Why Do Premarital (Prenuptial) Agreements Cost So Much?

I just want to get married. I know I need a premarital agreement. Why can’t I just get a short internet form premarital agreement and fill it out? I will save a lot of money and all that time dealing with lawyers.

My friend says that I am making a big mistake. She told me that I need to have a premarital agreement tailor-made by an attorney. She also told me it would be expensive.

So, Why Do They Cost So Much?

Why do premarital agreements cost so much? The answer is twofold. First, Texas law is complex. Premarital agreements can last a lifetime, divorce can be complex and you need an agreement that fits your particular circumstances. Secondly, there is no standard form for a premarital agreement. Your attorney is going to have to use her/his knowledge, skills, time and talent to craft an agreement for you.

If you get an internet form premarital agreement and simply fill in the blanks, you are probably just going to make some lawyer a big fee in the future trying to straighten out the mess you created.

A Few Examples to Think About

Let’s take a couple of examples of why premarital agreements are complex and expensive.

Let’s say you are 45 years old and have two children from your first marriage. You own a home that you promised your children would be theirs someday. Now, you are about to get remarried. So, you and your fiancé sign an internet form premarital agreement that says the house is yours in the event of a divorce. You get married on January 1 and you and your spouse move into your house. Unfortunately, you suffer a massive heart attack on February 1 and die. Your will says your children get the house. But, your 30-year-old spouse advises your children that she/he likes living in your house. As a result, he/she decided to stay there the rest of her/his life (probably another 60 years)! Your children think she/he is crazy – surely she/he cannot do that.

Surprise! In Texas, without a properly drawn premarital agreement, your surviving spouse can live in your home for the rest of his/her life. This is the case as long as the survivor pays the taxes, mortgage payments, insurance and taxes. Your surviving spouse has a life estate homestead in your separate property. Your internet form premarital agreement did not address a survivor’s life estate rights in the Texas homestead. Yes, your children inherit your property according to your will. However, they do not get possession of it as long as your spouse is alive. With a properly drawn prenuptial agreement, you can avoid this problem.

Let’s take another example. Let’s say when you get married you have a 401K that is worth $300,000. You and your fiancé sign an internet form premarital agreement that lists the 401k as your separate property. The form also says that you and your spouse’s income will be community property. Every year, you contribute the maximum and your employer contributes the maximum (let’s say $30,000 total annual contributions). All of the contributions are invested in your company’s stock at $30.00 per share. Thus, over 10 years of marriage, you acquired 10,000 shares of company stock in your 401k. Then, the beginning of the 11th year of your marriage, the company goes public and the stock zooms to $75.00 per share. At that time, your 10,000 shares of stock are then worth $750,000, plus you have you initial of $300,000 investment. Now you are really feeling comfortable – you have $1,050,000 in your 401k. You come home and tell your spouse about your good fortune. But, your spouse announces she/he just filed for divorce and he/she is really looking forward to spending his/her share of your 401k.

Surprise! In Texas, unless you have a properly drawn premarital agreement, all income earned during the term of marriage is community income. Additionally, your annual contributions to your 401k and your employer contributions are community income. So, for example, $750,000 of your 401k is community property. Thus, the Court will divide it between you and your spouse upon divorce.

This is Why You Need an Attorney

There are many, many decisions that you have to make to prepare a premarital agreement. These decisions then depend upon your particular facts and goals. You need the guidance of an experienced attorney. And the simple fact is that it takes a lawyer time, effort and skill to craft a premarital agreement that protects you and your goals. So, if you want to protect yourself and your goals, plan on paying a lawyer for the lawyer’s time, effort, experience, and skills. It is worth it.

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