An ounce of prevention …
A prenuptial agreement, also called a “premarital agreement,” is a contract entered into between persons who intend to marry. While they are not appropriate for all couples, and can be tricky to negotiate, they can provide a measure of financial security and certainty in the event the new marriage is not successful.
Should I have a prenuptial agreement?
Prenuptial agreements make good sense if:
- This is your or your partner’s second or third marriage;
- You have (or your partner has) significant premarital assets; or
- You have (or your partner has) children from a prior relationship that you wish to protect.
A prenuptial agreement can protect your separate assets from a claim by your spouse if you divorce or die. In North Carolina, assets owned by you prior to the marriage are not subject to division in the event of a divorce. But any appreciation in the value of those assets may be. And if you die, even if you make no provision in your will for your spouse, the law will grant your spouse a share in your estate. If your premarital estate is significant, a prenuptial agreement can specify how your spouse will share in that estate. It can also ensure that your children’s inheritance is protected.
Next, a prenuptial agreement can specify how you will divide assets acquired during the marriage if you divorce. For many couples, the negotiation of a prenuptial agreement necessarily involves some discussion about where you will live and how you will support yourselves. Some couples choose to pool their incomes, while others elect to keep their money separate but share in joint expenses. The prenuptial agreement addresses postseparation support and alimony. It can also address what you and your spouse will do with the marital residence in the event of a separation or divorce.
Negotiating a prenup using the collaborative process
The discussions between partners that lead to a prenuptial agreement can be healthy and productive to their relationship. Each party comes into the marriage knowing where the other stands financially and what is important to the other. Committing to an orderly and peaceful separation, if it ever occurs, can bring peace of mind.
The most efficient and respectful way to negotiate a prenuptial agreement is using the collaborative process:
- Each of you hires a collaborative attorney.
- You and the attorneys meet together to discuss your goals and intentions in establishing the prenup.
- Financial information is shared and discussed between you and the attorneys.
- The attorneys jointly draft the prenuptial agreement.
- You and the attorneys meet together to review and sign the agreement.
Among other things, a respectful and sensitive negotiation prior to the marriage can set the tone for how you and your spouse will resolve disagreements, which all couples experience from time to time. As Benjamin Franklin once wrote, “An ounce of prevention is worth a pound of cure.”