PREMARITAL AGREEMENTS | Under Texas law, all community property is subject to division in a divorce.
A premarital, or prenuptial, agreement is a contract entered into prior to marriage. Valid premarital agreements predetermine the characterization of property without court involvement, allowing future spouses creative control over their financial future and status.
Though most premarital agreements in Texas are concerned with complex property issues, they can also set boundaries on many other issues such as the rights to control property during the marriage; dividing retirement and employee benefits; and specifying homestead rights.
KoonsFuller has decades of experience in creating and dealing with premarital agreements tailored to meet the circumstances and needs of our clients and their families
Texas Prenuptial Agreements
Being engaged to be married is an exciting time, with lots of preparation and decision-making. Although it’s not as pleasant to think about as where to go on your honeymoon, one of the important decisions you might have to make involves having a prenuptial agreement in place.
A prenuptial agreement is a legal contract that essentially protects a person’s finances and other property in the event that the couple eventually divorces. If you are from Texas and are planning on marrying, you might want to know all about prenuptial agreements if you or your future spouse deems it necessary.
Who Should Get a Prenuptial Agreement?
Prenuptial agreements can serve a benefit for all couples regardless of the socio-economic status. However, there are certain situations that may warrant getting a prenuptial agreement more than others. Those include the following:
- One or both of the parties have major debt they would be bringing into the marriage
- One or both parties have property they would bring into the marriage
- One or both parties are marrying for the second time or have had even more prior marriages
- One or both parties have children
- One or both parties want to keep their estates secure
- One or both parties are starting a new business venture-backed by investors keenly interested in protecting their investment/money.
A prenuptial agreement helps the couple (or any third parties who may be financially affected by the divorce) to have peace of mind that in the event things don’t work out, they have more certainty as to how assets and liabilities will be divided. This also tends to reduce the cost of litigation in the event the marriage dissolves.
Benefits of a Prenuptial Agreement
Prenuptial agreements carry certain benefits for one or both parties. They include the following:
- Override State Laws: Usually, during divorce proceedings, marital property gets divided. However, if the couple cannot agree on the division of property, the court determines the division through state law. When there is a valid prenuptial agreement, it overrides state laws. , For example, the debt amassed by either or both individuals can be controlled by the language contained in the prenup. Often, couples desire to keep debts incurred during the marriage solely by one spouse as that spouse’s debt. Without a prenup, the parties’ marital estate (community estate) would be subject to that debt.
- Protects Financial Stability of Children: A valid prenuptial agreement can protect your children by ensuring that they receive money or assets if you end up getting divorced. It can prevent your spouse from withholding money from your children to keep it for themselves. This is especially relevant if your children are from a prior relationship or your spouse simply wants to keep all money or assets for themselves.
- Allows for the Outlining of Spousal Support: It is possible to use a prenup to outline spousal support while a divorce suit is pending or following the divorce.
- Reduces Conflict: Surprisingly, a prenuptial agreement can also benefit both spouses by reducing conflict. It is a legal contract that the courts can enforce, so if there’s any particular argument over any one issue, the prenup states exactly how it should be handled.
What is the Process of Getting a Prenuptial Agreement?
The process of creating a prenup involves taking the following steps:
- Negotiate the Terms
The two parties should get together (with their respective attorneys, if applicable) and outline the terms of the prenuptial agreement. There should be negotiation and planning for the acquisition of assets and debts, both now and in the future.
- Obtain Independent Counsel
While it is legally possible for only one party to obtain a lawyer for the drafting of the prenuptial agreement, both future spouses should consider retaining his or her own separate attorneys to ensure that the prenuptial agreement is fair for both sides.
- Make Financial Disclosures
Regardless of whether either side is represented by counsel, each future spouse should disclose all of his or her property and debts to the other side. Each spouse should also consider including a Waiver of Financial Disclosures both in the actual prenup and in a separately executed document to avoid the necessity of further financial disclosures in the future. Further, the waiver coupled with the financial disclosures protects each party from potential challenges to the prenup in the event of a divorce.
- Execute the Prenuptial Agreement
All the terms of the agreement should be in writing and signed by both future spouses before a Notary Public. It is advisable to execute the prenup as far in advance of the wedding as possible to avoid a potential challenge to the voluntariness of the prenup in the event of a divorce.
In the event of a Divorce, Can I Challenge the Prenuptial Agreement?
It depends. Prenuptial agreements in Texas are presumed valid unless the challenging party proves that the agreement was (1) not signed voluntarily; or (2) was unconscionable when signed and before signing the challenging party (a) was not provided a fair and reasonable disclosure of property or debts of the other party; (b) did not voluntarily waive in writing any financial disclosures beyond the disclosures provided; and (c) did not have or could not have had adequate knowledge of the property or debts of the other party. The challenging party has the burden to prove the foregoing elements. Just because an agreement is unfair does not make in invalid.
Whether the agreement was signed voluntarily depends on the specific facts of the case. There is no bright-line test. Factors that may call into question the voluntariness of the signing include: (a) whether either party had the advice of counsel; (b) misrepresentations made by one party to the other; (c) the amount of information provided; (d) evidence of fraud or duress; and (d) the withholding of any information.
To determine whether the agreement is unconscionable (defined as extreme unfairness), Texas courts look to such facts as the non-bargaining ability of one future spouse; whether the agreement is illegal or against public policy; and whether the agreement is oppressive or unreasonable. In examining these facts, Texas courts consider the maturity and age of the future spouses, education levels, relative business backgrounds, prior marriages, and other motivations of the parties.
Bottom Line: Before signing a Prenuptial Agreement, always read and re-read any prenuptial agreement and consult with a lawyer experienced in drafting and defending/challenging these types of agreements prior to entering the same.
POST-MARITAL AGREEMENTS | A post-marital, or asset partition agreement, may be created to protect one spouse’s assets from the other’s debts; to protect assets from the risk associated with a spouse’s business venture; or for a variety of other reasons.
Sometimes an agreement between spouses that divides marital property can be a good way to preserve and protect assets and to reach agreements concerning financial issues. This often is used to ease marital stress, resolve issues to avoid divorce or to divide assets and avoid a dispute about their division in the event of a divorce.
KoonsFuller attorneys can assess your situation and determine if a post-marital agreement would be appropriate for your situation.