A properly designed premarital (aka prenuptial) or postmarital agreement can accomplish a great deal to protect specific property interests, specify arrangements for spousal support, and avoid confusion as to the assets that could make up part of the community estate in a divorce.
Understanding the Function of Premarital Agreements
Premarital agreements (prenups) are most often used in situations when one or both people about to marry wish to keep the parties’ separate estates distinct from the community estate. We have seen cases where the parents of a younger person insisted on a prenuptial agreement as a condition of their support for the union.
We have seen cases where an older parent is encouraged by children from a prior marriage to sign a premarital agreement before entering into a second marriage. More commonly, parties who have been through divorce have learned just how much a premarital agreement could have saved them from problems in a previous divorce.
To stand up in court, a premarital agreement must meet certain standards. While a premarital agreement gives the parties a great deal of latitude to vary the operation of Texas family law with respect to property or alimony issues, it cannot affect the child support obligations that would otherwise apply.
As well as advising clients about agreements prior to marriage, our experienced prenup lawyers can also draft or review property agreements made during marriage. Married individuals can partition community property into separate property, convert separate property into community property and create rights of survivorship in community property.
A premarital agreement is an agreement between two people made in contemplation of marriage and to be effective on the date of marriage. Premarital agreements regarding property are made possible by the state constitution, by Texas statutes, and by case law. In addition, public policy dictates that premarital agreements should be enforced, and the law favors these agreements.
Property in a Prenup
Essentially, premarital agreements aid in assisting the marital relationship and the well-being of spouses by preventing marital conflict over the spouses’ property. They also may make the division of community and separate property easier in the event a marriage is dissolved.
Property that may be subject to a premarital agreement is broadly defined to include any “interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings.” An experienced prenuptial lawyer can help protect your assets going into a marriage.
Providing for Non-Wealthy Party in Agreement
A premarital agreement must be in writing and signed by both parties. No actual consideration is required; however, it may be wise in some cases to provide for some benefits to the non-monied party in order to avoid a later finding of unconscionability, particularly if the financial condition of the non-monied party under the agreement will be poor. If the benefits are good enough, it may defuse any impetus to challenge enforceability.
Texas Family Code Section 4.003 provides a comprehensive listing of matters which might be dealt with in a premarital agreement. These include:
- The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located
- The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property
- The disposition of property on separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event
- The modification or elimination of spousal support
- The making of a will, trust, or other arrangement to carry out the provisions of the agreement
- The ownership rights in and disposition of the death benefit from a life insurance policy
- The choice of law governing the construction of the agreement
- Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty
Effect on Child Support
It is important to point out that Subsection (b) of this statute makes clear that child support may not be “adversely affected” by a premarital agreement. Therefore, a provision providing for the elimination of or reduction of a party’s child support obligations in the event of divorce would be unenforceable. An attorney experienced with child support cases and enforcement can help you plan for future uncertainties.
As mentioned earlier, the legislature and people of Texas have made a public policy decision that premarital agreements should be enforced. However, a premarital agreement is not enforceable if the party against whom enforcement is requested proves that:
- The party did not sign the agreement voluntarily
- The agreement was unconscionable when it was signed and, before signing the agreement, the party contesting the agreement:
(a) was not provided a fair and reasonable disclosure of the property or financial obligations of the other party
(b) did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided
(c) did not have, or reasonably could not have had, adequate knowledge of the property or financial obligations of the other party.
There is also the issue of how you might conduct your financial life after the wedding. No matter how good the agreement might be, it can be damaged or destroyed if you intertwine your separate financial affairs with your spouse’s in a way not intended by the premarital agreement.
After all, when agreements like these are created, most couples are happy and looking forward to a wedding. They generally are not contested until a divorce is filed. If the premarital agreement was not prepared by someone with the experience and skill to foresee the consequences of the document upon divorce and advise you about those consequences, then the original effort put into it might have gone to waste. We highly recommend hiring a premarital agreement lawyer to help protect your assets from unforeseen asset vulnerabilities before getting married.
The family law attorneys at Orsinger, Nelson, Downing & Anderson have decades of experience with premarital agreements. If you need advice about the negotiation, documentation, revision or enforcement of a prenuptial or postnuptial agreement, contact us today.