Do You Need A Prenuptial Or Postnuptial Agreement?
A prenuptial agreement, also called a premarital agreement or a prenup for short, allows a couple to set the terms of property rights for their marriage. There are a lot of misconceptions about what prenuptial agreements are and who uses them.
What Can A Prenup Do For Me?
While wealthy individuals do often use prenups, these agreements have far more uses than simply protecting the assets of a wealthy individual. Prenups can be used to:
- Protect one party’s assets
- Protect a party from assuming the debts of the other party
- Determine how property will be passed upon death
- Clarify financial rights and responsibilities during a marriage
- Avoid long, costly disputes in case of divorce
What Happens If You Don’t Get A Prenuptial Agreement
Absent a prenup, Texas has numerous laws that determine how property is handled during marriage and after marriage. Generally, your spouse is entitled to:
- Share and receive ownership of property acquired during the marriage
- Share in any debts acquired during the marriage
- Share responsibilities in managing property acquired during the marriage.
Depending on the situation, there may be valid reasons to deviate from Texas laws. For instance, if you have children from a previous marriage, upon your death you may want your property to pass to your children rather than transfer to your current spouse. The advantage of prenuptial agreements is that you can craft them to meet your particular needs.
How To Create An Enforceable Prenuptial Agreement
Originally, prenuptial agreements were heavily scrutinized by judges because they were traditionally used to protect a wealthy individual from a spouse with substantially less financial means. The fear was that the poorer spouse was being coerced to sign, and that such agreements encouraged divorce.
Today, however, every state allows prenuptial agreements, and divorce and remarriages are more widely accepted. In addition, women are considered to have a more equal place in society and require less protection from courts. As a result, most prenups will be upheld as valid.
The Court’s Role In Prenups
Courts do, however, still analyze prenups with a careful eye so it pays to do it right. Create a prenup that is clear, understandable and justifiable. If a judge decides that your prenup does not comply with the applicable laws, the agreement will be set aside.
Although it is perfectly fine to negotiate and create a prenup yourself, both parties should get the prenup reviewed by their own, separate attorneys who can advise them on their rights and review the prenup to ensure it complies with state law.
Is A Prenup Right For You?
Whether to enter into a prenuptial agreement or not is a very personal decision. Each individual and couple is unique. Therefore, you should base your decision on your own unique circumstances. Review the pros and cons of prenuptial agreements and then read through the steps below to help you decide if a prenuptial agreement is right for you.
Pros Of A Prenuptial Agreement
Some of the benefits of a prenuptial agreement include:
- Documenting each spouse’s separate property to protect it as separate property
- Supporting your estate plan and avoiding court involvement to decide property distribution
- Distinguishing between what is marital and what is community property
- Documenting and detailing any special arrangements between you and your spouse
- Avoiding extended court proceedings, which result in the time of expensive divorce attorneys
- Reducing conflicts during a divorce
- Establishing procedures and rules for issues that may arise in the future
- Assigning debt, such as credit cards, school loans and mortgages, to the appropriate spouse to avoid both spouses sharing debt liability
Many people fear that discussing these matters, or even bringing up the word prenuptial agreement, will cause turmoil in their relationship. Oftentimes, just the opposite is true. One of the main irreconcilable differences leading to divorce is finances. Talking to your spouse ahead of time regarding finances, property and marital asset management can avoid a lot of these disagreements. You both can get on the same page in the beginning so that the issue does not pop up and cause an argument later. Furthermore, discussing these issues nurtures healthy communication. Even if you and your spouse decide a prenup is not for you, discussing the mentioned issues is a very good idea.
Cons To A Prenuptial Agreement
Although nuptial agreements carry a lot of benefits, there are some downsides that you should consider before creating one.
It’s not romantic. If you fear that discussing a property and finance distribution and the possibility of a separation or divorce will dull your relationship in some way, then a prenup may not be right for you.
The timing may not be right. The beginnings of a marriage are typically a time of marital bliss, when many of the issues involved in a prenup are not even a thought. You may be at a point in your lives where you don’t yet know the answers to some of the issues in a prenup. The truth is these issues will come up eventually, whether during the marriage or if you divorce. If you think the timing of discussing these issues is bad, or you just don’t have a basis for formulating decisions or answering questions, then the timing may not be right for you.
You can always wait until after you are married, when you may know a little more about the management of your household. An agreement made after you’re married is called a “postnup.” These are enforceable, but be sure to consult an attorney before creating one, because the legalities and enforcement of postnups do vary from prenups.
There may be laws that cover all of the issues you want to address, without a prenup. Texas has laws that determine how property is distributed in the case of divorce. These laws may be perfectly ideal for you. If so, there is no need of going through the trouble of creating a prenuptial agreement. On the other hand, there may be certain issues in your situation that are not covered by the law, and would be better clarified in a prenup.
A prenup cannot include child support or child custody issues. The court has the final say in calculating child support. The court determines child support based on a “best interest of the child” standard, with several factors at play. A court would never uphold a provision of a prenuptial agreement that dealt with child support.
A prenup cannot include personal preferences such as who has what chores, where to spend the holidays or what school the children should attend. Prenuptial agreements are designed to address financially based issues.
Property Agreements Created After Marriage — Marital Property Agreements Or “Post-nups”
Post-nuptial agreements allow spouses to accomplish many of the same goals as prenuptial agreements, but are created during the marriage. These sorts of agreements are sometimes used by spouses to partition and exchange community property into separate property or, conversely, separate property into community property. Spouses can also settle property issues through a post-nuptial agreement instead of a separation agreement.
Validity Of Texas Marital Agreements
Texas courts will generally uphold post-nuptial agreements so long as:
- The agreement is in writing.
- The agreement has been signed by both parties.
- Both parties have the legal capacity to enter into the agreement.
- The agreement was entered into voluntarily by both parties.
- There was full and fair disclosure of all assets and liabilities by both parties (unless there was a valid signed waiver).
- The agreement is neither unconscionable nor in violation of public policy or other state law.
Generally, marital agreements are deemed to be voluntary so long as the parties knew what they were signing. They may be amended or revoked at any time, so long as the changes or revocation are in writing and signed by both parties.
Don’t Rely On A Cookie Cutter Form
Fill-in-the-blank marital agreements are available from a variety of sources, but using these forms may do more harm than good.
Marital agreements work best when couples tailor them to their individual circumstances. Form agreements cannot possibly anticipate every couple’s needs and, as a result, they may lack language necessary to protect your interests. Besides offering individual attention, an attorney can both ensure that the agreement is enforceable under Texas law and can inform you of your rights.