Premarital Agreements and the Importance of Clear Terms

Wayne Hopper, Legal Assistant

STEWART v. STEWART, 141 NC App. 236

Dividing assets collected throughout a marriage is an unfortunate but necessary undertaking with divorce. This process can cause conflict, especially when the asset was brought into the marriage by one party. In North Carolina, a business stake or an interest in a professional practice can be considered a marital asset subject to Equitable Distribution. While a premarital agreement is worth considering for a party bringing assets into a marriage, the language contained therein is just as important. Your spouse may challenge a premarital agreement without clear and suitable terms. Let’s look at one such case.   

Renee and Charles Stewart were married in early 1992. At the time of the marriage, Mr. Stewart held a medical license and owned a partial stake in a medical clinic. Prior to the marriage, the couple signed a Premarital Agreement under the North Carolina Uniform Premarital Agreement Act. The couple separated in January 1998. Neither party challenged the Agreement’s validity; rather, they disputed the interpretation of terms in the Agreement that seemed to bar claims of post-separation support, alimony, and equitable distribution of certain assets.

In February of 1998, Mrs. Stewart brought an action seeking post-separation support, alimony, and equitable distribution (including Husband’s interest in his medical clinic, an asset Husband claimed is protected under the Agreement). She claimed the terms of the Agreement addressing spousal support and equitable distribution were ambiguous and vague. Responding to her claim, Mr. Stewart asserted that the terms of the Agreement barred Wife’s claims for spousal support.

The issue in this case was whether a premarital agreement can bar claims for post-separation support, alimony, and equitable distribution. After examining the Agreement and its relevant terms, the trial court granted summary judgment in favor of Husband, denying Wife’s claims for post-separation support and alimony. In addition, the court granted partial summary judgment regarding Wife’s claim for equitable distribution in favor of Husband. Specifically, the court found that the terms of the Agreement protected Husband’s interest in the medical clinic from equitable distribution.

The North Carolina Uniform Premarital Agreement Act (“the Act”) governs premarital agreements in North Carolina. In this case, both Husband and Wife acknowledged that the Act governs their Agreement. By the letter of the Act, a premarital agreement may be used by parties for “[t]he modification or elimination of spousal support.” Furthermore, North Carolina General Statutes [NCGS 50-16.6] establish that “Alimony, post-separation support, and counsel fees may be barred by an express provision contained in a valid separation agreement or premarital agreement.”

The appellate court also highlighted the fact that the general rules of contract law apply to separation and premarital agreements. When the language of a contract is clear, there is a legal presumption that the contract must be interpreted to mean “what on its face it purports to mean.” According to the Court, Paragraph 13 of the Stewart Agreement is a clear waiver of post-separation support and alimony. Furthermore, Husband’s interest in a medical practice was his separate property when parties specifically acknowledged in a premarital agreement that Husband “is the owner” and that the interest “shall remain the sole and separate property” of Husband. The same language supported a conclusion that any appreciation of that interest during the marriage was Husband’s separate property.

This case provides an important lesson in the significance of detailed, clear, and thorough drafting of legal documents. Whether you need a pre- or post-marital agreement, a custody-related document, or any other family law-related document, careful drafting is imperative. It can mean the difference between protection and exposure. When we are considering whether we need documents like these, we are often in a “good place” with the other party and cannot envision a time when we would even need such a document. An experienced attorney can see the pitfalls and problems you may be overlooking.