Premarital and marital property agreements in Texas have a long, complex history steeped in the community property presumption, the state constitution, statutes, and case law. Originally, such agreements were disfavored by the Texas courts and traditionally found to be unenforceable. However, as a result of amendments to the Texas Constitution, evolving statutes, recent case law, and improved draftsmanship, the agreements are generally held to be a valid and enforceable.
In Texas, spouses can have a pre-marital agreement or post-marital agreement. A premarital or post-marital agreement can have a lasting impact on your divorce, property division, and even spousal maintenance.
A premarital agreement is a contract executed by a prospective couple contemplating marriage that lists each person’s rights and obligations in case of a potential divorce. Section 4.003 of the Texas Family Code provides a comprehensive listing of matters which might be dealt with in a premarital agreement:
- 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; and
- Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.
In addition, post-nuptial agreements can assist spouses in accomplishing many of the same goals as premarital agreements. Partition and exchange agreements, or in other words, agreements that convert community property into separate property or, separate property into community property, are an example of post-nuptial agreements.
The Texas Family Code states that at any time, the spouses may exchange between themselves any part of their community property, then existing or to be acquired, as the spouses may desire. Property or a property interest transferred by a partition or exchange agreement becomes the spouse’s separate property.
In addition, spouses may also agree, at any time, that income or property arising from the separate property that is owned by them at the time of the agreement, or thereafter acquired, shall be the separate property of the owner. Post-marital agreements must be in writing and signed by both parties.
You may be thinking, “What is the purpose of an agreement like this?” Well, in case of a divorce or even death, time and money could be saved. It is always smart to plan ahead and to plan for worst case scenarios, while still hoping for the best.
Writing marital agreements takes talent, experience, and forethought. These agreements don’t get attacked when they are created and signed, they get attacked when they are really needed – during a divorce. That’s why it is so important to have an attorney with the skillset to draft an agreement up front and counsel you about how to conduct your financial life after the wedding (or after the post-marital agreement is signed) to preserve what has been accomplished in the agreement. With the wrong attorney drafting it, your agreement might not be viable when and if the time to use it arrives.
The attorneys at Orsinger Nelson Downing and Anderson have that experience and expertise to help you protect your estate from the outset and help you rest assured that the deal you make is the deal you can count on. It’s just part of what we do.