Many clients need counsel prior to marriage, to understand their property rights during marriage and what will happen to their property in the event of a divorce. Parties about to marry should carefully weigh the effect their marriage will have on property or businesses owned by them prior to the marriage, and consider counsel and advice about how to protect that property for the benefit of children born of a prior marriage or simply to ensure that they will, in the event of a divorce, be able to preserve what they had coming into the marriage. A premarital agreement can be the most effective way to achieve those goals.
Texas Family Code Section 4.003(a) provides that parties to a premarital agreement may contract with respect to the following:
(a) 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;
(b) 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;
(c) The disposition of property on separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;
(d) The modification or elimination of spousal support;
(e) The making of a will, trust, or other arrangement to carry out the provisions of the agreement;
(f) The ownership rights in and disposition of the death benefit from a life insurance policy;
(g) The choice of law governing the construction of the agreement; and
(h) Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.
In other words, parties to a premarital agreement can decide, prior to marriage, what the character of their property will be upon divorce or death, who will get it upon divorce or death, and whether either spouse will get spousal support. Parties can decide to keep certain things separate (like income from separate property they brought into the marriage) and still share their earnings as community property, or they can agree to keep everything separate so that no community estate is created at all.
For an article written by Parter Judith Bryant about factors to consider when deciding if you need a premarital agreement, click here.
If drafted properly, premarital agreements are presumptively enforceable in Texas, and very difficult to challenge. They must be drafted properly, however, and contain required elements such as a fair and reasonable financial disclosure and a waiver of disclosure beyond what has been provided.
Married persons can also agree to change the character of their property and partition or divide it during marriage. Married parties can agree to turn community property into separate property, or turn separate property into community property. Like premarital agreements, there are specific statutory requirements governing the enforceability of such contracts, and legal advice and counsel is highly recommended for both parties.
None of these agreements absolutely guarantee that property disposition will not be disputed. Sometimes the agreement is challenged as a way to gain leverage by a party during the disposal of assets. But generally speaking, pre- and post-nuptial agreements, especially if properly crafted, stand up in court.