Understanding Prenuptial Agreements: Protecting Your Future and Assets
The Ex-It Strategy Podcast: Episode 67
Listen Now Apple | Spotify | YouTube
Podcast Episode Hosts: Elizabeth Stephenson, Sarah Hink, and Cam Heinsohn
Prenuptial agreements, sometimes referred to as prenups, can be a sensitive topic, but they play a crucial role in protecting your assets, managing debts, and setting expectations for your marriage in North Carolina. In this episode of the Ex-It Strategy Podcast, Attorneys and Managing Partners Elizabeth Stephenson and Sarah Hink are joined by Cam Heinsohn, Marketing & Business Development Manager, explore the ins and outs of getting a NC prenup, including misconceptions, financial transparency, and considerations for second marriages or families with children.
Why Prenups Matter
Elizabeth and Sarah begin by emphasizing the importance of prenups for individuals entering second marriages or with children from previous relationships. A prenup can safeguard inheritance rights, ensure the protection of personal assets, and provide clarity on debt management. They also note that prenups are not just for the wealthy. Any couple with assets, debts, or business interests can benefit from a prenuptial agreement in North Carolina.
If you and your spouse-to-be are considering a prenup, our attorneys can help create an agreement that benefits you through your marriage while protecting your future. Contact us today at New Direction Family Law to schedule your initial consultation at (919)719-3470 or fill out our online form here.
Debunking Common Misconceptions
Many clients worry that discussing a prenup signals a lack of trust or love. Elizabeth compares prenups to insurance, since you plan for unforeseen circumstances without expecting the worst to happen. Sarah highlights that the biggest issues often arise when couples fight over debt rather than assets, which can easily be addressed in a prenup.
Opening up communication about finances, debt, and assets is essential before marriage to avoid misunderstandings later. Prenuptial Agreements are a great way to bring up the conversation with your partner, and can alleviate unforeseen problems later down the road in your marriage.
Debt and Financial Transparency
Prenups allow couples to define which debts are marital versus separate. Elizabeth and Sarah discuss real-world scenarios where credit card debt or student loans caused conflict during divorce. By specifying responsibility in a prenup, each party knows their obligations, preventing financial disputes.
Prenups and Business Ownership
Business owners face unique challenges with prenuptial agreements. Elizabeth and Sarah explain that without a prenup, a spouse could claim a share of a business started before or during marriage. Prenups can specify ownership, protect business equity, and address scenarios such as starting new ventures during marriage.
Modifying Prenups and Legal Considerations
Life circumstances change, and prenups can be amended with mutual agreement. Elizabeth and Sarah clarify that a prenup is modifiable if both parties agree, providing flexibility over time. They also touch on legal limitations, including public policy, coercion, and invalid clauses, such as child support arrangements, which cannot override a court’s determination of a child’s best interest.
Prenups for Second Marriages and Families with Children
The attorneys highlight that second marriages often involve additional considerations, such as preserving inheritance for children from previous relationships. A prenup helps clarify estate planning and protects the financial interests of both new spouses and existing family members.
Creative Clauses and Real-Life Examples
Elizabeth and Sarah share some unusual prenup requests they’ve encountered, from lifestyle obligations to infidelity clauses. While these can seem extreme, a well-drafted prenup ensures that any agreement is enforceable and protects both parties without violating public policy.
Postnuptial Agreements
Postnuptial agreements, similar to prenups, can be created after marriage to address changes in finances, business ownership, or family dynamics. Elizabeth and Sarah emphasize that postnups offer the same protections as prenups but are executed after the marriage has begun.
Final Thoughts
Prenuptial agreements are not a reflection of distrust but a strategic tool to protect assets, manage expectations, and safeguard financial security. Elizabeth and Sarah encourage couples to approach prenups with honesty, open communication, and legal guidance to ensure both partners are protected.
Ready to discuss a prenuptial or postnuptial agreement? Contact New Direction Family Law to speak with an experienced family law attorney and protect your future today. Give us a call at (919)719-3470 or fill out our online form here.
The Ex-It Strategy Podcast | Episode 67
Listen Now Apple | Spotify | YouTube
Podcast Episode Hosts: Elizabeth Stephenson, Sarah Hink, and Cam Heinsohn
In this episode of The Ex-It Strategy Podcast, Elizabeth Stevenson and Sarah Hink discuss the importance of prenuptial agreements, especially for individuals entering second marriages or who have children from previous relationships. They explain how prenups can protect personal assets, manage debts, and anticipate changes in circumstances, such as starting a business. The conversation also touches on the misconceptions about prenups, the emotional and financial implications, and the necessity of discussing finances openly before marriage. Tune in for real talk on romance, prenups, and safeguarding your future.
Hello everyone. It’s Elizabeth Stephenson. Thanks for joining us. It’s Sarah Hink here as well.
The lawyers and the partners of New Direction Family Law. We have Cam with us again, marketing business development manager, and Joe in the corner back there. Sometimes he says something, sometimes he doesn’t. Sometimes he looks at us like we are nuts.
What’s our topic today?
Okay. NC Prenup. Okay, so this is when things are good.
Elizabeth: Yeah. Happy. Yeah. Right at the beginning when everybody’s happy and ready to get married. Yeah. You’ve got your ring right on your to-do list for the wedding. You’ve got your venue. Mm-hmm. And then. I love you honey, but I’ve been thinking, yep, we need a prenup and my parents really want us to have a prenup.
A lot of times it does come from the parents. It does, it does.
Sarah: I agree. Especially if their parents have been divorced once or twice in the past, speaking from experience.
Sarah: Which is great advice. I think so. You know, that’d be a good wedding present for someone to like buy someone’s prenup.
Elizabeth: Did you remember we wanted to go to these wedding shows and set up a booth and do prenups. I think that’d be a great idea.
Sarah: Yeah. And people are like, oh, that’s a joy kill.
Elizabeth: Why do people need to hate? I mean, people have this idea about prenups and if they get one, it means they’re gonna get divorced and you don’t really love me.
Sarah: Right. And that’s a, you know, you get car insurance ’cause you might get in an accident, but you don’t think about it. You don’t want an accident. Exactly. No one wants a car accident. Yeah. But, um, the biggest misconception is we don’t have anything, or we aren’t rich, so we don’t need a prenup.
Cam: Yeah. That people think it’s for like the super wealthy or like celebrities or something. Well tell Jeff Bezos that.
Sarah: Yeah.
Elizabeth: You know, right. When they got married, they were in a garage and then, you know, at the end of the day, things changed. Mm-hmm.
Sarah: So that’s true. Things can change. And also something to think about is some of the worst divorces I deal with are when people are fighting over debt.
True. True. So, um, you can put that in the prenup too. Like their debt and your debt. Yours, so he has his credit card.
Elizabeth: Well, it doesn’t work like that anyway. If you have a charge card and you charge something that I don’t know about, why am I, why am I responsible for that?
Sarah: Well, it’s for the marital household.
If you’re married, you both know about it. Yeah. Go out and buy a Louis Vuitton. That’s gonna go. So we’re each gonna split that debt if we separate, most likely. If it’s something you should have known about, you know, like you’re living in the same household, your wife likes to go shopping and that’s the standard you know, that y’all have that together.
So how does a prenup take care of that? Well, it sets out, a lot of times I advise they do, you know, title control. So if that credit card’s just in the husband’s name and he goes out and, you know, spends lavishly on watches, or whatever he’s into, then that debt on that credit card is his, and instead of having to split the debt 50-50, it’s his separate debt as listed in the prenuptial agreement.
Right, right, right. So that’s one thing to think about and also during this conversation, when you’re speaking to an attorney about how that works, you’re like, you know, something should go off in your head is, I don’t even know what kind of spender he is. I don’t know if he has credit card debt.
Elizabeth: That’s great, and so true.
That’s absolutely true. Yeah. I think you should have, you know, we always have premarital counseling or whatever. Mm-hmm. But people don’t like talking about money. Not at all. You know it’s like a taboo for us for some reason.
Sarah: But can you imagine getting married and then six months later finding out that this person has like $50,000 in credit card debt?
Elizabeth: I have people who will come to me and say that and say, and I paid it, you know, and we paid it off during the marriage. Mm-hmm. So, you know, that’s love. It was beautiful looking back on that. I probably shouldn’t have done that, but I mean, you know, you are in love and you go, mm-hmm. Okay, well let’s work.
We’re a team. We’re gonna work together. My money is your money.
Sarah: Yeah. And, you know, work hard, pay off their student debt and then their medical school and Right.
Elizabeth: It doesn’t last long, and then they go and have an affair with their nurse and leave you and have another baby. Mm-hmm. Shit really happens.
Cam: Let me tell you, I mean, you make a good point though, because I think, I don’t think it’s that uncommon for people to discuss like, okay, financially, once we get married, how’s this gonna work?
Are we gonna share a bank account? So why wouldn’t it be taboo to discuss the debt? Part of it.
Elizabeth: I think a lot of times if you have a lot of debt, people may feel a lot of shame around that.
Cam: Mm-hmm.
That’s true. Yeah.
Elizabeth: One of the easiest ways is, alright, let’s each run our credit report, right? And let’s, let’s see what’s out there and just sit down around the table with a glass of wine and let’s talk about it. Right?
Sarah: So when I do prenups for people, I have them both list all their liabilities and assets so that’s out in the open. Everyone can disclose it. So if they haven’t discussed it at that point, they’re gonna talk about it then. So that’s one thing to consider. Life does change. Mm-hmm. But also to protect you from being poorer than you were when you got married. You know?
That’s true. That’s a good point. Yeah. Let’s keep it moving in a positive direction. Correct. And there’s language in there about anticipating businesses. So maybe you don’t own a business before you get married, but then you start one during the marriage. That’s pretty huge.
So that’s my business. Right. As long as you put your title, I mean, if everyone’s in the business and you’re 50-50 owners, well, you guys made a decision to make 50-50 ownership.
Elizabeth: But, if you had to go to court, and you own the business a hundred percent, I’m still entitled to 50% of it without a prenup. Yes. Correct. That’s what I’m saying. If you have a prenup that addresses the title and business, and you own it, then that’s your business and you’re gonna be covered, right?
Otherwise, you’re gonna lose half your business, right? You’re gonna lose half your retirement, you’re gonna lose half the equity in a house that you maybe put a hundred thousand dollars down on for a down payment, right? Mm-hmm. So those are all things to consider. No, you’re not being mean. You’re not, you know? Mm-hmm. It doesn’t mean you don’t love the other person.
You’re just being sort of smart about it. Yeah.
Sarah: And it can always change. Without a contract, everything can change. And you might not break up. You might stay together forever. It doesn’t matter.
Elizabeth: Right. What can you put in a prenup? We talked about property. What else?
Sarah: We can put alimony. You know, some people are quick to just waive alimony and then I’ll usually say, well, you can. If you’re going down that road, think about if you have really young children, right? Like sometimes we can put in there if you have children that are not yet in elementary school mm-hmm.
And you are entitled to it. So you can get really crafty with the elementary section, right? And you put certain things in there about if this happens and then that would happen. You can leave it all together and just say. Let the cards fall. Deal with it. We’ll deal with that if that comes down the road or you just do the waiver, especially if both people are seemingly on equal footing at that time.
Elizabeth: Well, what if somebody comes to you and I mean… we’re a week out now, and I’m really in love with this guy, and you tell me you do not. You should not sign this. And they say, well, if I don’t sign it, he won’t marry me, then they sign it. Nothing we can do. I mean, that’s it. Their choice. It’s not a little red flag.
I mean, you think about him when you’re in love and you’re right in there. I mean, you know, they’ll come back to see us in a few years, I’m sure.
Sarah: I’m seeing his red flags. And you know, that’s a scenario I haven’t been in luckily.
So I don’t know. I’d probably be very adamant that this person slowed down, read it and asked me questions, and you know, why am I telling them not to sign it? It must be something that’s really against them and not reciprocal. I don’t know.
Elizabeth: Right. But at the end of the day, you know, we’re not the boss.
Mm-hmm. The client’s the boss, and they get to make that decision. Our job is just to tell ’em best, worst. Yeah. Here’s what my advice is. Yeah.
Sarah: I think, and you know, it’s not the absolute end of the day. So if you’ve been married for two years and you signed a prenup and things are gonna change… like you have decided that you are gonna stop pursuing your career and you are gonna stay home with the children, but you have made that waiver in the prenup. Right. Come back to an attorney. You can have that amended. You can have that changed as long as everyone signs. Yeah. It isn’t final.
Elizabeth: Yeah. No contract is final. Even with a separation agreement, both parties can agree to modify it and reduce it back to writing. Mm-hmm. You can always modify stuff. And that is different from a court order. You don’t have any control over that. But that’s what’s so good about agreements is you control what goes in there.
Sarah: Yeah. Well, so when things start to change and you remember that prenup says something that maybe is not gonna be as beneficial to you anymore. Right. Talk to an attorney, get that changed. Right.
And see what you could do about that. Can you put stuff about kids in there? Children? No. I mean you could, but it’s not gonna hold up in court.
It doesn’t mean anything. Child support. No. So think about it like this – when the court gives an order for custody, it’s based on the best interest of the child at that time. So it doesn’t matter what you guys talked about in your prenup, you know, 10 years ago, this is the best interest of the kid today. So the court isn’t going to care what you guys put in that prenup about custody.
Right? And pretty much the same for child support, right? You need to financially support your children, right?
Elizabeth: Mm-hmm. And sometimes I’ve seen them put in here and you probably have too, that this thing’s gonna be null and void If you guys screw around on me.
You owe me or if I find out that you do, you owe me a lot of money for that. Sure.
Sarah: Yeah. So you know, you can put things in there. It can’t be against public policy. Nope.
Cam: What does that mean – against public policy?
Sarah: They have to keep their weight below a certain amount. Like things are not just an extreme kind of thing.
Elizabeth: People put in crazy things. Like… We have to have sex three times a week or something like that. So I mean, you can sign it, but then if you challenge it, you can do that. But it’s always modifiable. So think about that.
And so if you sign this and we separate, am I screwed? I’m stuck with that, right? I can’t go to the court and ask them to divide the property 50-50.
Sarah: If it’s a valid prenuptial agreement, I mean, you can go file in court. The other side’s gonna waive that prenup in the errand.
Elizabeth: Uhuh. So what can I do? Are there defenses to it?
Sarah: The defenses would be, you know, something against public policy in IT policy, um, that there was some sort of involuntary signing, so maybe they were coerced into signing it.
Um, does the example that you gave count, like, marry me… kind of.
Elizabeth: I think we have to think about free will.
I think it’s more if you got to the venue, you are in your dress, and somebody walks in there and says – sign this. That free will in a moment of duress where you feel like I have to sign this. Yeah. And that’s a pretty high bar.
Sarah: So it is considered as the timing of everyone being presented with a prenuptial agreement. I think that that was mentioned in that case law we read earlier, even though it didn’t go much into the facts, but that does matter. And for some reason people do really like to wait too close to the wedding date to reach out to an attorney. It just seems to happen.
Elizabeth: A lot of times it is because the other side, the one that wants it, is feeling like they’re getting married, they’re in love, and they don’t wanna screw it up.
They’re afraid that the other person’s gonna call it off or something. But I mean, I have had a prenup. I have a prenup, and you know, and I think it’s very important when you’re older and you have children or you have grandchildren.
Mm-hmm. It preserves your estate, you know? Right. You can still take care of your new spouse, but it does protect them also.
Elizabeth: Yeah. But I, I mean, I had a prenup. I have a prenup. Yeah. I think it’s very important when you’re older and you have children or you have grandchildren.
It preserves your estate, you know? Right. You can still take care of your new spouse, but it does protect them also.
Sarah: That is huge. Even for a second marriage. I have kids already, I wanna make sure they inherit any property. Right. Right. Mm-hmm. And make sure that that is protected.
And that’s something I definitely recommend for anyone that’s getting married and already has children. I’ve only had one Prenup case where it got too heated and the marriage didn’t happen.
Elizabeth: Well, and that was part of it. In hindsight, that’s probably good.
Sarah: Yeah. So it wasn’t my fault.
Elizabeth: Absolutely not. I’m sure it wasn’t your fault.
Joe Woolworth: What’s the strangest thing you’ve ever been asked to put into a prenup?
Elizabeth: I mean, I haven’t had anything strange or weird that I’ve read. Maybe like having sex a certain amount, or keeping your weight down. You have to fix me dinner three times a week. I mean, if you don’t, that is not a red flag to somebody to go. I know – how controlling are you?
Joe Woolworth: You know I was just reading in the New York Post about a famous example I think that you guys are talking about – basically keeping the weight down – it was in the prenup. Every 10 pounds the wife gained, she lost 10 grand a month, so she started at 70.
Cam: She started at 70 pounds or 70 grand?
Joe Woolworth: Grand. She started at 70 grand a month, and they prefer every 10 pounds in this prenup from this lawyer in New York who put his name on it. He was James Sexton. Yeah. It was gross.
Elizabeth: Well, it ought to be reciprocal is all I gotta say.
Cam: Right, exactly. Why do men age so gracefully? I don’t know.
Sara: I haven’t had anything crazy like that.
Elizabeth: No. I just finished doing a postnup, which is sort of the same thing. Mm-hmm. You can do the same sort of contract after you’re married. Mm-hmm. So you’ve acquired all this marital property, bought a house together, kids, retirement and all of that. And then you want to, and you’re not contemplating separating, but some people do it and then separate that for their businesses.
Cam: That makes sense. You might’ve mentioned this earlier, but what if you inherited family property all of a sudden that you weren’t expecting or something like that?
Sarah: I mean, inheritance is gonna be your separate property until you start to like to commingle or it’s given, but people still fight over it too.
Yeah, let’s just sign off on it. You’re taking one thing off the table to fight about. Right. But a lot of times with businesses that are growing during the marriage, or if you’re a partial owner of a business, there might be requirements to have a postnup.
What the business doesn’t want to happen, say you have a business with five people in it, they don’t want their business to go down because, you know, one fifth of it is being argued about in court and like they put a freeze on like certain parts of the business and like all these things are happening, that can happen.
Cam: That’s such a good point. Mm-hmm. I didn’t think about it being a requirement in order to enter into a partnership or, you know, part of business or whatever.
Sarah: Yea, they just lose their equity in it. Just immediately they’re like, okay, bye bye. We’re selling your part and you’re out of here.
Elizabeth: Yeah. Because it can really frustrate a business because you think about how many people are in business, I mean, there’s a lot of entrepreneur content creators, and a lot of people who work for themselves or who start a side hustle or do something like that, and even though it’s yours, it’s all marital property, unless you put some provisions around it.
Sarah: Yeah. So any business owners listening out there, come see us. We can help.
Elizabeth: We can definitely help you. What else? Anything else we haven’t talked about that people need to know about?
How do you generally do a NC prenup? You know, if there’s not an attorney on the other side, I sort of say… tell me what’s gonna be the best way for this person to receive it?
Sarah: Yeah.
Elizabeth: Do you wanna go and give it to them? Or I can send it to them with a very nice email or something like that.
Sarah: I usually say that I leave that up to my client. Yeah, exactly. The conversation I had this morning went like that. I was like, well, do you want me to do it or you? She was like, I’ll just do it. I’m like, okay. Okay. That’s fine. Yeah.
Elizabeth: Most people who have done it go for like five days and it’s like, oh man, I shouldn’t have done that. Am I screwed? Well, we haven’t got married yet. Well, let’s say we did. You know, it’s coming. I’m thinking about it. I really don’t want to, can I undo it if everyone agrees to, but if I don’t get married and I’ve signed it.
Sarah: If you don’t get married, it doesn’t mean anything because it’s based on the fact that you get married. It’s conditional, right? Like once you get married, this is the agreement. Well, what makes me think is like, why wouldn’t they be happy with it? What did it say?
Elizabeth: Because he is a multimillionaire and he met you and you have nothing and you loved him so much that you said, okay, you keep yours and I’ll keep mine. Mm-hmm. But I don’t have anything. Do you still love him? Well, I don’t know, like that’s really complicated, right?
Sarah: I know, right? So I don’t know. That’s gonna be a personal decision. Yes it is. And thinking down the line, if she waved alimony, but they had five kids and didn’t work, there’s a chance that the court might say, well, this is extreme. Yes. If he really is a billionaire, this is an extreme situation.
Mm-hmm. And there are times where the court will be like, okay, well this is violating public policy in the respect that this person has zero money. Right. I think if they go on government assistance, then they can go and seek something if they qualify for government assistance.
We’re not gonna fund this like, no, no to, to hell with your prenup. You pay for this. We’re not doing that.
Joe Woolworth: Yeah. But to your point, that’s why you should have that conversation when you still like each other, right? Like if you have it before you get married and you’re a billionaire, then you can make a decision based on your good feelings about that person.
I think you should be entitled to some of the money, and it’s not gonna be so dang contentious.
Elizabeth: Yea, you sort of wonder why are you asking me to waive it? Yeah. You know, if you want me to, you had a conversation, I want you to stay home. We’re gonna have kids right away. I don’t want you to work.
You don’t have to. That would make me sort of wonder.
Sarah: Yeah. We’ve experienced a lot professionally and I think about these people, they were a little jaded sometimes. They weren’t thinking about that down the road. And it’s hard to think about what that looks like, and that this person would ever hurt you and want to keep you at home with the kids, just because that makes life easier for them.
Elizabeth: I agree. But, if you live in Texas now, you’re not going to get alimony anyway.
Good luck down there, y’all.
Sarah: Oof. Yeah, so I mean, prenups, it’s a personal decision for sure. It’s a good opportunity to at least have a conversation about finances. One of my best friends was presented with a prenup and she had me review it and I said, looks pretty.
You know, it was New York. I can’t really give legal advice in New York, but it looks like it regurgitates New York law. In North Carolina, a lot of my prenups just regurgitate North Carolina law and they don’t wanna keep it separate. They want it to be marital.
They just want it to be simplified. So there’s less to fight about in the future, which is perfectly fine too.
