Marital Agreements in Texas
Most of us have heard of marital agreements but often associate things like “prenups” and “postnups” with celebrities or the very wealthy. We see marriage as a celebration of love and commitment. But in reality, marriage is a legal contract involving financial rights and obligations. Marital agreements can help avoid disputes over the division of assets in the event of death or divorce, as well as during the marriage.
There are two types of marital agreements, a prenuptial, which is accomplished before marriage, and a postnuptial, which is accomplished after marriage. What both agreements have in common is that they permit couples to designate separate property, that is property/assets, that will not be subject to the community property laws of Texas. What else they have in common is that both have significant legal impact and must be accomplished with independent counsel for both parties.
The Prenuptial Agreement
This agreement permits the establishment of separate property as well as financial rights and obligations to help protect both parties in the case of death or divorce. Assets owned prior to marriage are considered separate property, but after marriage, separate property issues may become blurred and hard to prove.
A prenup is a wise choice for anyone bringing significant personal or business assets to their marriage. Although most often associated with property division and spousal support issues, there are many other situations where a prenup can be beneficial.
- Either party has significant existing debt—you may wish to establish repayment obligations and responsibilities.
- You have inherited property—you may wish to ensure that these assets remain in your family.
- You own or have invested in a business—you may wish to protect your premarital investment as well as that of any partners.
- There are minor children from previous marriages/unions—This can establish provisions regarding any planned inheritance for these children.
- Other—the prenuptial agreement is completely customizable. However, it is best to avoid private/minor domestic matters, or the court may find the agreement frivolous and refuse to recognize it.
The standard prenup attempts to eliminate community property entirely. Each spouse can keep separate all that he/she acquires during the marriage, which can include real estate, autos, retirement accounts, etc. They can still set up provisions to purchase property together or open a joint bank account, if they so choose, as the separate property of each. The standard prenup also specifically provides for the spouses to be able to make gifts to each other, including gifts of cash, at any time.
Note: There are two things marital agreements cannot address:
- Future child support
- Child custody and visitation rights
The Postnuptial Agreement
This agreement is essentially the same as, and can have all the same properties as, a prenup. The only difference is that it is accomplished after the marriage occurs. Some of the reasons for considering an agreement after marriage include:
- Prior to marriage, discussing asset division was too difficult. When the marriage is more mature and both parties are more secure, making financial decisions may be easier.
- There has been a change in circumstances. Perhaps one party is earning significantly more than the other or one has agreed to forgo a career to stay home with the children. As a couple, you may wish to provide for additional spousal support for the dependent spouse.
- Business investments—one spouse may wish to protect the other, as well as the family home, from any possible business losses.
In the end, marital agreements essentially permit couples, and not the state, to govern what will be separate and community property. If you are considering such an agreement, talk to a family law attorney who can advise you on how to proceed, guide you through the process, provide all the necessary forms and help ensure that your wishes will be recognized by the court.