Prenuptial agreements, or prenups, are legally binding documents signed by two people intending to marry. A few different types of prenuptial agreements serve different purposes, so the type of prenup agreement signed will depend on the couple.
A prenup would kick in in the event of a divorce or the death of one of the spouses. Prenups cover a variety of things, but the overall intention is to protect the couple's financial future and ensure their intentions are clear.
- Prenups are legally binding in North Carolina.
- The key difference between an estate plan and a prenup is when it goes into effect. Estate plans go into effect after death, while prenups go into effect after a marital problem or divorce.
- There are four commonly used prenups that each serve different purposes.
How Does a Prenup Work?
Prenuptial agreements look at each person entering into a relationship, catalogs their assets and debts.
Assets that can be included in prenups are almost anything that someone has, but some common examples include:
- Personal property of value, such as art, appliances and cars.
- Cash and/or bank accounts.
- Education funds and retirement funds.
- Stock and bonds investments.
- Real estate and other property.
With a prenup comes instructions for what needs to happen to the couples assets should they divorce.
How Is a Prenup Different From an Estate Plan?
An estate plan addresses what should happen to your estate if you were to die or become incapacitated. It’s a chance to set things up so that you have a say in how your money, assets and home are divided up after you’re gone.
Estate planning grants you access to a bunch of legal tools that are customized based on your circumstance and desired outcomes. Documents found in your estate plan are things like a last Will and Testament, a Trust, Living Will, and Power of Attorney.
A prenup is different from an estate plan because it only outlines your financial obligations and lifestyle preferences or requirements of your marriage. While all 50 states honor prenuptial agreements, each state may interpret the agreements differently. Prenups don’t manage what happens to things after you die like an estate plan does.
Different Types of Prenuptial Agreements
Every prenup has a function that enables couples to customize the legal document to their requirements and concerns. Common types of prenups include:
Traditional prenups cover inheritance rights, spousal maintenance and how property should be divided. In the case of divorce, a prenuptial agreement would stipulate how assets accumulated during the marriage and how they should be shared. The prenup may also state how much spousal support each party has to provide for the other.
Prenups can also specify how liabilities incurred during the marriage are split between the spouses, while preventing large assets owned by one spouse from being shared if the couple divorces.
Prenups are especially important if the couple has children, together or with other people, as they want to ensure their assets transfer to their children, not the children of their spouse and someone else.
This particular type of prenuptial agreement does not focus on inheritance. Instead, this prenup agreement focuses on lifestyle choices, restrictions in lifestyle choices, and lifestyle expectations. This type of prenup is used by couples who care about their lifestyle and want to ensure it remains intact and that their spouse agrees with their lifestyle.
In this document, couples can specify their expectations on how childcare is going to be broken up, how and who does the chores and even who cooks when. Lifestyle prenups are for couples who really care about their partner providing equally to the home and family, so that neither partner feels overburdened.
A lifestyle prenup may even address the couple’s career expectations, to ensure that one partner is not focusing on work more than they focus on their partner. The agreement can lay out easy-to-understand expectations of how the couple spends their time.
Infidelity Clause Prenup:
Partners who want their boundaries and objectives known within their marriage may choose to use an infidelity clause. These agreements specify the repercussions of adultery, like a decrease in spousal support or a one time payment to the non-cheating spouse.
Couples can define what adultery means in their relationship, whether they want to go into detail about physical adultery, emotional adultery, or online interactions. They can describe the repercussions in detail and customize it to suit their marriage.
A sunset prenup outlines the spouse’s financial rights and duties for a set period of time. This is used by couples who want to set expectations and limitations on their financial prospects, but they don’t want to have a permanent prenup.
For example, a sunset prenup expires on a specific day, or after a set period of time, such as five years. Sometimes a couple might stipulate that their prenup ends when their children reach a set age, and once that time has passed, the prenup is no longer valid. This type of prenup can be changed if it stops reflecting their needs, whereas other types of prenups are meant to remain the same for the duration of the relationship.
How Carolina Family Estate Planning Can Help…
Ensuring that your attorney is aware of your prenup will help them make sure that nothing in the estate plan contradicts or overrides the prenup and that the prenup doesn’t override anything in the estate plan.
At Carolina Family Estate Planning, we recognize that each client is unique and has personal goals and objectives. We will help you make smart decisions to protect your family. Contact us today at 919-899-2606 or fill out our online form to schedule a needs-assessment call. We’ll help you get your ducks in a row.