What You Need to Know About Prenuptial Agreements in Texas

Divorce

Prenuptial agreements – or premarital agreements – have something of a bad reputation, but it is undeserved. Couples today tend to marry after beginning their careers and amassing their own estates, which makes it only natural to put some thought into how those assets will be divided in the event of a divorce – or upon one’s death. Further, if the marriage is your second, there may be all the more reason to consider a prenuptial agreement. If you are preparing to marry, a better understanding of the ins and outs of prenuptial agreements can help you make the right decisions for you – and discussing your concerns and questions with an experienced Killeen family law attorney is an excellent place to start.

What Is a Prenuptial Agreement?

Just as a marriage is a legal contract – so too is a prenuptial agreement. The fact is that, upon divorce –or upon one spouse’s death – there are certain terms that must be resolved. If your marriage does end, these resolutions must be hammered out between yourselves or must be made by the court. Prenuptial agreements are contracts that are created prior to marriage, that are executed (or entered into) upon marriage, and that guide the way specific divorce-related issues are handled in the event of divorce. Prenuptial agreements are not a means of hedging one’s bets and in no way increase the risk that your marriage will end in divorce.

Instead, a prenuptial address provides you with a roadmap forward – based on you and your spouse’s mutual agreements prior to marriage. Having a strong prenuptial agreement in place can help reduce the contentiousness and the cost of divorce while also reducing much of the uncertainty involved. The goal of your prenup is outlining provisions for how important matters will be resolved – in relation to the rights and responsibilities of both of you – if your marriage does end in divorce.

The Division of Marital Property

In the event of divorce, all those assets that you acquired over the course of your marriage, which are considered marital property – regardless of who purchased the item or whose name is attached – must be divided between you and your divorcing spouse equitably. This means divided fairly – when a variety of relevant details are factored in. The only exceptions when it comes to assets you obtain while married include:

  • Gifts made in the name of one spouse alone

  • Inheritances made in one spouse’s name alone

  • Separate purchases one spouse makes using his or her distinctly separate assets

Those assets that either of you brings into the marriage with you are considered separate property, but it is very easy for separate property to intermingle with marital property and to, thus, dissolve or diminish the separate nature of the asset. Premarital agreements are often used to help delineate the separate nature of specific assets that either spouse brings into the marriage with him or her.

Basic Prenuptial Considerations

Knowing the basic considerations related to prenuptial agreements (as shared by Forbes) can help you get a better feel for what prenuptial agreements are all about

Privacy Concerns

Prenuptial agreements are private matters. Your prenuptial agreement does not represent information that is public in nature (the way divorce records are).

Financial Imbalance

Prenuptial agreements are often employed to help address a considerable financial imbalance between the parties. If one spouse’s wealth is far greater than the other spouse’s, a prenuptial agreement may be in order.

State by State Basis

The prenuptial agreement can specify which state’s laws apply to its execution in the event of divorce.

Fair Dealings

In order for a prenuptial agreement to be valid – and thus, upheld by the court – it must have been fair, to begin with. As such, both parties are required to be forthcoming when it comes to disclosing their assets. Further, when it comes to full disclosure, it is important to look at the broader picture – not just at one’s finances at the moment of marriage. For example, if one of you is expected to inherit a considerable amount of money, that would very likely need to be addressed in the prenuptial agreement.

Separate Attorneys

Both parties to a prenuptial agreement need their own dedicated family law attorney (with considerable experience crafting solid prenuptial agreements that protect their respective client’s financial rights). If one party to the prenuptial agreement didn’t have an attorney, it could ultimately invalidate the contract.

Relative Fairness

The unique circumstances of the situation determine what is fair. Every marriage is as unique as the two people involved, and the fair division of assets in one divorce may look very different from the fair division of assets in another. The determination of fairness is considered on a case-by-case basis.

Thinking It Through

The more thoughtful the prenuptial agreement process, the stronger the contract is likely to be. Asking your spouse to sign off on a prenuptial agreement once the marriage is about to take place is not going to do you any favors legally (and may invalidate your agreement from the outset). A prenuptial agreement requires not only legal care and attention but also forethought. The party who is requested to sign a prenuptial agreement needs to be allowed the time necessary to ensure that his or her rights are well protected.

Marital vs. Separate Property

Prenuptial agreements often specify separate property from the outset – to help ensure that it is off-limits in the event of a divorce – and determine how marital assets (any growth in the couple’s overall wealth) will be divided in such an event. This approach helps to take the uncertainty out of how assets will be divided if they ever need to be, and while it reinforces the law’s stance, it helps to take the guesswork out of the matter. Not every prenuptial agreement, however, adopts this approach.

The Matter of Alimony

Prenuptial agreements – because they tend to address unequal assets – often address the matter of alimony by either waiving the legal right to it or by setting financial parameters for it. When alimony is not addressed in a prenuptial agreement, the matter of whether or not alimony will be awarded remains an open question.

Issues Related to Children

The matter of child custody arrangements is off the table when it comes to prenuptial agreements. When children are concerned, the court always bases its decisions on the best interests of those children – in the current situation, which cannot be anticipated or determined prior to the fact. Child support is similarly off-limits – unless the terms included exceeding the terms set forth by the State of Texas.

Upon the Death of a Spouse

A prenuptial agreement can address how a spouse’s separate property will be distributed upon his or her death – as long as the specifications are within the boundaries of the law and fairly address the surviving spouse’s inheritance rights.

Texas Law

In Texas, prenuptial agreements are generally upheld when all of the following are true:

  • Both spouses entered into the contract voluntarily (neither was coerced to sign or signed under duress from the other).

  • Both spouses signed the contract in advance of their marriage.

  • The terms outlined in the contract are not excessively harsh in relation to either spouse.

  • The contract fully discloses each spouse’s personal property and financial obligations (unless one spouse waived – in writing – his or her right to the other’s full disclosure).

Peace of Mind

Many couples enter into prenuptial agreements for the peace of mind they provide (and not because either spouse is anticipating a divorce). The fact is that divorces do happen, and they are often unexpected. A prenuptial agreement can help to ensure all of the following if you do find yourself facing a divorce:

  • Your prenuptial agreement helps to protect you and your spouse’s separate assets.

  • A prenuptial agreement can help you, and your spouse avoid the extremely high cost of a contentious divorce in which you battle out the fair division of your assets and/or the issue of alimony.

  • A prenuptial agreement can help protect both of you from the other’s debts.

  • A prenuptial agreement can help you address how the death of either one of you will be handled (in terms of his or her separate assets).

  • A prenuptial agreement can help protect family assets that are currently owned by either of you (or that you are likely to inherit in the future).

  • A prenuptial agreement can help protect a family business owned by either of you (or a business that either of you started outside of marriage).

  • A prenuptial agreement can help you protect your children’s inheritances (whether they are children of a different marriage or the marriage in question).

Additionally, a prenuptial agreement can help you, and your soon-to-be spouse begin the conversation about estate planning generally, which is an important matter to address.

FAQ

The answers to the following frequently asked questions related to prenuptial agreements may answer some of your own pressing questions.

Do I need a prenuptial agreement?

If you think you might need a prenuptial agreement, it is a good idea to discuss the matter with an experienced family law attorney. If you and your soon-to-be spouse are both starting off in life (with neither considerable debt nor wealth), if neither of you has reason to expect your future earning potential to skyrocket, and if neither of you has children, a prenuptial agreement is not likely to be necessary. This said, however, every prenuptial agreement is unique, and if you have a unique concern, it is worth reaching out to that experienced family law attorney and making sure that you are on the right track. If any of the following apply to your situation, a prenup might be the way to go:

  • High assets are involved

  • Either of you has a child or children from another relationship

  • Either of you has specific assets that you want to remain separate

  • Either of you wants to address the matter of future alimony obligations

Are Texas prenups enforceable?

In the State of Texas, prenuptial agreements are not only enforced but are favored. When the prenuptial agreement is clearly written, is in accordance with the law, is fair, to begin with, and was entered into by both parties of their own free will, it can be next to impossible to get out of. The Texas Constitution, the Texas Supreme Court, and the Texas Family Code all support the enforceability of prenuptial agreements.

Won’t our assets be divided 50/50 if we divorce?

Many people think they do not need a prenuptial agreement because they believe their assets will be divided between them equally in the event of a divorce, but this is not necessarily the case. In fact, your assets will be divided in a manner that is deemed fair when all the following factors are taken into consideration:

  • The length of the marriage

  • The overall size of your marital estate

  • The amount of separate property owned by each of you

  • You and your spouse’s mental and physical health

  • Any considerable age discrepancy between the two of you

  • Any disparity in earning capacity between the two of you

  • Whether fault played a role in the dissolution of your marriage

  • Any future inheritances expected by either of you

  • Whether either of you wasted, spent down, or otherwise dissipated marital assets

  • The tax implications for both of you

  • Attorney fees and the cost of divorce litigation

  • The unique nature of any assets involved

  • Any other factors that the court deems relevant

In other words, the equitable division of your marital assets can prove exceptionally complicated if you have no prenuptial agreement in place.

Turn to an Experienced Killeen Family Law Attorney for the Legal Help You Need

Brett Pritchard at The Law Office of Brett H. Pritchard – proudly serving Killeen, Texas – is a practiced family law attorney with a wealth of experience helping clients like you protect their assets while simultaneously supporting their upcoming marriages. Your best interests are our priority, so please do not hesitate to contact us online or call us at 254-501-4040 for more information today.

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