorce.
- Divisible property includes any of the couple's assets that either depreciates or appreciates in value after the date of separation. Real estate and stock investments are examples of divisible property. Divisible property is often treated the same way as marital property.
One spouse may also be ordered to pay alimony (spousal support) to the other spouse.
A premarital agreement (also called a prenuptial agreement or a "prenup") is an agreement between a couple that plans to get married. It is a written contract that is signed by both members of the couple before the marriage occurs.
A premarital agreement can describe:
- Responsibility for certain kinds of expenses and debts that occur during the marriage itself.
- What will happen to the couple's property, income, expenses, and debts if the marriage eventually ends?
- The amount and duration of alimony that one spouse may pay to the other in the event of divorce or separation.
- What should be done with certain types of assets if a spouse passes away?
Because a prenuptial agreement spells out the division of property in advance, it can help reduce or eliminate the time, stress, and expense of a legal battle around the division of property.
Who Needs a Prenup in North Carolina?
The whole idea of a prenup might not seem very romantic, especially for a couple looking forward to a happy future together. It's hard to imagine that a marriage might end in separation or divorce.
However, a prenuptial agreement can be advantageous even if the marriage never has any problems.
A prenuptial agreement requires that both parties are transparent and honest about their financial situations. It can also spell out which spouse is responsible for different financial activities during the marriage, whether that is preparing tax returns, paying for health insurance, or managing a family business. This kind of frank discussion and clear delineation of responsibilities prior to marriage can help prevent arguments and misunderstandings that can create ongoing conflicts in the marriage.
A prenuptial agreement can be helpful even for couples with modest assets. But it can be particularly helpful if either member of the couple has a more complicated financial situation, such as having:
- Assets of their own that they want to keep separate
- Children from a previous marriage
- Part or full ownership of a business
- Concerns about debts their spouse may bring to the marriage
- Plans to give up their career after they are married
A prenuptial agreement can also help ensure that each spouse's wishes regarding the division of assets are respected in the event of one spouse's death.
A postnuptial agreement is very similar to a prenuptial agreement, except a postnuptial agreement is signed after a couple is already married. Like a prenup, a postnuptial agreement spells out how the couple's property will be divided in the event that a marriage ends.
Who Needs a Postnuptial Agreement in North Carolina?
People enter into postnuptial agreements for many of the same reasons they enter into prenuptial agreements, usually to ensure that each spouse's property is protected if the marriage ends.
Changes to the couple's financial situation during marriage may also prompt a couple to reevaluate their need for an agreement. This could include a change in job or a sudden inheritance. If the couple had not previously discussed their financial situation, they might also discover new information during the course of the marriage, prompting them to consider a postnuptial agreement.
North Carolina Family Law Attorneys
By clearly delineating the division of marital property and the expectations for spousal support, a prenuptial or postnuptial agreement can reduce the stress associated with ending a marriage. It can also help ensure that a married couple is aligned regarding their financial responsibilities and expectations, reducing the strife that can occur in even the happiest of marriages.
Because the couple's financial future is at stake, each party should have their own attorney when they decide a prenuptial or postnuptial agreement is the right choice for their marriage. Contact the experienced family law attorneys at Caulder & Valentine for a consultation.