Texas Prenuptial and Premarital Agreements

Basic Information from a Houston Prenuptial Lawyer

A premarital or prenuptial agreement is a contract between prospective spouses made in contemplation of marriage and to be effective on marriage. Premarital or prenuptial agreements may contain, among other things, contract provisions regarding the following items:

  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’s 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.

Photo Premarital AgreementTraditionally, high net worth individuals or earners that marry an individual without little property or low income may consider a premarital agreement. However, with the changing nature of our society, the number of individuals who enter into premarital agreements broadened dramatically.

Who Needs a Prenup?

It is not uncommon to find couples marrying in their 40’s, 50’s or 60’s. Many of these couples divorced before or have children from prior marriages. However, these couple want to provide a degree of certainty regarding their financial future together, protect their estates from each other’s children, and to lay out a financial road map for their future. Also, business owners who have significant real property, income property, boats, yachts, airplanes, or who own sole proprietorships, partnerships, small businesses, or corporations, or professional associations frequently wish to enter into a premarital agreement that provides not only for the operation and management, but also provides certainty upon their death or divorce.

Another growing trend in entering into premarital agreements is when two young professionals decide to marry. These are usually very accomplished people who wish to maintain their professional identity and separate professional practices. However, they also want to share life together. Thus, in order to accomplish this, they enter into premarital agreements.

In other scenarios people acquired substantial savings, 401k plans, 403b plans, defined retirement plans, profit sharing plans, employee stock ownership plans, or other employee benefits. They then wish to keep these separate from each other. Additionally, people who inherited property or received gifts, or who expect to inherit property or gifts, frequently wish to make provisions in a premarital agreement to protect their inheritance and gifts.

How Do I Make Sure my Prenup is Legal?

In Texas, in order to have a valid premarital agreement, it must be in writing and signed by both parties. While it is not required, it is generally recommended that the premarital agreement also be notarized. Frequently, premarital agreements are recorded in the Official Real Property records in the county where the parties reside, or where they may own property.

Amendment or Revocation of a Premarital Agreement

After marriage, you can amend or revoke a premarital agreement. However, you can do so only if both parties sign a written agreement to that effect.

Validity of a Premarital Agreement

In Texas a premarital agreement will be enforceable unless a party can prove that:

  1. the parties did not sign the agreement voluntarily; or
  2. the agreement was unconscionable when it was signed and before signing the agreement, that party:
    1. was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;
    2. 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
    3. did not have, or reasonably could not have had, adequate knowledge of the property or financial obligations of the other party.

Regarding premarital agreements, there are prevailing trends in Texas Family Law. This includes that if a person knows that he or she is signing a premarital agreement, he or she is deemed to have voluntarily entered into the agreement. This is the case even if he or she felt pressure to enter into the agreement because of his or her particular circumstances. Additionally, even if a premarital agreement is disproportionate, the courts tend to hold that it is still a valid agreement.

Preparation of a Premarital Agreement

Frequently people try to prepare their own premarital agreement, often using forms from the internet.  As a Houston premarital lawyer, I can tell you that this is probably the most foolish thing a person can do. This person runs the risk of preparing an agreement that does not accomplish his or her objectives. Furthermore, the probability of a successful challenge to a premarital agreement goes up dramatically when people try to do it themselves.

As I tell people, I am very smart, and there is absolutely no doubt in my mind that I can do appendectomies. Unfortunately, probably the first fifteen appendectomies will result in death, because of the learning curve. The last thing a couple wants to do is to use a premarital agreement as a learning curve experience. Furthermore, frequently when people do their own premarital agreements, upon death or divorce, it creates a mess. The cost to then untangle the mess frequently far exceeds the cost of having a properly prepared premarital agreement.

Hiring Attorneys to Prepare a Premarital Agreement

Can both parties use one Houston prenuptial agreement lawyer to prepare a premarital agreement? In my professional opinion, no. One attorney cannot represent both parties in preparing a premarital agreement. Each party should have his or her own attorney. Each attorney reviews the schedules, assets, the liabilities, the agreement and explains how the agreement affects his or her respective rights.

Furthermore, I generally include an acknowledgment by the attorney that he or she explained the agreement to his or her client, that his or her client is voluntarily signing the agreement, his or her client expressly waives any right of disclosure of the property and financial obligations of the other party beyond the disclosure provided for in the agreement, and that the party understands how the agreement will effect his or her rights.

Children of the Marriage

Occasionally, parties want to insert something in a premarital agreement about future children, custody or support. While such provisions can be very beneficial to the parties and may provide the court with guidance and direction, these provisions do not bind the court. Courts have a duty to decide child custody, visitation rights, and child support based upon the best interest of the child. In other words, if the court believes that any provision of the premarital agreement adversely effects child support, custody or visitation, and is not in the best interest of the child, than the court is simply going to disregard that provision of the premarital agreement. The court will then decide the case based upon what it believes to be best for the child.

Preparing for a Premarital Agreement

Before meeting with a Houston prenuptial lawyer, you should prepare some basic information for the attorney. You will need biographical information such as your complete name, date of birth, social security number, drivers license number, addresses, employers, educational experience, business or professional experience, children’s names, sex, date of birth, etc.. You also need the same information for your spouse. Then, you should prepare a summary list of the assets and liabilities for yourself and for your spouse. This includes information regarding 401k accounts, 403b accounts, IRA’s pension plans, stock options, employee stock options, employee stock plans, annuities, life insurance and trusts. Identify any inheritance or gifts that you received in the past, and any you expect to receive in the future. Additionally, you should write out any questions in advance that may be particular to your case. This may include questions about a special needs child from a former marriage, a particular business arrangement, family business, etc.

You should schedule an appointment with the attorney as soon as you decide to marry. This will give the attorney an opportunity to fully explore the particulars of your individual situation. He or she can then draft an agreement that meets your specific needs. Then, your attorney forwards it to your spouse’s attorney to make any mutually agreed revisions. I prefer to have the premarital agreement completely finalized and executed at least 30 days prior to the wedding. My experience has been that this substantially lessens stress upon the parties and the attorneys. If you are considering a premarital agreement, then please contact our Houston prenuptial agreement lawyer for a consultation.

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