In light of all the negative new stories in 2020 and the statistics about the rise in divorce rates, it does not hurt to point out that there is a plus side to the pandemic: more requests for premarital agreements means more people are choosing to get married. Whether through chosen quarantine in the early stages of a relationship or slowly getting to know a new love through FaceTime, 2020 has allowed many people to reevaluate their lives, wants, needs. While it is true there is an uptick in divorces and custody disputes related to the pandemic, there is also a rise in requests for Premarital Agreements. So many people have found love and happiness during the pandemic. Family law is not always about ending relationships and fighting over children and assets. Sometimes it helps to point out the positives.
What Is Premarital Agreement?
A premarital agreement is a written contract entered into by two individuals prior to a marriage or civil union to solidify property and financials rights and division of that property upon the termination of the marriage by divorce or death. A premarital agreement is valid in Texas if it is in writing and signed by both parties. In addition, the parties must agree that they have each disclosed their assets and have waived any right to further disclosure prior to signing the premarital agreement. While it is not required, each individual should have their own independent attorney review the premarital agreement prior to signing.
Why do I need a Premarital Agreement?
There are many reasons couples choose to execute a premarital agreement but some of the most frequent reasons to enter an agreement prior to marriage are:
- one or both spouses plan to bring property into the marriage
- One spouse owns a thriving business or has recently invested in a small business they expect to profit from in the future
- One spouse has significant debts coming into the marriage (such as student loans)
- one spouse is much wealthier than the other
- The marriage is not the first marriage for one or both spouses
- one or both spouses have children from prior relationships
- One or both spouses expect to receive an inheritance they want to protect in the future (income from separate property is in most cases is considered community property)
Texas Community Property Laws.
Texas is one of the nine community property states. What that means in Texas is that property acquired during the marriage is presumed to be community property and thus owned by both spouses regardless of how the property is titled. In the event of a divorce, community property is subject to a just and right division between the parties. In a premarital agreement, spouses can contract and agree to alter the characterization of their assets, debts and liabilities. Some spouses chose not to create a community estate at all. Other people choose to limit the creation of community property to only jointly titled assets. There are a myriad of options for couples to reach agreements regarding the characterization of property and the division of property in the event of a divorce.
What About Children?
A premarital agreement can address provisions for children from prior marriages such as setting aside certain assets or funds for their benefit. However, Texas law does not allow parties to address child support or child custody for children of the marriage in a premarital agreement.
Couples can reach agreements regarding the payment of alimony or a lump sum payment in the event of the bad acts of one spouse. For example, some couples choose to agree that in the event of adultery, the spouse committing the bad act will owe the other spouse a large lump sum payment as part of the divorce.
Does It Matter If The Marriage Will Not Be In Texas?
Generally, no. If a couple chooses to get married in another state or country but intends to reside in Texas following the marriage then a Texas premarital agreement can be executed. In order for Texas law to apply to a premarital agreement there should generally be some tie to Texas (such as one party resides in Texas or the parties intend to reside in Texas).
Can a Premarital Agreement Be Set Aside?
A premarital agreement in Texas can be set aside only under very limited circumstances. Generally, it is the public policy of the State of Texas favoring the freedom of contract so most premarital agreements are found to be valid and enforceable. In order to set aside a premarital agreement, one party must prove that either the agreement was not signed voluntarily or it was unconscionable. Examples of an “unconscionable” agreement are determined on a very fact specific, case by case basis. Some examples include but are not limited to: (1) one of the spouses failed to provide the other spouse with a fair and reasonable disclosure of all financial obligations and property owned prior to marriage; (2) one of the spouses did not voluntarily and expressly waive, in writing, any right to said disclosure and (3) one of the spouses did not, or could not reasonably have had, adequate knowledge of the other spouse’s property interests and financial obligations.