Texas Prenuptial Agreement Law: Basics and What You Should Consider Before Getting Married
Prenuptial Agreements: What are They?
A prenuptial agreement, commonly referred to as a premarital agreement or antenuptial agreement, is a contract entered into by prospective spouses that is effective immediately prior to marriage. Generally speaking, its purpose is to exempt certain types of property from the community estate, or, alternatively, impose a separate estate characterization of a portion of the community estate as joint ownership (applicable to the spouses’ children, for example). However, premarital agreements can also address any number of other concerns, such as spousal support, management (separate or otherwise) of the community estate, or even address concepts such as confidentiality of income or assets.
There is a great deal of common misconceptions about prenuptial agreements. While the concept of a premarital agreement has been around for a long time, many people associate them with high profile relationships, which can be misleading for the average person. Primarily, there are two reasons for this: (1) a premarital agreement may provide the only opportunity to address issues of characterizing separate property, inheritance, or property passing from the estate of a deceased spouse; and (2) there are an infinite number of issues that may be addressed in a premarital agreement, without regard to whether they are appropriate only for wealthier individuals.
In Texas, prenuptial agreements (i.e . , premarital agreements) are governed by Chapter 4 of the Texas Family Code. Pursuant to Texas law, in order to be enforceable, a premarital agreement must be in writing and signed by both spouses. Additionally, unless it appears on the public record, it is not effective with regard to a third party, such as a bank. However, this is easily accomplished by filing it with a county clerk.
These agreements do not require consideration to be effective. In other words, it is just not necessary for a premarital agreement to afford any benefit to either spouse, although that is the general practice. However, some courts have held that unconscionable provisions within a premarital agreement are nevertheless enforceable if the agreement is entered in connection with the parties’ waiver of the right to go through a conventional marriage ceremony.
Under Texas law, a spouse must have an independent attorney to review the terms of a prenuptial agreement before it signing the contract. Originally, this requirement was designed to protect the untutored spouse from being manipulated by the other; however, many family law judges will simply look to see that the waiving spouse had an opportunity to consult with counsel. That means that the attorney need not review the contract directly, although he must be provided with a copy of the complete agreement prior to execution, attached as an exhibit.
Texas Prenuptial Agreements: Requirements
Under the Texas Family Code, in order for a valid prenuptial agreement to exist, it must:
- Be in writing
- Be signed by both document parties
- Enter into the contract voluntarily, and
- And if the agreement contains a waiver of the non-affected parties’ right to spousal support, a finding of adequate disclosure of the property is required.
Tex. Fam. Code 4.002 (2013).
The Advantages of a Prenuptial Agreement
When one or both of the parties to a prospective marriage in Texas have substantial assets, and especially when they have substantial separate assets, it pays to do a complete and accurate prenuptial agreement. A properly drafted prenuptial agreement will set out both the separate and the community property of the parties, including how the property will be characterized and managed, below are other benefits of having a prenuptial agreement: A lawyer can also advise you on whether and how your agreement can protect yourself and your children from any predatory actions of the prospective spouse, such as comingling separate and community property. A properly drafted prenuptial agreement will give you peace of mind prior to the marriage.
Myths about Prenuptial Agreements
Common Misconceptions About Texas Prenuptial Agreements
Believing a prenuptial agreement suspends or completely cuts off spousal support (alimony). In Texas, courts cannot consider a premarital agreement in determining whether an award of spousal maintenance ("alimony") is appropriate. Spousal maintenance depends on the current needs of the requesting spouse, and that person must ask for it in court. Only if the court awards the requesting spouse maintenance will the terms of a premarital agreement addressing the subject come into play. Not knowing that a prenup needs to be in writing and signed by both parties to be enforceable. Oral express or implied agreements may be enforceable under other states’ laws. However, Texas law requires prenuptial agreements to be written (which the term "prenuptial" implies), signed and stated to be in contemplation of divorce. Also, a prenuptial agreement must be in writing before the date of marriage, or else it is not enforceable. So setting up what you think is a premarital agreement after you’re already married? That’s not going to work in Texas.
Drafting a Prenuptial Agreement
In Texas, prenups typically have six major areas of development: a statement of family and separate property between the two parties, a statement of all debts and obligations of each party, a statement defining what is community and separate property, some testing of the parties to the agreement during the period prior to the signing during which the two parties essentially interrogate the other under oath, and then various provisions dealing with state and federal tax issues and the handling of children from the marriage post-marriage.
The negotiations are vital to the agreement as one may imagine . Fortunately, many parties, through the intervention of their lawyers, are able to deal with many difficult topics in advance of the wedding, thus avoiding the possibility of subterfuge or pressure in the period immediately preceding the signing of the document. Normally the parents of the parties decide to honor the valid prenup as a legal and valid document, meaning that the parents or third parties are not lenders to the marriage and will not interfere with its workings in any way.
Each party to a prenup should always have a lawyer review the contract to ensure that their best interests are preserved and that there is no duress, promise or other condition between the parties. Finally, the agreement must be fair, just and reasonable to each party.
Enforcement of Prenuptial Agreements in Texas
In Texas, prenuptial agreements are generally enforced as long as they are supported by consideration and entered into voluntarily. A valid prenuptial agreement requires the party to the agreement to actually execute the document prior to the marriage. To be enforceable, the agreement must not be the product of fraud, duress or overreaching, or unconscionability. This means that the agreement cannot leave one party so cash strapped that he or she would require government assistance to meet daily living expenses or would "never have a reasonable opportunity to acquire assets," or require the party to agree to a plan for the care of minor children that is harmful to the children or does not have any basis in the best interest of the children.
Even if a valid prenuptial agreement has been executed, it may be challenged if the party to the agreement did not receive independent legal counsel unless an express waiver of independent legal counsel signed by the party is shown in the agreement or presented to the court. Unless the agreement meets the statute of frauds requirement and is in writing, it is not enforceable.
How to Change or Cancel a Prenuptial Agreement
Texas law permits prenuptial/spousal agreements to be modified or possibly even nullified after the fact. This would take a new agreement signed by the parties. It’s important to recognize that a court will not modify or nullify a prenuptial agreement based on the parties’ agreement alone, as a manual of ideas or general contract terms would do. Instead, a court will only do so in furtherance of another legal right, such as a divorce or perhaps a partitioning or creation of a lien against a party’s property.
There are numerous situations in which the parties to a prenuptial agreement may wish to modify or nullify it. However, the obvious situation here is divorce, where one party has gone through a significant financial change and wishes the other party to share more fairly in the division of marital property. When a divorce action commences, the husband and wife may agree to dissolve the prenuptial agreement for a period of time, or even until the case resolves. Typically, a dissolution of a prenuptial agreement is part of the marital settlement agreement that eventually disposes of the entire case, including child custody, support and all aspects of marital property. By this time, circumstances have changed so much for both parties that a court essentially treats a dissolution of the prenuptial agreement as just another aspect of the parties’ final settlement.
Although a court will not merely modify a prenuptial agreement without a complete and independent reason for doing so, a court will, and cannot avoid , delineate how the prenuptial agreement should affect property division during trial of a divorce action. The court must make findings of fact and conclusions of law addressing, among other things, whether the prenuptial agreement is valid, applicable to the property being addressed, and/or whether the terms are unconscionable. If the prenuptial agreement has been modified, there must be clear evidence of that. Otherwise, the court must analyze the agreement as it stands at the time of making the property division. In that case, the court must make a finding that the property division accords with the prenuptial agreement and constitutes a just and right division of community property. Consistent with a final decree that modifies a negotiated prenuptial agreement, there should be a specific triggering date for the property provisions to take effect.
When the prenuptial agreement is generally valid and links the final property division with its terms, each party may have obligations to account for pre-existing separate property. A party may not have a right to a portion of that separate property under any circumstances, but rather to a recourse against the other spouse in the division of community property that accounts for it in some proportion. Finally, when one party violates a provision of the agreement or has substantially changed circumstances that alter the property division significantly, a court should make a finding reflecting enforcement of the agreement or the impact of any changed circumstances on the agreement.