Prenuptial agreements (also known as "premarital agreements" or simply "prenups") often get a bad rap. They are sometimes seen as a way for a much wealthier spouse to unfairly shield assets from a poorer spouse in the event of a divorce. In this way they are viewed much less as protective and much more as punitive legal documents. For the vast majority of couples signing prenups before marriage, however, nothing could be farther from the truth.
Clearing the air
One of the most positive aspects of a prenup, aside from the wealth and asset protection benefits it offers down the road, is that even considering signing a prenup before marriage forces the couple to have an open, honest discussion about finances. It is estimated that around 70 percent of couples fight about finances, and economic issues play a huge role in ending the marriages of many of the 50 percent of couples who divorce each year.
It may initially seem counterintuitive, but the possibility of a prenup puts the couple on the same page where finances are concerned. In some instances, this is the only way that they would have such a frank discussion about what they are both bringing to the proverbial table economically, and what their goals are for the future.
Helping meet specific goals
In addition to allowing the couple to clear the air about their finances, there are also particular asset protection goals that can be met with prenuptial agreements. These include:
- Keeping a family business or heirlooms in the family (by designating them as "separate property" in the event of a divorce and not subject to North Carolina's equitable distribution laws)
- Protecting the inheritance of a child from a previous relationship
- Setting out the terms of future alimony/spousal maintenance payments
- Designating who will keep the marital home if the couple divorces
- Assigning "custody" of the couple's pets should the marriage end (the same cannot be done for children, but pets are treated as property under the law, so they can be specifically discussed in a premarital agreement)
- Much more
Prenuptial agreements aren't just for the very wealthy, though they are particularly useful when there is a great financial disparity between putative spouses. If you are considering signing a prenup, make sure that both you and your spouse are represented by effective legal counsel to ensure that the document you sign meets your needs and doesn't put you at an unfair disadvantage in the event of a divorce.