Do I Really Need a Prenup?

Prenup

When most of us think of prenups, we probably think of wealthy tycoons or Hollywood stars who are marrying partners much younger and less financially stable than they are.  In the real world, however, there are several reasons why a prenup (aka “premarital agreement”) might be right for you and your future spouse.

Make Your Own Rules

North Carolina couples who plan to marry have two options: (1) marry without a premarital agreement and accept all of the legal consequences of our state’s family, estate, and trust laws; or (2) enter a premarital agreement before marriage that will enable the couple to choose whether and how certain family, estate, and trust laws will apply to them.  Essentially, if you get married without a premarital agreement, you are allowing the state to write your agreement for you — the legislature’s pronouncements on family law, estate law, and trust law (and their amendment and repeal over time) will guide the court in the event you divorce.  You might think of this akin to dying without a will — someone else will make the rules about what happens to your family and property.

A valid, carefully crafted premarital agreement, on the other hand, allows you and your betrothed to choose the approach that will work best for you if you ever separate.  As a couple, you know your unique circumstances better than anyone else, and you may benefit from rejecting the one-size-fits-all approach of the state statutes.  Instead, you have an opportunity to determine your own path in the event that things go south.

Address “Business” Issues Before Walking Down the Aisle

There’s no point in denying it:  negotiating a premarital agreement is not the most romantic part of wedding planning.  While the most important, inspiring aspects of a wedding are about love and commitment, the unavoidable truth is that marriage is also a business decision.  That’s true whether you enter a premarital agreement or not.  In the event that you and your future spouse divorce, your property will be divided as if you two had a business partnership.  Business people make contracts to govern the division of money and property all the time, so it’s not absurd to think that you should too.

Although it can be difficult to buckle down and discuss finances when you’re in the haze of wedding planning, before the wedding is actually an ideal time to work through these issues.  You’re not clouded by hurt and anger the way many are when they are faced with the business aspects of separating.  You can work together on realistic solutions that will work for both of you if you ever separate.  Plus, even the most open, in sync couples can benefit from going over their finances and getting everything out in the open before committing their lives to each other.  For many, it can be very freeing to feel legally and financially secure before the wedding.  A premarital agreement can ideally help couples minimize financial stress so they can focus on their relationship.

But How Do I Know If I Should Get a Prenup?

With a few exceptions, most couples can benefit from having a premarital agreement.  They’re not just for reality starlets and real estate moguls; anyone who has property or debt, owns a business, has a professional license, has children from another relationship, or has a significantly higher or lower income than their partner should think about getting a prenup.  Retirement savings, valuable collections, and business assets are just a few of the things that can be addressed and protected in a premarital agreement.  Whatever the financial circumstances of you and your future spouse, chances are that you have assets or debts that you would prefer to make your own decisions about together, rather than leaving the decision up to the complex and changing laws of the state.  If you are interested in discussing a premarital agreement, please contact me to schedule an appointment.

Cohabitation in NC

CohabitationCohabitation has become more common and more accepted in today’s society.  Statistics vary, but some sources claim as many as 60 percent of couples today live together before marriage.  People of different generations, backgrounds, and beliefs could argue all day about whether cohabitation is a good thing or not.  In the end, though, the practice is widespread enough that it is important for unmarried couples to think about the legal options and consequences when they decide to live together.

First off, the North Carolina law that made unmarried cohabitation illegal was struck down as unconstitutional by a superior court judge in 2009.  That decision is not necessarily binding on the whole state, however, so cohabitation may still technically be illegal.  It is unknown so far what other state courts would say on the matter, but the law against cohabitation (passed in 1805) is very unlikely to be enforced.

North Carolina does not recognize common law marriage, and there is no “legal status” associated with unmarried cohabitation.  Thus, a couple who lives together for many years and then breaks up, is still not usually entitled to the remedies associated with divorce:  equitable distribution of property and alimony.  Property is simply divided according to who owns title, and dividing personal property (i.e. furniture and valuables) can of course become very difficult for those whose lives and money have become so intertwined.

So how can cohabiting couples protect themselves and plan for the future?  First, don’t be afraid to talk about these issues before moving in together.  If you’re close enough to live together, you’re close enough to talk about protecting yourselves and each other financially if things end poorly.  Think of this just like betrothed couples discussing a pre-nup — it’s unpleasant to think about, but in some cases essential to protecting your interests.

Second, unmarried couples in North Carolina are free to make contractual agreements to establish rights and obligations should the relationship end.  So although unmarried couples are not granted the rights associated with marriage, they can make express agreements about dividing property in the event of a break-up, and the agreements will be honored by courts (as long as they are not based upon sexual services).  Before acquiring any substantial property interest together, it is very wise to make a written agreement about what would happen to the property if the relationship ended.  It may be a touchy subject, but it’s much easier to reach an agreement when you’re on good terms than it will be if things go south.

Note:  North Carolina still does not recognize same-sex marriage, so this advice applies to same-sex couples who consider themselves married, as well.  Although the law denies the privileges and rights of marriage to same-sex couples, there are ways to secure some of those rights through contract before (and after) joining your lives together. Goodness knows it’s not romantic, but it’s important!