Premarital agreements are contracts executed by fiancés, which become effective upon marriage. Their purpose is to clearly define the rights and property of spouses in the event of death or divorce. They are intended to prevent unnecessary litigation and unpleasantness. However, broaching the subject of premarital agreements is frequently difficult for people planning their weddings. Just like executing a will requires acknowledgement of mortality, a “prenup” admits that the marriage could end.
Generally speaking, property owned by the parties prior to the marriage is separate property and remains separate property thereafter. Property acquired during the marriage (except by inheritance) is community property that can be divided by the courts at the end of the marriage. Wages and retirement earned during the marriage are generally community property.
A 1948 constitutional amendment authorized Texas spouses to partition and exchange separate and community property. In 1980, another amendment authorized spouses to agree that income from separate property would remain separate property. Both of these provisions are common in premarital agreements today. Another popular provision provides that no community estate will be formed and the parties’ wages and other property will forever remain separate property.
Texas requires that all premarital agreements be in writing and signed by both parties. The terms of an agreement cannot be grossly unfair or unconscionable, and both parties must provide adequate disclosure of their assets and liabilities. The document must be signed by the parties voluntarily and without undue duress. Presenting your intended with a prenuptial agreement at the altar may render it unenforceable.
Only about three percent of first-time spouses execute prenuptial agreements, compared to about 20 percent of second-time spouses. A prenuptial agreement is vastly more important in cases where the parties own significant property prior to the marriage.
Parties contemplating marriage are encouraged to engage in candid and serious discussions about their finances and debts. It is not inappropriate to discuss your financial plans with your intended life partner. A Bailey & Galyen attorney will provide you with a free consultation to discuss prenuptial agreements and whether one would be appropriate in your circumstances. Arrange your free appointment as far in advance of the wedding as possible.