The family law attorneys of Navarrete Schwartz, P.C. in Midland, Texas have proudly served clients throughout West Texas for nearly a decade. One of the topics we are frequently asked about by couples just starting off their life together is whether prenuptial agreements are a good idea.
While such agreements used to be thought of as unromantic or pessimistic, these days, with a significant percentage of marriages ending in divorce and blended families extremely common, prenuptial agreements are more likely to be considered simply practical, a reasonable way of protecting both parties in case the future does not turn out as expected.
What Is a Prenup?
A prenuptial agreement, often referred to as a prenup, is a legal contract entered into by couples before marriage that outlines how assets, debts, and other financial matters will be managed in the event of divorce or the death of one of the spouses. It serves as a proactive measure to define each spouse’s rights and responsibilities, designed to prevent potential conflicts in the future.
What Issues Does a Prenup Address?
When a prenup is well-crafted by an experienced lawyer who works closely with the couple, the document will resolve potential issues before they ever become conflicts.
Property Division
In Texas, without a prenuptial agreement, property acquired during marriage is generally considered community property, meaning it is owned equally by both spouses. A prenup can specify how property will be divided in case of divorce, allowing couples to retain control over their separate property and define what constitutes marital property.
For example, a prenup can specify that the couple’s home, already owned by one spouse before their marriage, is separate property, not marital property. This means that if the couple divorces, the home will revert to the spouse who entered the marriage as its rightful owner. In most cases, because the couple has discussed and agreed to this stipulation, the stress of contentious litigation will be avoided.
Spousal Support (Alimony)
Prenuptial agreements can also outline whether one spouse will pay spousal support (alimony) to the other in the event of divorce, and if so, specify the amount and duration of such support. This clause in a prenup will provide clarity and will be difficult for either party to contradict since both signatures will be on the document.
Children from Previous Marriages
Because a prenup is often used to lay the groundwork for a peaceful second marriage, another subject that is frequently covered is how children of previous relationships will inherit from this new couple. Decisions around this issue will usually vary according to how completely the families have blended.
In many cases, the latter depends on the ages of the children. While young children may be completely embraced by their stepparent, grown children may continue to be thought of as outsiders. In any case, it is typically helpful for the couple to talk openly about their expectations and come to an agreement so that it will not become a bone of contention if the marital ties fray.
Payment of Debts
Prenuptial agreements can determine which spouse will be responsible for specific debts incurred before or during the marriage, protecting each spouse from assuming the other’s financial liabilities. In this context, it can make a big difference how the existing debts of one spouse were incurred. For instance, an educational cost or paying a high surgical bill may be more acceptable as a shared expense than a large gambling debt.
Asset Protection
Individuals entering marriage with significant assets, such as real estate, investments, or business interests, can use a prenup to safeguard those assets from being divided in ways that may not align with their intentions. It is possible, for instance, that one spouse may have promosed a piece of land or a valuable vehicle to a child from a previous relationship before ever meeting the current spouse.
It is important to note that the state of Texas will only accept property acquired before the present marriage as a separate asset; anything purchased during the current marriage must be divided equally between the two spouses.
Business Ownership
For business owners, a prenup can establish how business assets, interests, and profits will be managed in the event of divorce, ensuring continuity and stability of the business, its employees, and perhaps its shareholders.
Enforcing Prenups in Texas
In Texas, prenuptial agreements are generally enforceable if they meet the legal requirements below:
- The agreement must be in writing and signed by both parties voluntarily.
- Both parties must provide a fair and reasonable disclosure of their assets
and their debts.
- The terms of the agreement must not be unconscionable (extremely unfair)
at the time of signing, for example, one spouse may not agree to be left destitute.
- The agreement must not be obtained through fraud, duress, or coercion.
- It is crucial for each party to have their own legal representation when negotiating and executing a prenup to ensure that their rights and interests are adequately protected.
Although the Texas Family Code does not require witnesses or notarization of a prenuptial agreement, our estate planning attorneys recommend having both since you want the document you have worked to create and accept to end up being legally binding.
How a Prenup Can Have a Positive Impact on the Marriage
Contrary to popular belief, discussing and creating a prenuptial agreement can strengthen a couple’s communication and understanding of each other’s financial goals and expectations. It encourages an open dialogue about finances, future plans, and potential contingencies, fostering mutual trust and transparency.
Contact Navarrete Schwartz Today for a Frank and Friendly Discussion of Prenuptial Agreements
At Navarrete Schwartz, we are committed to honest, trusting communication and we hope you and your beloved are, too. Too many couples, under the guise of being “too much in love” allow themselves to be starry-eyed and never speak honestly about finances.
This is unfortunate since misunderstandings and conflicting views about money are often the reason marriages drift onto the rocks. Don’t be afraid to discuss important matters with the person closest to you. If you are think a prenuptial agreement may be right for the two of you, give our skilled, caring family law attorneys a call so we consider your best options.