When to Have a Premarital Agreement ("Prenup") in Texas

Whether or not you need to have a premarital agreement can be a difficult decision. It can also be a sensitive topic to discuss with your loved one. Here are some helpful guidance and information.

What Are They?

Premarital agreements are also known as "Prenuptial Agreements" or "Prenups".

Who Usually Uses Them?

These agreements are usually used in situations of second (or third, etc.) marriages, or when the financial or personal picture of the two partners is (or will be) unequal in some way, such as when there is a difference between:

-assets owned
-debts owed
-income earning ability (current and future)
-anticipated inheritance
-children from a prior relationship

Why Are They Used?

The reason that these agreements are used are normally to protect someone or something. For example:

-to protect the new spouse from current or old debt owed by the other spouse
-to protect assets of a spouse so that they may be passed down to children from a prior relationship
-to keep a family business situation "in the family" (blood relatives)

Why the Negativity?

In books and movies, the prenup is usually shown as something that is used to protect against an unscrupulous "gold digger", especially a younger person who is marrying a much older one. Although that makes a good story, it is unfortunate that the common perception of the premarital agreement is generally negative. Because of that negative association, many people who could benefit from this financial planning tool do not use it for fear of insulting their partner.

What Does Texas Law Say?

Both separate property and marital (or community) property is defined under the Texas Constitution. All income earned or property obtained after marriage is generally community property. The exceptions to that are: property gained by gift, inheritance, or certain parts of a personal injury settlement or award. These exceptions (plus property that is owned before the marriage) are separate property. But, if a couple signs a valid contract, they can change this. As you can imagine, there may be times when it is a "grey area" and unclear as to whether something is separate property or community property. The Prenup attempts to remove doubt, and make it clear for the present and future.

Example:

Terry is about to marry Robin. It is a second marriage for both of them. Terry has a lot of debt and is struggling to pay the debt, a little at a time, but creditors are getting impatient. Robin, on the other hand works in Robin's family business, which is making a decent income. Robin also has children from a prior marriage, one of whom also works in the family business. Both parties agree that it would be best for their financial plan, for the family business, and for their families, if their debts and assets were kept separate, even after marriage. They welcome the chance to write their own plan for their post marriage assets, and to clearly define what each person is bringing into the marriage, to prevent any misunderstanding later.

This example combines several of the reasons for a premarital agreement, but in real life, a situation doesn't have to be this complicated in order to benefit. For some people, it may simply be a personal belief that it is the right thing to do, or the specificity may bring peace of mind.

Are You Interested?

If you think that you may be interested in obtaining a premarital agreement, contact an attorney in advance. Because these agreements are so specific, they do take some time to draft. From a practical and emotional viewpoint, this is not something that you want to rush at the last minute. You will want to provide accurate information to your lawyer, and also have time to review the drafts and discuss with your loved one.

Did You Miss your Chance?

If you have already gotten married, but wish that you would have gotten a prenup first, there may be a solution for you. In some cases, an agreement drafted and signed after the marriage (a "postnuptial agreement" or "partitioning agreement") may be appropriate as part of a financial plan.

By Kalish Law Office, Texas

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