Can a Premarital Agreement in North Carolina Waive Equitable Distribution?

The division of property is one of the most significant factors in many North Carolina divorces. Spouses accumulate substantial assets and debts throughout their marriage, including real estate, retirement accounts, investment portfolios, vehicles, and bank accounts. North Carolina statutes support equitable distribution, meaning that if either spouse requests it a court will determine a fair and equitable division of marital property.

Spouses with prenuptial or premarital agreements may believe that this contract prevents an equitable distribution of property in a divorce, but that may not be true. Precise wording is critical because not all agreements meet the requirements to waive equitable distribution.

McIntyre v. McIntyre

In McIntyre v. McIntyre, the parties entered into a prenuptial agreement a few hours before they were to be married. About 13 years later, Husband filed for a divorce and sought equitable distribution. Wife filed a counterclaim in which she also requested equitable distribution, along with post-separation support and alimony. Husband claimed that their prenuptial agreement prevented Wife from receiving equitable distribution of the marital estate and moved for partial summary judgment, which means that Husband felt Wife had no legitimate claim and the court should dismiss her equitable distribution request without a hearing.

Wife’s response was that the agreement was invalid because of a lack of adequate disclosure, undue influence, unconscionability, and duress. Husband dropped his request for equitable distribution after his motion for summary judgment was denied.

The trial court in McIntyre determined that Wife was not unduly influenced, coerced, or experiencing duress when she signed the prenuptial agreement. They further ruled that that agreement was valid, and it did not waive either party’s right to equitable distribution. The court subsequently entered an equitable distribution order and then an order for alimony. Husband appealed.

In his appeal, Husband claimed that the postnuptial agreement waived his and Wife’s rights to equitable distribution. The Court of Appeals disagreed.

While it is true that parties to a marriage can make their own decisions about the division of their marital estate’s property and forego equitable distribution, there are specific requirements when creating and entering into a contract. North Carolina General Statute Section 52-10(a) states that contracts and agreements between spouses that are consistent with public policy are valid and that soon-to-be spouses may release the property rights they could acquire through marriage. The Court of Appeals had already established in a case decades prior that antenuptial agreements are enforceable and not inherently against public policy.

Because prenuptial agreements are contracts, they are governed by contract law, including the following legal concepts:

• Contract language must be clear and unambiguous
• The language in a contract must represent the parties’ intentions

When a premarital agreement’s language is ambiguous, and the intention is unclear, a court must interpret the contract.

Ambiguous Language and Premarital Agreements

In McIntyre, Husband and Wife made opposing claims as to the meaning of their prenuptial agreement. Husband claimed that the language clearly meant the spouses were waiving equitable distribution, while Wife stated it did not.

The Court of Appeals noted that the fact Husband and Wife disagreed on the meaning of the wording meant it was ambiguous, thus, the interpretation became the responsibility of the Court, resulting in the opinion that both spouses’ interpretations of the agreement were reasonable.

Ultimately the Court upheld the trial court’s decision because the premarital agreement in McIntyre was missing key elements that would have waived equitable distribution rights. Specifically, the following were mentioned in the Court’s ruling:

• The agreement did not reference property acquired during the marriage
• No express waiver of equitable distribution rights was included
• Nothing was included regarding the distribution of property in the event of divorce
• The agreement could have been intended as a free trader agreement that allowed each spouse to buy property without permission from the other spouse

If soon-to-be spouses intend to use a premarital agreement to waive equitable distribution, McIntyre shows that the contract must be carefully written to meet North Carolina’s legal requirements.