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Premarital or Prenuptial Agreements

Texas recognizes and enforces premarital or prenuptial agreements between prospective spouses who intend to avoid any uncertainties regarding property interests as the conclusion of their marriage whether by death or divorce. The relevant provisions of the Texas Family Code are reproduced below.

Sec. 4.001. Definitions:

(1) “Premarital agreement” means an agreement between prospective spouses made in contemplation of marriage and to be effective on marriage.

(2) “Property” means an interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings.

Sec. 4.002. FORMALITIES.

A premarital agreement must be in writing and signed by both parties. The agreement is enforceable without consideration.

Sec. 4.003. CONTENT.

(a) The parties to a premarital agreement may contract with respect to:

(1) 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;

(2) 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;

(3) the disposition of property on separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;

(4) the modification or elimination of spousal support;

(5) the making of a will, trust, or other arrangement to carry out the provisions of the agreement;

(6) the ownership rights in and disposition of the death benefit from a life insurance policy;

(7) the choice of law governing the construction of the agreement; and

(8) any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.

(b) The right of a child to support may not be adversely affected by a premarital agreement.

Sec. 4.005. AMENDMENT OR REVOCATION.

After marriage, a premarital agreement may be amended or revoked only by a written agreement signed by the parties. The amended agreement or the revocation is enforceable without consideration.

Sec. 4.006. ENFORCEMENT.

(a) A premarital agreement is not enforceable if the party against whom enforcement is requested proves that:

(1) the party did not sign the agreement voluntarily; or

(2) the agreement was unconscionable when it was signed and, before signing the agreement, that party:

(A) was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;

(B) did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and

(C) did not have, or reasonably could not have had, adequate knowledge of the property or financial obligations of the other party.

(b) An issue of unconscionability of a premarital agreement shall be decided by the court as a matter of law.

(c) The remedies and defenses in this section are the exclusive remedies or defenses, including common law remedies or defenses.

No one marries with the intention of divorcing. However, every marriage does eventually end, by death if nothing else. A prenuptial or premarital agreement can reduce the uncertainty and complexity of property issues and avoid legal proceedings with heirs and third parties. It will not govern child custody or child support obligations.

Parties contemplating marriage should consider the scope and nature of property they own prior to marriage along with their anticipated career paths and retirement plans to determine whether they would benefit from executing a premarital agreement. If presented with a proposed agreement, consultation with an attorney is strongly recommended.

At Bailey & Galyen, our attorneys will provide a free initial consultation to discuss the benefits and nature of a premarital agreement. We can assist prospective spouses in drafting or negotiating such instruments. Schedule a free appointment at any of the many convenient Bailey & Galyen offices. Remember, these are complex and important documents and should be prepared well in advance of the date of marriage.

R. Keith Spencer – Board Certified Family Law Attorney

5 Tips on Planning a Prenuptial Agreement

Source: msnbc.com

It may be unromantic, but a prenup should at least be considered before saying ‘I do’

By Catherine New

“No prenup!” headlines gasped last year as Kelsey and Camille Grammer’s divorce went public. The star of Frasier reportedly is paying $50 million — serious money even by Hollywood standards — in the divorce settlement with his wife of 13 years.

Other celebrities take a more pragmatic attitude to love. Katie Holmes and Tom Cruise’s 2006 marriage agreement included a contract paying Holmes $3 million for each year they’re married, up to $33 million for 11 years of wedded bliss, in addition to a sizable house, reports said. After that, California law entitles her to half of Tom’s money should the marriage end.

For the rest of us, prenuptial agreements are considerably less high stakes —at least in strictly numerical terms. A few tens of thousands of dollars may mean more to the average couple than a million to Tom and Katie. And as unromantic as a prenup is, brides and grooms getting married this year — no matter what their net worths — should consider whether a premarital agreement is something they want, or need.

A quick financial inventory of you and your future spouse will reveal if you’re candidates for one. Typically checklists focus on what you do have (property, inheritance, business, earning potential). Just as important is what you don’t — like positive net worth. If you don’t own or owe much, and neither does your partner, then you probably don’t need a premarital contract. But with the average age of first-time brides and grooms increasing in the United States —28 for men and 26 for women today — couples are bringing more liabilities, including credit card debt, student loans and even mortgage debt into first marriages.

What are you really bringing to the altar?

States’ laws vary on marriage property. In most cases, what you brought into the marriage — such as title on a property or $10,000 in credit-card debt — remains yours, for better and for worse. However, if you and your spouse combine credit card accounts or add the new partner’s name to a property title, the responsibility becomes shared.

Other issues are affected as soon as you say “I do,” and the impact of monthly payments on a household budget or a couple’s ability to qualify for a home loan can cause financial tension. As couples combine their finances, make shared payments, or jointly fund big expenditures like home improvements, the lines between liability and ownership blur.

A prenuptial agreement can troubleshoot some of these issues in advance. Even as the stigma of prenups lingers, they are becoming more common, says Evan Sussman, a family law attorney who represents clients in Beverly Hills, Calif. In second marriages, they are more routine — around 20 percent of couples get them — but for first-time weddings, that number is still very low: 3 percent in 2010, up from 1 percent in 2002, according to a survey reported in USA Today.

Don’t Shy Away From Talking About Money

Financial advisers and family-law attorneys both agree that emotional issues are the biggest hurdle to broaching the topic of a prenup — and questions regarding money and marriage in general. Finances and feelings are like peanut butter and jelly: They seem to always to be stuck together. The dreaded phrase “I want to get a prenup” can push buttons of fear, anger and denial.

“That is the point couples get into therapy,” says Susan Pease Gadoua, a licensed therapist based in San Rafael, Calif., who specializes in divorce. “The man or woman had a realization and it has made them question if they are with the right person.” Last fall, The New York Times profiled a couple who ended their engagement after the fiancé learned his wife-to-be owed $170,000 in student loans.

Candace Bahr, a certified estate adviser in San Diego, says talking about money is part of the commitment of getting married.

“Let’s say you are saver, and you marry someone who is a lot of fun, but you have no idea where the money is coming from. You may be taking on their debt over time, and that can create a rift,” Bahr says. “As uncomfortable it is, talk to each other about what each of you has.”

“Bahr is concerned that too many women turn a blind eye to finances when their emotions are heightened.”I am still shocked that many women think that someone is going to come and rescue them,” she says. “A Prince Charming can fall off his horse. Even though you are in love, you need stand on two feet.”

Five tips for planning a prenup

1. Do it long before the wedding. Family-law attorney Sussman advises getting the agreement as early as six months to a year before a wedding date to ensure that both parties have had time to review it. Last-minute contracts are harder to enforce.

2. Step out of your emotions. The emotional roller coaster of falling in love and wedding planning can distort reality. Getting objective feedback can help separate what is real and what imagined. “My husband likes to joke that we lose 100 IQ points when we are falling in love,” says therapist Gadoua. “It’s called emotional flooding and we can learn to manage those emotions.”

3. Use your taxes as an excuse to talk about money. “Right now we are in tax season, so it’s a great time to look at finances,” says Bahr. “Look at each other’s returns as a way into the conversation. It can feel threatening, but it is important to have the uncomfortable conversation now, rather than later in a time of crisis.”

4. Make your agreement reasonable and enforceable. If you are preparing a prenuptial contract, establish your goals and don’t include fault clauses (like “If you cheat on me, you owe me $1 million”), advises Sussman. The goal is to have a contract that is enforceable and provide each spouse with a sense of exactly what they are getting if the marriage ends.

5. Research your state’s law regarding marriage and property. Marriage property laws are different from state to state. You can find more information about lawyers specializing in prenuptial agreements at the American Academy of Matrimonial Lawyers.