Free Trader Agreements Explained!
Have you ever wondered what happens to the swanky multi-million home(s) celebrities own when they get divorced? Like most everyone, when celebrities get divorced their assets are divided – including those luxurious houses. When news that Channing Tatum and Jenn Dewan separated hearts broke, and while their divorce was finalized in 2019 the pair are still working through the terms of their divorce – including property division. Recently, their Beverly Hills home went on the market for 6 million dollars. While many going through divorces may not be juggling mansions in the Hollywood Hills, divorce attorneys are often asked by clients “What happens to the house, and can I buy a new house after I separate from my spouse?”
In North Carolina, there is a twelve (12) month waiting period from the date of separation until a divorce can be filed. During the separation period, one spouse may choose to stay in the former marital home, while the other spouse moves out. Eventually, when the time comes to divide up their assets, they will have to decide the best way to fairly split the value of the marital home. For some couples this means selling the marital home and splitting the net proceeds, for others it may mean one spouse chooses to buy out the other. In addition to deciding what to do with the marital home when the time comes, it is not uncommon for the spouse leaving the home to want to purchase their own residence.
Generally speaking, when married couples buy real property they do so together. Since North Carolina defines “married” as any time between the date of marriage and the divorce judgment, separated couples are still considered to be legally married during the separation period. So, what options do people have if they want to buy real property during the grey period between the separation and divorce being finalized? Enter the Free Trader Agreement.
A Free Trader Agreement is a legal document that allows a spouse to “freely trade” which includes purchasing real property after separation without needing to place the soon to be ex-spouse on the deed. Legally speaking, these Agreements allow a spouse to purchase real property in their own name, without creating a marital interest in the property or giving the other spouse rights to the property. If purchasing real property after the date of separation, the Free Trader Agreement is important to have to insure the new property stays separate property and is not included in the division of marital assets for equitable distribution during the divorce.
Free Trader Agreements can be executed as a standalone agreement, or as part of a Separation Agreement. Whether standalone or included in a Separation Agreement, they should be recorded with the Register of Deeds in the County in which the real property was purchased.
If you are separated and contemplating buying property, whether it be a 6-million-dollar Beverly Hills mansion or something somewhat smaller, talk to an experienced divorce lawyer. Not only can they help you understand the process of “dividing up your stuff” they can help you protect your future assets and your best interests.