What You Need to Know about Texas Prenuptial Agreements
You may shy away from the topic of prenuptial agreements altogether. After all, they have definitely garnered a bad reputation over the years, but there is so much more to prenuptial agreements than what the media hype would have you believe. One of the most important points to make about prenuptial agreements is that they are no more and no less than legal contracts, which means that there is no emotional component involved. Having a prenup in place is not an indictment of your marriage – and it is not a symbol of your doubt regarding your relationship – but it can provide you with the peace of mind necessary to focus on building your strongest marriage (without having to overly concern yourself with what would happen in the event of divorce). Better understanding what prenuptial agreements are all about can help you make the right decisions for yourself.
Is a Prenuptial Agreement Right for You?
If you are considering a prenuptial agreement or have been asked to sign a prenup, it is time to consult with an experienced family law attorney who has impressive experience successfully handling complicated legal issues related to prenuptial agreements. While only you can make the final decision regarding whether or not a prenuptial agreement is right for you, working closely with a dedicated family law attorney can help to ensure that you make well-informed decisions that serve your best interests and that you are comfortable signing off on.
Factors that Can Contribute to the Need for a Prenuptial Agreement
There are certain factors that often contribute to the need for a prenuptial agreement, and they include:
One of you owns (or co-owns) a business or businesses
One of you expects to receive a large inheritance in your future
One of you is expecting a significant increase in your income
One of you is far wealthier than the other
One of you will be supporting the other financially through his or her post-secondary education (in pursuit of a high-paying career)
One of you has (or likely will have) a lucrative career
One of you owns your own medical or legal practice
One of you owns valuable assets, such as real estate, stocks, or significant savings
One of you has other people, such as parents or children from another relationship, who rely upon you for financial support
If there is a factor in your life that leaves you thinking a prenuptial agreement may be in order, do not put off discussing it with an experienced family law attorney.
The Matters Addressed in Prenuptial Agreements
The primary factors that are typically addressed in a prenuptial agreement generally relate to financial matters.
The Division of Marital Property
In Texas, those assets that you acquire as a married couple (regardless of who makes the purchase or whose name is on the title) are considered marital property that must be divided equitably upon divorce. Equitably means fairly – when you take the circumstances and situation involved into consideration. On the other hand, those assets that you bring into your marriage with you will remain your own property – if you manage to keep them separate throughout the years of your marriage. This part about keeping things separate, however, can be exceptionally difficult, and this is where a prenuptial agreement can prove beneficial. Identifying the separate nature of your property can help highlight its separate nature in the event of a divorce. While any increase in value that your separate properties or assets experience during the course of your marriage will likely be considered marital assets, the prenuptial agreement can help clearly identify the assets as separate, to begin with (thus retaining the separate nature of their original value).
Alimony is designed to help offset a financial discrepancy between spouses in the event of a divorce. If, for example, one of you comes into the marriage with considerably more wealth, it increases the chance that alimony will factor into a divorce, but having a prenuptial agreement in place can help to set the parameters for how alimony would work (if a divorce does happen).
If either of you has children from another relationship, your prenuptial agreement can specifically address the matter of their inheritance.
Specific Issues Addressed
Some of the most common issues addressed in prenuptial agreements include:
Each spouse’s rights regarding property (including the right to buy, sell, use, transfer, exchange, abandon, or otherwise manage or control a specific property)
The allocation of property in the event a spouse dies or in the event of divorce
The right to receive alimony
The making of a will that addresses the terms included in the prenuptial agreement
The rights to the death benefits from a life insurance policy
Any other matters that don’t violate Texas laws
Matters Your Prenuptial Agreement Cannot Address
While prenuptial agreements are often broad legal contracts, they cannot address legal matters related to your child custody arrangements or child support. This is because courts in Texas always make decisions regarding children in accordance with the best interests of the children involved, and there is no way to make such decisions prior to the fact. As such, both child custody arrangements and child support are off-limits – unless the child support terms included exceed the state’s child support guidelines. For example, some couples choose to include financial terms related to their children’s college educations (which are not required by law) in their prenuptial agreements. Including terms in your prenuptial agreement that are not allowed by law can void the entire contract, which makes obtaining the professional legal counsel you need paramount.
Prenuptial Agreements and Litigation
The vast majority of divorces are settled out of court, and having a prenuptial agreement in place can add an additional layer of protection against litigation. Having your financial matters spelled out in your prenup generally makes resolving these terms far less painful and complicated in the event of divorce. However, there are still child-related terms that will need to be resolved. Further, even if your prenup has your finances completely covered – and tied up with a bow – your divorcing spouse can make negotiating fair divorce terms very difficult if he or she chooses to do so (for whatever reason), and there probably is not much you can do to avoid litigation in such an instance.
Signing the Prenuptial Agreement
A prenuptial agreement that is signed hastily in the moments before a wedding will lack the authenticity of a prenup that is entered into with forethought. In other words, take the time to create a prenuptial agreement that is mutually acceptable and sign it well before the wedding takes place (30 to 60 days prior is considered a decent amount of time to demonstrate that you both entered into the contract with your eyes wide open and that you had plenty of time to think the matter over prior to your marriage). Your prenuptial agreement will go into effect immediately upon your marriage.
Ensuring Your Prenuptial Agreement Is Enforceable in Texas
The rules for ensuring that your prenup is enforceable in the State of Texas include:
The prenuptial agreement is in writing. Oral prenups are not legally enforceable.
The prenuptial agreement was signed by both of you.
You executed the prenuptial agreement in contemplation of your marriage, which means that you negotiated the terms therein and signed the agreement with a mutual view toward your upcoming marriage.
You both truthfully disclosed all relevant information related to your assets and liabilities prior to signing the contract.
If legal representation is involved, you should both retain your own lawyer who will provide you with your own independent legal guidance.
There cannot be any evidence that duress, coercion, or undue influence was involved.
A well-written and a thoughtful prenuptial agreement can be a powerful legal tool, but a poorly written or conceived prenup can be problematic at best, which makes working with an experienced family law attorney from the outset well advised.
Factors that render a prenuptial agreement unenforceable include:
One of the spouse’s signatures was not voluntary
The agreement is so grossly unfair (or unconscionable) to one of the spouses that enforcing it is against the interests of justice.
Is the Prenup Unconscionable?
Whether or not the terms of a prenup are unconscionable or not will be decided (as a matter of law) by the judge in the case, but the following kinds of issues tend to render a prenuptial agreement unconscionable:
One spouse failed to provide the other with a fair and transparent disclosure of all his or her financial assets and obligations.
The other spouse did not specifically waive the right to the above disclosure.
One of the spouses did not have (or reasonably could not have had) knowledge of the other’s financial interests and obligations that was adequate to knowledgeably entering the contract.
It is critical that both parties to the prenuptial agreement fully disclose their finances to one another, including:
If either spouse fails to be completely forthcoming regarding his or her finances, the prenuptial agreement can be challenged in court (if failure to do so comes to light).
Prenuptial Agreements: FAQ
If you have questions or concerns about prenuptial agreements, the answers to the most frequently asked questions can help.
What Is a Prenuptial Agreement?
Before you become overly concerned about whether or not you should enter into a prenuptial agreement, it is important to know what is. A prenuptial agreement is a legal contract that is only valid and enforceable if it is in compliance with Texas law. A prenuptial agreement can include all the following:
The matter of separate property and how it will be addressed in the event of divorce
How marital property will be divided in the event of divorce
How specific heirs’ inheritances will flow to them in the event that one spouse dies
Do I have to hire an attorney?
Neither of you is required to have an attorney to execute a prenuptial agreement, but if you do find yourself in divorce court at a later date, the fact that one of you did not have legal counsel can seriously diminish the contract’s validity. If one of you has an attorney and the other does not, it can suggest to the court that the contract may have been entered into involuntarily (or without the requisite information and understanding). You have a prenuptial agreement to help protect your financial rights in the event of divorce, which makes ensuring that the prenuptial agreement will be upheld critical and which makes having a dedicated family law attorney on your side an important first step.
What Constitutes Full Financial Disclosure?
Full financial disclosure will look different for everyone (depending upon the kinds of assets you have and the kinds of debt you carry), but the basics include:
Both parties’ income tax returns
Both parties’ bank statements
Information about both parties’ real estate holdings and any mortgages
A list of both parties’ cars and other vehicles (including recreational vehicles)
Both parties’ retirement accounts
Both parties’ outstanding loans and debts
If one or both of you own a business, have high assets, or have complicated finances generally, it tends to make the matter that much more challenging (and that much more important to address via a prenuptial agreement).
Turn to an Experienced Killeen Family Law Attorney for the Legal Guidance You Need
If you are faced with a prenuptial agreement or wonder if you need one, Brett Pritchard at The Law Office of Brett H. Pritchard – proudly serving Killeen, Texas – is an accomplished family law attorney who is well versed at helping clients like you successfully address concerns related to prenuptial agreements head-on, and he is here to help you achieve the peace of mind you are looking for. For more information about what we can do to help you, please do not hesitate to contact us online or call us at 254-501-4040 today.