A premarital agreement is a contract between persons who
are about to marry that provides protection from the creation of community
property during marriage. “Community property” is the only property
a court has the discretion to divide upon divorce. A premarital agreement
identifies all assets and liabilities, and the values therof, existing at
the time of the marriage (separate property). The parties can then contract
that such property remains separate, and that the growth of, or interest
earned upon such separate property (which would otherwise be community property)
also remains separate property. The crucial point to remember is that a
court cannot divest a person of his or her separate property once that property
is found to be a person’s separate asset.
Who should use a premarital agreement?
While the majority of premarital agreements are written in cases where at
least one of the parties has a significant separate estate, any couple who
wants to decide in advance how property is divided in the event of a divorce
or death — rather than leave this decision to a judge — is a
candidate for a premarital agreement.
What can be included in a premarital agreement?
The trend among Texas courts is to allow persons the freedom to do what
they want with their property, so essentially anything that is not criminal
or against public policy can be contracted for within a premarital agreement.
Can both persons use one attorney in preparing a premarital agreement?
While one attorney is all that is necessary to draft the premarital agreement
itself, each party to the agreement should use their own counsel to prepare
the schedules of assets and liabilities to be included in the agreement,
review the agreement, and explain how it affects their rights.
Can a premarital agreement be changed, amended, or revoked?
Premarital agreements can be amended or revoked only in writing. Physically
destroying a premarital agreement will not defeat the agreement. A premarital
agreement may also expire by its own terms, either in part or in total.
The agreement, however, must be explicit in its terms to evidence the intent
of the parties as to which portions of the agreement will expire.
Although we want to protect the majority of our separate assets, can
we also allow for some creation of community property?
A well-drafted premarital agreement can provide for the creation of some
community assets. Again, it is important to explicitly define how the community
assets are to be created and how the remaining assets would be affected.
How can I ensure the premarital agreement will be upheld in a court of
law at the time of divorce?
Above all, it is important to create a contract that is unequivocal and
precise as to the intent of the parties. Courts are bound by the agreement
as long as it is proven that there was full and complete disclosure of all
assets and liabilities prior to signing the agreement, that the agreement
itself is not unconscionable by its terms, and that the parties entered
into the agreement voluntarily. Also, after marriage, the parties should
ratify their premarital agreement by executing a “partition and exchange
agreement.” One further step is to ask the court to approve the agreement
and declare its enforceability as a contract immediately after the marriage,
before any question or dispute arises.
This page was prepared by
Sondra Kaighen, a Houston attorney who
is board-certified in family law. She is a frequent lecturer on family law
topics for the State Bar. Reach her at
www.kaighenlaw.com.
