If you’re considering getting married and you or your spouse-to-be have significant assets or debt, a prenuptial agreement may be beneficial. In the past, many thought prenuptial agreements were only for wealthy individuals. On the contrary, every couple should consider signing a prenuptial agreement before marriage.
The Fairfax attorneys at Surovell Isaacs & Levy PLC have years of experience drafting, negotiating, and reviewing prenuptial and postnuptial agreements. If you’re considering a prenuptial agreement, we can help you understand how a prenuptial agreement can benefit you. We can help you make informed, practical decisions that benefit you and your partner.
What Is a Prenuptial Agreement?
A prenuptial agreement is a contract a couple enters into before marriage. The agreement specifies what will happen to any assets, income, property, or debt in the event of a separation or divorce. Discussing a premarital agreement can be easier when it is a financial conversation between you and your significant other. Discussing a prenuptial agreement several months before the wedding will give both of you time to process, plan, and agree upon if you decide a prenuptial agreement is necessary.
The Difference Between Separate vs. Marital Property
Under North Carolina’s equitable distribution law, premarital assets are usually considered separate assets. Property owned by a spouse before he or she entered the marriage is considered separate property. When a couple divorces, marital property is subject to equitable division between the spouses. Assets obtained during the marriage are generally considered marital property and subject to division. When negotiating a prenuptial agreement, the couple can agree on which property should be considered separate property should the couple divorce.
Who Should Consider a Prenuptial Agreement?
Getting a divorce can be financially and emotionally exhausting. A lengthy, expensive trial can result when a couple cannot agree on how to divide their assets and debts. Discussing what you’d like to happen if you divorce your spouse before marriage can help the divorce proceed smoothly.
A prenuptial agreement can help you avoid a contentious, lengthy battle in the future. For these reasons, prenuptial agreements have been growing in popularity. A recent poll found that nearly 40 percent of married couples between 18 and 34 have a prenuptial agreement. Prenuptial agreements can benefit all married couples, but they can be especially beneficial in the following circumstances.
You or Your Spouse Have Significant Assets
If either you or your soon-to-be spouse have substantial assets, including financial assets, real estate, or vehicles, it is wise to consider a prenuptial agreement. A prenuptial agreement can ensure those assets and any income they produce will remain separate from the marital estate. When separate property becomes commingled with marital property, a judge may include the assets into the marital estate and divide them between the spouses.
Similarly, if you or your spouse have significant stock holdings, a prenuptial agreement can be beneficial. In the event of a divorce, the other spouse may have a claim to all or part of your stocks and any income they’ve generated. Without a prenuptial agreement, you risk losing significant money and future income.
Your Spouse Has Significant Debt
Many couples bring significant debt into the marriage, including student loan debt and consumer debt. If your soon-to-be spouse has debt, a prenuptial agreement is necessary. Generally, the debt one person brings into the marriage will remain separate property after a divorce. However, problems can arise that result in resources shifting around.
For example, if you paid your spouse’s student loans with a loan from your retirement, it could result in you being stuck with some or all of the remaining debt in the event of a divorce. When debt is taken out during the marriage and isn’t paid back during the marriage, creditors could seek payment from you, even if the debt was taken out in your spouse’s name. A prenuptial agreement can help you clarify the debt’s nature, existence, and future responsibilities of debt.
Business Owners and Entrepreneurs
You may consider your business separate from your marriage, but in the event of a divorce, your business may play a role in the division of assets. Even if you started your business before you married your spouse, your spouse may be entitled to a portion of any appreciation in value your business enjoyed during your marriage. If you lose 50 percent of your business’s value in a divorce, your business, employees, and personal finances can suffer greatly.
If you started a business during the marriage, or your spouse contributed to the business during the marriage, it may be considered marital property and subject to division and distribution. If you’re in a family business, a divorce could risk hurting your family members financially. Deciding how you’ll divide your assets before marrying can help protect your business.
Either Spouse Has Children From a Prior Relationship
You should consider a prenuptial agreement if you or your spouse have children from a previous relationship. While you cannot address child custody and child support matters in a prenuptial agreement, there are other ways you can use a prenuptial agreement to protect your children.
For example, a prenuptial agreement can be drafted to preserve your children’s assets and future income. These assets might otherwise be included in the marital estate and subject to division. A premarital agreement helps ensure children don’t lose their inheritance and future support through a divorce proceeding.
Do You Have Questions About Prenuptial Agreements? We Can Help
Considering the possibility of your future marriage ending can be difficult but beneficial. Prenuptial agreements have become more popular in recent years for good reasons. A prenuptial agreement can help you protect yourself, your assets, and your future interests. If you have questions about whether a prenuptial agreement is right for you, don’t hesitate to schedule an initial appointment with one of our family law attorneys.