Texas premarital agreements: powerful tools to manage property rights

A prenuptial agreement may the appropriate way to sort out property and debt issues between future spouses.

Estate planning and asset management sometimes goes further than just writing a will. When a Texan approaches marriage, he or she should consider whether executing a valid premarital agreement might be a smart way to predetermine property rights during marriage, upon divorce or separation, or at death.

Texas is a community property state, which means that all property acquired during a marriage, including wages, is classified either as part of the shared community to be equally divided at divorce, or as separate property owned by just one spouse. Generally, separate property is either preowned by one spouse before marriage or received through a personal gift or inheritance. Income generated during the marriage by separate property, however, becomes community property.

It follows naturally then that in Texas one major function of a premarital agreement, also called a prenuptial agreement or prenup for short, is to allow the spouses to change the characterization of community or separate property. For example, two people who are already independently wealthy may want to keep all property and income gained during the marriage separately owned depending on who earned or purchased an asset, creating no community estate.

Persons contemplating marriage who may seriously consider prenups include:

  • Someone with children from an earlier relationship whom the future spouse wants to be sure receives money or certain personal property or real estate at divorce or death
  • A future spouse who owns part of a family business and wants to be certain the enterprise stays entirely within his or her family of origin
  • A person marrying someone who tends to spend money too freely, has a gambling problem or engages in risky business ventures from which the person wants to insure personal protection from resulting debts and liabilities of the other
  • Someone who wants to provide for the care of a family member who is disabled or elderly
  • A person who wants to minimize tax liability resulting from potential future events
  • A future spouse who wants to predetermine the terms of property division or alimony in case of divorce
  • A person who wants to preassign responsibility for future debts and liabilities
  • And others

Texas law controlling premarital agreements can be complex, depending on the circumstances, so legal counsel should be consulted for direction. Here are some of the basics:

  • A prenup takes effect at marriage.
  • It must be in writing and signed by both spouses.
  • The agreement may govern property rights broadly, property disposition at the occurrence or nonoccurrence of any event, terms or waiver of spousal support or alimony, execution of another legal document to carry out the terms of the prenup, life insurance benefits, and choice of law (for example, that of Texas or another state, or of another country) should the agreement need interpretation.
  • The agreement may deal with any other matter except child support, or anything that violates either public policy or a statute that imposes a criminal penalty.
  • A prenup may be amended or revoked after marriage by a written agreement signed by both parties.
  • A premarital agreement is unenforceable if a party did not sign it voluntarily, or it was unconscionable (shockingly unfair) plus a party did not provide adequate disclosure of assets and liabilities (or the other party did not adequately waive the right to that information).

From their office in Houston, the estate planning attorneys of Hayes & Wilson, PLLC, advise clients about premarital agreements as well as postmarital and cohabitation agreements, including drafting and review.