….But was that a smart decision for someone worth $400 million??
A premarital agreement is an agreement that changes the rules that the law normally applies when a marriage ends in divorce or death. Do you need a premarital agreement? You must determine whether you need to change the rules that the court normally applies to these matters.
The previous post in this series considered whether you might want an agreement to change the rules that apply to division of property at divorce. This post will consider whether you might want an agreement to change the rules that govern support of a spouse, or the rules that govern division of property upon death.
Upon divorce, the law normally requires the wealthier spouse (the “supporting spouse”) to pay support (traditionally called “alimony”) to the less wealthy spouse (the “dependent spouse”). N.C. Gen. Stat. (“G.S.”) § 50-16.3A. Alimony is often not awarded after short marriages. After medium-length marriages, alimony is often limited in both amount and duration. After a long marriage, however, alimony can be a significant obligation, especially if the dependent spouse has been out of the workforce for many years.
If the parties would prefer not to be responsible for the support of one another, the duty to pay alimony can be waived in a premarital agreement. Id. § 52B-4(a)(4).
When the court divides property upon death, it does not divide the property into marital property and separate property. Instead, if the deceased spouse has no will, the surviving spouse simply receives a percentage of the deceased spouse’s property. The exact percentage varies according to the type of property involved, and according to whether the deceased spouse is survived by children and/or parents, but it is rarely less than one-third. The percentage applies to all of the deceased spouse’s property, not just to marital property. Id. § 29-14.
If the deceased spouse has a will, the terms of the will normally control. But a surviving spouse is allowed to dissent from the terms of a will, and instead receive an elective share. The elective share is essentially a minimum amount of property that must be left to a spouse. The elective share varies from 15% to 50% of the deceased spouse’s total assets, depending upon the length of the marriage. Id. § 30-3.1. The elective share is essentially a minimum amount of property that a person must devise to his or her spouse.
Many older couples in later marriages prefer to leave their property to their children from prior marriages, and leave nothing to each other. If both spouses are willing to do this, the right to inherit property and the right to dissent from a will can be waived in a premarital agreement. Id. § 52B-4(a)(3).
There is one thing that a premarital agreement cannot do: waive support for any children that have been or may be born to the parties. Id. § 52B-4(b). Child support is a right of the children, not a right of the parents. Agreements between the parents, regardless of when they are signed, cannot interfere with the duty of both parents to provide support for their children.
It is worth stressing that no marrying couple ever truly needs a premarital agreement. Many couples are perfectly satisfied with the normal rules of law that apply when a marriage ends in death or divorce. Also, even if one spouse is not satisfied with those rules, a valid premarital agreement, of course, requires the consent of both parties. A premarital agreement is a good idea only when both parties have a mutual desire to change the rules of law that would otherwise apply upon termination of their marriage.