Using a prenuptial agreement to establish a trust

There are a number of important issues a North Carolina couple can address in a prenuptial agreement, including what should happen to property following the death of one or more of the spouses. A prenuptial accord can help ensure that children of the couple receive their inheritance even if the couple divorces. If necessary, a couple can go further and use the prenuptial agreement to establish a trust to help enforce their wishes.

According to state law, couples can use a prenuptial agreement to handle ownership matters concerning money and property. These include buying, selling, transferring, disposing of or otherwise exerting control over property. The agreement can also state what will happen to property if a spouse dies or the marriage is dissolved. In addition, couples can define what will happen to their assets in the event of other occurrences they wish to address.

However, some estate plans can be delayed or derailed if there is no proper mechanism to carry them out. That is why North Carolina allows for couples to create estate mechanisms in a prenuptial agreement to enforce the provisions of the compact. For instance, a couple can use a prenuptial agreement to make a will that carries out the wishes of the couple as stated in the agreement.

Some couples feel more secure about their estate wishes if they can establish a trust. State law does allow for couples to use a prenuptial agreement to create a trust that enforces the provisions of the agreement. According to Kiplinger, a trust is a way to transfer assets and property to heirs without using the typical method of sending an estate though probate. Trusts can also be used to reduce various tax liabilities and provide structured income for a surviving spouse.

North Carolina couples have varying estate needs, so not every couple will create a trust to handle their estate wishes. Since a prenuptial agreement can be invalidated by a court if it runs counter to public policy, asking an attorney for assistance in drafting the agreement can help avoid problems in the event the agreement is ever challenged in court.