We didn't get a prenup before we got married. Is it too late to get one now?

Once you are married, it is too late to get a premarital agreement in Texas.  However, you and your spouse can enter into a post-marital agreement. The requirements for a post-marital agreement are the same, but the need for full disclosure of assets and liabilities is held to a higher standard after marriage.  This is because spouses have a fiduciary duty. A fiduciary relationship is one that bears a high responsibility for dealing fairly and ethically with the other person.  Because of this high standard, post-marital agreements are found invalid much more often than premarital agreements.

Postnuptial agreements are frequently used in troubled marriages when parties are having financial conflict.  Estate planning lawyers may also recommend postmarital agreements for tax purposes. 

The provisions of a postmarital agreement (sometimes called a partition agreement) in Texas are the same. The parties can separate their assets, address the source of funds for debt payments, address issues of spousal support in the event of divorce, etc.   

 

For help in drafting your postmarital agreement, contact the Texas board certified attorneys at O’Neil & Attorneys.

Read more on premarital agreements:

What is a Prenup?           

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

How to I tell my spouse-to-be that I want a prenup?

What are the requirements of a prenup?

What are common clauses in a prenup?

Can we change the prenup later?

What is the procedure for getting a prenup?

How long before the wedding should we start the process of getting a prenup?

Can one attorney represent both of us in drafting the premarital agreement?

What happens to a prenup when the spouses get a divorce?

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

What happens to a prenup when the spouses get a divorce?

When spouses get a divorce and have a premarital agreement in Texas, the divorce suit must state the parties’ position regarding the enforceability of the premarital agreement. Either the party seeks to have the court uphold and enforce the agreement as it is written, or the party wants the court to find the agreement void and unenforceable. There are limited reasons why an agreement will be found unenforceable under Texas law. One is that the agreement was entered into involuntarily or that a party was under duress or coerced into signing the agreement. The threshold to set aside an agreement is extremely high and happens very rarely.

Even if the agreement is enforceable, sometimes the parties may disagree about the interpretation of a provision of the contract and how that provision applies to the property division in the divorce. In such cases, the judge will read the document and rule on the meaning of the provision. Then, the premarital agreement is applied to the property division in the divorce.

Read more on premarital agreements:

What is a Prenup?           

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

How to I tell my spouse-to-be that I want a prenup?

What are the requirements of a prenup?

What are common clauses in a prenup?

Can we change the prenup later?

What is the procedure for getting a prenup?

How long before the wedding should we start the process of getting a prenup?

Can one attorney represent both of us in drafting the premarital agreement?

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

Can one attorney represent both of us in drafting the premarital agreement?

It is best for each spouse-to-be to be represented by independent counsel when negotiating and drafting the premarital agreement. One lawyer cannot represent both sides to an agreement – that is a violation of the ethical rules for lawyers in Texas. This is because the parties to the agreement will probably have differing interests and perspectives in the terms of the agreement.  Each person requires legal advice and authority that is specific to their situation. If one attorney represents both parties, the chance that the agreement will be voided is high.

Read more on premarital agreements:

 

What is a Prenup?           

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

How to I tell my spouse-to-be that I want a prenup?

What are the requirements of a prenup?

What are common clauses in a prenup?

Can we change the prenup later?

What is the procedure for getting a prenup?

How long before the wedding should we start the process of getting a prenup?

 

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

 

How long before the wedding should we start the process of getting a prenup?

Ideally, the process for getting a premarital agreement should be started at least 2-3 months in advance of the wedding. Unfortunately, many people do not get around to starting the process of getting a prenup until very close to the wedding. When a premarital agreement is signed close in time to the wedding day, or even on the day of the wedding, it becomes much more likely that the agreement will be voided upon a challenge. This is because some courts find as a factor in voluntariness of the prenup the fact that the party would suffer humiliation if the wedding were called off due to refusal to sign a prenup. It is far better to handle the business of the premarital agreement well in advance of the wedding.

Read more on premarital agreements:

What is a Prenup?           

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

How to I tell my spouse-to-be that I want a prenup?

What are the requirements of a prenup?

What are common clauses in a prenup?

Can we change the prenup later?

What is the procedure for getting a prenup?

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

What is the procedure for getting a prenup?

 

The first step in the process of getting a premarital agreement is for the spouses-to-be to discuss and reach a consensus on the purpose of the agreement and the general terms that each finds important. Then, it is a good idea for each to start a list of what assets and debts each owns with approximate values. Usually one party takes the lead on hiring an attorney to begin the first draft of the agreement. The other spouse should secure a different lawyer to get independent advice on the terms of the agreement. Once the initial draft is prepared, the parties and their lawyers will review and suggest changes until each party is satisfied with the form of the agreement. The next step is to sign the agreement. Because the main path to voiding a premarital agreement is to show the agreement was not entered into voluntarily, some lawyers prefer to videotape the parties voluntarily signing the agreement. This documents each person’s mood and frame of mind at the time of signing. After the agreement is signed, each party and respective attorney will receive an original copy of the agreement to hold for future purposes.

Read more on premarital agreements:

 

What is a Prenup?           

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

How to I tell my spouse-to-be that I want a prenup?

What are the requirements of a prenup?

What are common clauses in a prenup?

Can we change the prenup later?

 

 

 

 

Can we change the prenup later?

 

A marital agreement signed before the marriage is termed premarital agreement. Once the parties are married, they cannot enter into a premarital agreement. So, in the event married spouses decide to change the terms of their premarital agreement, the new agreement will be a post-marital or post-nuptial agreement. A post-marital or post-nuptial agreement is held to a higher standard than a premarital agreement. This is because after the parties are married, they have a fiduciary duty to each other. This means that each spouse has an obligation to conduct him or herself with the highest good faith and fair dealing relating transactions with the other spouse, and neither of may take unfair advantage of the other. The new agreement will be scrutinized and held to a higher standard of fairness. If the new agreement doesn’t meet the high standard of fairness, it will be voided.

As with the premarital agreement, each spouse will be entitled to full disclosure of any documents related to the modification. Because of the fiduciary duty owed after marriage, the disclosure is held to a higher standard than with a premarital agreement. So, if a challenge is made to the postmarital agreement, the quality of the disclosure will be evaluated under a high standard. If a party is found to have acted underhandedly or provided less than full disclosure, the postmarital agreement will be set aside and voided.

For help in drafting your prenup, contact the Texas board certified attorneys at O’Neil & Attorneys.

Read more on premarital agreements:

What is a Prenup?           

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

How to I tell my spouse-to-be that I want a prenup?

What are the requirements of a prenup?

 

What are common clauses in a prenup?

 

 

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

 

What are common clauses in a prenup?

 There are some common provisions that parties to a premarital agreement often want to include. The most common provision engaged spouses want to include in a prenuptial agreement is an identification of the property and debts of each party owned prior to marriage. The purpose of this clause is to identify what will be each party’s separate property after the marriage begins.

The second-most common clause in a Texas premarital agreement is a determination of whether the parties will accumulate any community property under Texas law, or whether the property of the parties acquired after marriage will remain each party’s separate property.

Parties may also contract regarding each party’s right to buy, sell, use, lease, mortgage, dispose of, or otherwise manage and control property, whether the community property of the parties, or the separate party of either party. Additionally, a premarital agreement may contain clauses regarding:

  • Income, deductions, and claims for filing tax returns
  • Management of household bills and expenses
  • Management of joint bank accounts, if any
  • Arrangement regarding investing in certain purchases or projects, like a house or business
  • Management of credit card spending and payments
  • Savings contributions
  • Property distribution to the survivor, including life insurance, in the event of death
  • Arranging putting one or the other through school
  • Settlement of potential disagreements, such as using mediation or arbitration

A premarital agreement may address how the parties plan to dispose of their property in the event of divorce, as well as the existence and terms of any spousal support.

The parties may address in a premarital agreement the disposition of property upon death, the provisions to be contained in either parties’ will, as well as the ownership and beneficiary rights of each party in a life insurance or retirement policy.

More generally, the parties may provide in the premarital agreement what laws will apply to the interpretation of the agreement. Most commonly, if the agreement is made in Texas, the agreement will provide a choice of Texas law for the interpretation and enforcement of the agreement.

A premarital agreement may contain other creative provisions that are important to the parties, provided that the provisions are not in violation of public policy or violate criminal laws.

For help in drafting your prenup, contact the Texas board certified attorneys at O’Neil & Attorneys.

Read more on premarital agreements:

What is a Prenup?           

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

How to I tell my spouse-to-be that I want a prenup?

What are the requirements of a prenup?

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

 

What are the requirements of a prenup?

The Texas Family Code sets out the requirements for a valid, enforceable premarital agreement (aka “prenup”). Most importantly, premarital agreements need to be in writing. Oral or verbal agreements are not recognized. Some states require a notarized agreement, but Texas does not.

Second, the prenuptial agreement must be executed before the parties get married. A whole new set of rules applies to agreements that are entered into after the marriage takes place.

Third, both partners must fully disclose their assets and liabilities. Most premarital agreements waive any disclosure that isn’t contained in the document.  The risk for failing to fully disclose assets and debts is that a court could later void the agreement due to lack of disclosure if challenged. Premarital agreements frequently alter a person’s property rights under existing law either in the event of death or divorce, so a party can only fairly evaluate the effect of the property rights he or she is being asked to release if a full disclosure of the property and debts is provided.

Each party must represent their own interests and, preferably, have independent attorneys representing each of them. It is unethical for one lawyer to represent both parties in a premarital agreement.

Most importantly, each partner must sign the prenuptial agreement voluntarily. An agreement that was not voluntarily signed is unenforceable and will be voided by a court upon a challenge to the premarital agreement either on death or divorce.

The agreement cannot contain provisions that limit child support rights. A couple cannot agree that one spouse will not seek child support. A court is likely to strike out any adverse limits relating to child support.

For help in drafting your prenup, contact the Texas board certified attorneys at O’Neil & Attorneys.

Read more on premarital agreements: 

What is a Prenup?           

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

How to I tell my spouse-to-be that I want a prenup?

 

How to I tell my spouse-to-be that I want a prenup?

All too often the prenup conversation is handled poorly. One spouse may bring up the need for a prenup at the last minute, leaving little time for thought and consideration.  Or, the other spouse may not understand what a prenup is and get upset at the mention. 

As Erik Newton points out in his post Approaching the Prenup Conversation Gracefully, it is important for everyone to understand that they already have a prenup! The State of Texas has rules in place for how property is handled during a marriage, as well as in the event of death or divorce. So, the question isn’t whether you want a prenup, but more whether you are okay with the rules that the State has provided or whether you have a different viewpoint of how your marriage should handle things. 

One approach to the prenup conversation might be to address difficult conversations in advance. Eventually there will be a disagreement over money. The more spouses-to-be discuss in advance how to handle difficult situations, the less strain they will have in the future.

Before approaching the prenup conversation think about how the other partner will feel about the discussion.  What will he or she need to hear in that conversation.  Once you are married, you take responsibility for the wellbeing of the other spouse. So, addressing the issues the partner will express in advance will make the conversation go more smoothly. 

Transparency is key to making both sides of the agreement feel secure. Provide full disclosure upfront as to the goals of the premarital agreement, and when the time come for disclosing assets, volunteer all of the necessary information so the other spouse feels like he or she is getting a fair deal. 

For help in drafting your prenup, contact the Texas board certified attorneys at O’Neil & Attorneys.

Read more on premarital agreements:

What is a Prenup?     

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

How much will a prenup cost?

Can I skip the lawyer fees and D.I.Y. my prenup?

 

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

 

Can I skip the lawyer fees and D.I.Y. my prenup?

If you want to end up with a clear and binding premarital agreement in Texas, the safest way is to get help from a good lawyer. There are good reasons to hire a lawyer -- or actually two lawyers -- to do your prenuptial (or premarital) agreement in Texas.

Independent legal advice

Prenups are still scrutinized by the courts closely. Having a lawyer representing each spouse ensures that each spouse will receive independent legal counsel regarding his or her rights under Texas marital property law. The absence of separate lawyers is a big red flag to a judge who is evaluating the fairness and viability of the prenups' provisions.

Laws vary in different states

One reason to hire a lawyer to draft the premarital agreement (prenup) is that the laws regarding a premarital agreement differ in each state. Of course, you could do the research yourself and educate yourself about Texas' laws regarding premarital agreements. But, how would you know that your research is thorough and accurate? A lawyer trained in the area of drafting premarital agreements in Texas should already know the laws regarding premarital agreements in Texas. Further, some websites on the internet may not be up to date with changes in the law relating to drafting prenups, where a lawyer should know the latest version of the law that would apply to your situation.

Know contents of prenup

A lawyer experienced in Texas family law should have experience drafting premarital agreements. Such lawyer will know the standard, customary provisions for a prenup, and also he or she can make suggestions for creative provisions that might apply to your individual situation.

Know the formalities

A prenup can be challenged on the grounds of voluntariness or duress. An experienced lawyer will be able to use procedural formalities to give the premarital agreement the best chance of being upheld. For example, the signing of the premarital agreement could be videotaped or transcribed by a court reporter to preserve the demeanor of the parties and tenor of the conversation when the signing occurs.

Find a good lawyer

Find a lawyer experienced in Texas family law to assist in drafting your premarital agreement. An attorney board certified in Texas family law will have a minimum level of experience, knowledge, and peer evaluation. The Texas Board of Legal Specialization is the certifying agency for Texas lawyer who wish to demonstrate to clients their proficiency in Texas family law.

 

How much will a prenup cost?

The cost of a premarital agreement in Texas depends on how complex the agreement is going to be. A couple with complex assets and debts may have a more involved discussion about how to handle their property in the event of death or divorce.  The contentiousness of the negotiations also determines the amount of time an attorney may have to spend drafting the prenuptial agreement in Texas and therefore the total cost of the process. A third factor that can influence the cost of obtaining a premarital agreement in Texas is the proximity of time between the drafting of the premarital agreement and the wedding date.  Ideally, the premarital agreement process should begin a couple of months prior to the wedding.  The closer in time to the wedding, the more careful the attorney must be to cover all of the bases in the process.

As with any matter that involves an attorney, the legal fees can range widely based on the qualifications of the attorney, complexity of the financial estate, and the contentiousness of the negotiations. Usually attorneys bill for their time at their hourly rate multiplied by the number of hours spent on the matter.

For help in drafting your prenup, contact the Texas board certified attorneys at O’Neil & Attorneys.

Read more on premarital agreements:

What is a Prenup?

Does getting a prenup mean that my fiancé doesn’t trust me?

But I’m not wealthy. Do I really need one?

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

 

Prenups...But I'm not wealthy. Do I really need one?

Prenups are not just for wealthy people anymore. Couples utilize premarital agreements not only to cover current assets, but also to cover future assets or the potential for future wealth. A prenuptial agreement in Texas can address a current or future business interest, potential inheritance, or financial support of elderly parents.

Premarital agreements are increasingly used to address division of debts in a relationship. One person may have significant student loan debt. The other spouse may have high medical bills or credit card debt. Discussing a prenup may seem like a killjoy but couples who address their finances before marriage may end up with a healthier relationship. Each person in the relationship should be aware of the combined assets, debts, and net worth. Sorting out economic hurdles in advance may even help prevent divorce.

For help in drafting your prenup, contact the Texas board certified attorneys at O’Neil & Attorneys.

Read more on premarital agreements:

What is a Prenup?

Does getting a prenup mean that my fiancé doesn’t trust me?

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups

And Why EVERYONE Should Have a Prenup and … that Means You
 

Does getting a prenup mean that my fiancé doesn't trust me?

Getting a premarital agreement in no way reflects on the love and trust of the relationship. Look at it like a business discussion, along the lines of how you will deal with your finances after the marriage. The purpose of the premarital agreement is to protect both parties from whatever eventualities might occur in the future. Even if it is death or divorce. No one goes into marriage expecting to get divorced. But having a premarital agreement provides an opportunity for the couple to create and plan for how they will deal with their finances. A prenup in Texas can go much farther than just who-gets-what in case of divorce. It can outline financial goals and priorities during the marriage as well.

Couples that don’t plan to marry (or same –sex couples who cannot marry under Texas law) can enter into domestic partner agreements in Texas that operate much like a premarital agreement. Even married couples can enter into contractual agreements during the marriage to address financial issues – this is usually called a post-marital or partition/exchange agreement.

One factor that can increase or decrease the trust a couple has in discussing the prenup is how close to the wedding the issue is raised and addressed. If it comes up a day or two before the wedding – then there’s probably a reason to question trust. If it is brought out in the open well in advance of the wedding, where each person has full opportunity to discuss the contents of the agreement with trusted advisors, such as financial investors, CPAs, and … yes… even family law attorneys, then it leads to a more trusting approach to the premarital agreement.

For help in drafting your prenup, contact the Texas board certified attorneys at O’Neil & Attorneys.

Read more on premarital agreements:

What is a Prenup?

Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups
 

What is a Prenup?

A prenup is an abbreviation of the term prenuptial agreement or premarital agreement. When two people want to get married, but also want to control part of their relationship by agreement, they use a premarital agreement to make those arrangements. The most common purpose of getting a prenup is to address how marital property will be handled in the event of a divorce. In Texas, most often people get prenups to control the application of Texas’ community property laws to the division of their assets during a divorce. But, marrying spouses may also use a premarital agreement in Texas to identify and preserve separate property owned before the marriage, to apportion debts or protect a spouse from the debts of another, or to address inheritance rights. Some spouses have been known to address personal issues in their prenup such as apportioning household duties, requiring sex weekly, or limiting the amount of football games the husband can watch. Some prenups even address what happens to the pets during the marriage and beyond!


Most celebrities have prenups. For example, Nicole Kidman and Keith Urban’s prenup allegedly nets Urban about $640,000 for every year that he is with Kidman. There is reportedly a clause in the prenup that states if Urban, a former cocaine addict, uses illegal drugs he will not receive a cent of Kidman’s fortune that is estimated at around $150 million. And, Catherine Zeta-Jone’ prenup with “Wall Street” star Michael Douglas entitles her to $2.8 million per each year the marriage remains in effect. (See Ten Craziest Prenuptial Agreements)


In Texas, we have some standard clauses that can be put in a prenup, but the ultimate document can be tailored to fit every need. It is important to have a board certified family law attorney draft the premarital agreement, as the implications on a divorce can be overlooked by attorneys who practice in other areas. For help in drafting your prenup, contact the Texas board certified attorneys at O’Neil & Attorneys.


Hat tip: 9 Questions You Want To Know But Are Too Afraid To Ask About Prenups
 

Necessity of Prenuptial Agreements in the 21st Century

Requesting your future spouse to sign a prenuptial agreement in Texas can be a touchy subject. Many people are hesitant to obtain a prenuptial agreement for the simple fact that it may damage the relationship. This is a point I understand and do sympathize. However, when I have a client, regardless of their level of wealth, state that they do not need a prenuptial agreement; I have a very simple response.

I first ask the client “Do you have automobile insurance.” The client states “Yes.” I then ask “Do you plan on having a wreck in your automobile.” My client then looks at me curiously and states “Of course not.” I then respond with “a prenuptial agreement is a lot like car insurance; you don’t plan on getting in a wreck but it is there in case you do.” This is usually the point where you can see the light bulb over my client’s head turn on and they are in agreement that a prenuptial agreement is necessary.

The Huffington Post reported last week that “Fox & Friends” had a segment in which they addressed whether or not a couple should have a prenuptial agreement. Dave Ramsey reportedly stated, "Don't do prenups unless someone is extremely wealthy and the person they're marrying is not. Other than that, you'd stay away from prenups." Mr. Ramsey has obviously never spoken to me about the necessity of a prenuptial agreement.

I agree with Huffington Post Divorce blogger Diana Mercer when she states that “a prenup may benefit all married couples.” Prenuptial agreements are not only for the wealthy, they are for all walks of life. Divorce can be a very stressful and sometimes prolonged process. If a couple agrees in a prenuptial agreement as to how assets and debts are to be divided in the event of a divorce, it removes a lot of the bickering back and forth that can occur during a divorce. It can also shorten the length of time the divorce is pending in that the financial issues are already handled and addressed in the prenuptial agreement.

Don’t let a prenuptial agreement hurt a relationship or eliminate the romance. Just like automobile insurance, a prenuptial agreement is there in the event of a crash/ending of a marriage.
 

Breaking Down the Sanders Divorce: Premarital Agreements in Texas

As discussed in my blogs earlier this week, there have been many rulings in the Deion and Pilar Sanders divorce this month regarding custody of the Sanders three children. Another significant issue was ruled upon this month which is that the couple’s 1999 premarital agreement is valid.

Deion and Pilar married in 1999 and prior to marriage the parties entered into a premarital agreement regarding their assets and debts. According to the Dallas Morning News, the premarital agreement “divides the couple’s property and awards Pilar Sanders $100,000 for each year they were married, with a cap set at $1 million.” During the ongoing divorce, Pilar Sanders has disputed the validity of the document based upon the assertion that there were missing exhibits and pages to the premarital agreement at the time it was signed by the parties. Pilar has also asserted that she was “tricked and defrauded” at the time she signed the 1999 premarital agreement.

Premarital agreements are not uncommon in today’s world. It is a binding contractual agreement entered into by spouses prior to marrying. The purpose of a premarital agreement is to protect a person’s assets that are owned prior to the marriage as well as to make certain financial provisions in case of a divorce.

Generally, Texas family courts recognize prenuptial agreements if the parties:

  • had independent counsel in creating the agreement,
  • were aware of their rights regarding property division under Texas law, especially if they agree to waive such rights,
  • entered into the agreement freely and voluntarily; and
  • were aware of each other’s income, and that full disclosures had been made.

This was not Deion Sanders first marriage. He was previously married to Carolyn Chambers whom he divorced in 1998. Having already been through one divorce, it is not unheard of for a person marrying for a second time to have a premarital agreement before entering into the second marriage.

The Judge’s ruling last week that the Sanders premarital agreement is valid is significant as the premarital agreement likely addresses and disposes of all property issues in the Sanders divorce.
 

Texas divorce FAQ: What about my "prenup"?

If you and your spouse have a premarital agreement, advise your attorney immediately. If the agreement meets the requirements of Texas law, then the agreement should be upheld as part of the divorce. As with any contract, the agreement must be entered into voluntarily and with full disclosure.

Dallas Court of Appeals Affirms Trial Court's Judgment Voiding Premarital Agreement

On July 3, 2012, the Dallas Court of Appeals issued its opinion in the Moore v. Moore case affirming the trial court’s finding that the premarital agreement at issue was unenforceable and upholding the valuation of the seven business entities owned by the community estate.  Michelle May O’Neil successfully represented the Wife and appellee.             

This opinion is one of the few Texas cases to void a premarital agreement. In reaching its decision, the Dallas Court of Appeals noted the suspicious circumstances surrounding the procurement of Wife’s signature. Specifically,  Husband misrepresented his financial condition prior to marriage and made it effectively impossible for Wife’s lawyer to review the final draft by misrepresenting to Wife that he did not have the agreement until a mere five hours before their Martha’s Vineyard wedding, then misrepresented to Wife that the version he presented to her had been approved by her attorney.   Although Wife signed the agreement based on Husband’s assurances and would not have done so but for such assurances. 

Regarding the premarital agreement, the Court of Appeals also noted that recitations in the agreement providing that Wife executed it voluntarily  could not preclude her from establishing involuntary execution.

The Dallas Court of Appeals also upheld the trial court’s division of the community estate, particularly the community businesses. The Opinion notes that Husband failed to make the required objections at trial that were necessary to preserve his complaints that Wife’s valuation expert should have used additional or different data, so this argument was waived.  Also, the trial court was within its discretion to blend all the evidence presented at trial and assign a value for the businesses within the range of evidence.

Husband’s arguments that the trial court erred by failing to make particularized finding as to the value of the community assets and by not conditioning the award of appellate attorney’s fees on the success of the appeal also  failed.

Using Prenuptial Agreements in Texas

Using Prenuptial Agreements in Texas

Celebrity prenuptial agreements can certainly make headlines. They include unique (and sometimes unflattering) requests that become public fodder; especially when things don’t work out.

Kim Kardashian reportedly will keep all her premarital assets as well as income she earned during her 72-day marriage to Kris Humphries. It is rumored that sister Khloe Kardashian’s prenup with new Dallas Mavericks forward Lamar Odom includes a $5,000 monthly shopping budget and $1,000 monthly beauty budget. Katie Holmes apparently receives $3 million for every year she’s married to actor Tom Cruise. If the marriage lasts more than 11 years, she could be entitled to half of his fortune should they divorce. On the opposite end of the spectrum, Paul McCartney turned down a prenuptial agreement before tying the knot with Nancy Shevell. The legal wrangling in his last divorce probably soured him on the prospect of another prenup.

As people become more ambivalent about marriage, prenups are becoming more common as couples are increasingly prudent about parting ways in case the relationship does not work out. This article will explain what prenuptial agreements are, discuss their benefits and limitations, and help determine whether a prenup is right for you.

Texas Prenups in General

Prenuptial agreements are essentially contracts; written agreements entered into between spouses before they are married. Couples use prenups to avoid disputes regarding property ownership and division of financial assets in the event of a divorce. Prenups are commonly used by couples entering a second marriage, as they want to make clear definitions of separate property. Some couples are combining new households and want to protect children or other relatives from a first marriage. Others may receive income from a jointly-held business with their ex-spouse, or spousal support from a past marriage, and would like to make sure such income remains separate property.

However, this does not mean that couples entering their first marriage are prohibited from entering into a prenup. People commonly use prenuptial agreements to protect assets owned before the marriage or to assign debts to either spouse in the event of a divorce.

Generally, Texas family courts recognize prenuptial agreements if the parties:

•had independent counsel in creating the agreement,
•were aware of their rights regarding property division under Texas law, especially if they agree to waive such rights,
•entered into the agreement freely and voluntarily; and
•were aware of each other’s income, and that full disclosures had been made.


Pros of Prenups – Clear Communication

Since financial discord is the primary reason for divorce, talking to your spouse ahead of time regarding finances and can help in avoiding future rifts over asset management. Of course, prenups are not the most romantic topic for discussion, especially because it invites the thought that your relationship could end badly. However, discussing these issues nurtures healthy communication, sets clear expectations for financial harmony, and breaks down potential barriers that may hinder your relationship. Even if you and your spouse decide a prenup is not for you, discussing it is a very good idea, and you could make fun of celebrities at the same time.

Cons of Prenups – Rocking the Boat

Conversely, prenups have their drawbacks. Some people broach the topic simply at the wrong time. Not only is in bad taste to propose a prenup soon before a wedding, it may not be enforceable in court. Also, a prenups may uncover other faults in the relationship (other than a significant income disparity). Trust issues, especially when manifested through a prenups, can doom a relationship.

Ultimately, if you fear that discussing a property and finance distribution and the possibility of separation or divorce will irreparably harm your relationship, a prenup may not be right for you.

Limitations of Prenups

While you may agree on a number of a financial and property issues through a prenup, it cannot include designations for child support or child custody. Only family courts may make final determinations on these issues. The court must follow statutory guidelines in calculating child support, and must make specific findings if it finds that a deviation is appropriate. Likewise, custody is determined by using the "best interest of the child" standard, where the court considers a number of factors to determine where the child will live and which parent may make decisions for the child.

Also, a court can set aside any part of a prenup it finds to be unfair or not in the interest of justice.

The preceding is not intended to be legal advice. If you have questions about prenuptial agreements in Texas, an experienced Texas family law attorney can help.

 

A prenuptial agreement without the wedding?

Posted by Michelle May O'Neil on July 4, 2011

In a national news report by Ellen Levya at KABC-TV, it seems prenuptial agreements are not just for people getting married anymore. Out of the more than 12 million unmarried couples living under the same roof in America, many of them are choosing to sign a pre-nup-like agreement in lieu of a marriage license.  Apparently, this is the latest legal trend aimed at protecting singles and their assets.

Why are all these unmarried couples taking this direction? In a poll of divorce attorneys, 48% said that they have seen an increase in unmarried couples headed to court over issues when there is a split. 

Now a growing number of these couples are choosing to sign co-habitation agreements. These are legally binding agreements for couples that share a home, but aren't married in the traditional sense.  They outline the couple’s expectations for their relationship, and also what happens in the event that the relationship ends, either by death or by simply deciding they're not going to live together anymore.

These co-habitation agreements can range from simple to complex, covering everything from medical decisions and health insurance. They can even cover who's responsible for debt and what to do with a house, cars, furniture, even pets.

Dr. Anne-Renee Testa, a relationship coach, says these agreements are just a sign of the times. That's because over the last 20 years, the number of unmarried couples living under the same roof has skyrocketed by more than 85%.

Dr. Testa says, "Any couple that is interested in being intelligent about their relationship should do something like this because it absolutely clears the air.”

In my own practice as a Family Law attorney in Dallas, I have found these co-habitation agreements to be beneficial to same sex couples as well as traditional couples that live together without being married.  They even work for people living together who are not romantically involved, such as roommates. 

The important thing is not to think of these agreements as a negative thing. It is not about control over the other person, or distrust in one another. It is really just a protection mechanism for both parties involved in the relationship, just like a prenuptial agreement for traditional married couples.

Private Ordering Is a Fancy Word for Contractual Agreements

Brian Bix of the University of Minnesota Law School has released a peer reviewed article to the American Academy of Matrimonial Laywers Journal called Private Ordering and Family Law.  Until recently, he contends, private agreements regarding family matters to change the law as it applies to their family were rarely upheld.  Of course, a person could choose to get married or not, or to have children or not, but once those choices were made, the law was clearly defined as to the rights and obligations that stem from that decision.  In recent years, the laws have become more friendly to allowing private agreements to change the law as it relates to a particular couple or family dynamic.

One can speak of premarital agreements, marital agreements, separation agreements, open adoption agreements, co-parenting agreements, agreements on the disposition of frozen embryos, and agreements to arbitrate disputes arising out of any of the above agreements.

In Dallas family law matters and for that matter in family law matters in Texas, couples may define their property rights during marriage by signing either a premarital agreement (aka prenup) or entering into a postmarital agreement.  Parents may choose to have children outside of the traditional marriage relationship and enter into agreements addressing parenting of the child.  Domestic partners, including same sex partners, who choose not to legally marry may enter into cohabitation agreements as well.

What is the purpose of a prenup?

I previously wrote about the rise in prenups (prenuptial agreements aka premarital agreements) across the country.  Dallas divorce attorneys are seeing similar trends as well.  Then, a client asked me, what are the most important things to put in a prenup?

Interestingly, CNBC is currently researching this topic and contacted me about being involved in a documentary they are filming.  I did the interview yesterday and the episode is expected to air in February 2011.

The most important consideration in a prenup is to think about what the goal of the document is before drafting it or even talking about it.  Is the goal to preserve an inheritance?  Or a business started before the marriage?  Is the goal to protect the financial interest of children from a prior marriage?  Or, maybe it is important to provide financially for one spouse in the event of death or divorce?  The bottom line, have a clear purpose in mind for the prenup.

Also, be upfront with your soon-to-be-spouse about the reasons you want a prenup and discuss it openly.  Many people find prenups distasteful and even disrespectful, so be open about the reasons for it.

Full disclosure of assets and liabilities by both soon-to-be-spouses is essential in a prenup.  List completely and accurately the extent of the assets that each spouse has going into the marriage, such as retirement account balances, business ownership interest, even baseball card collections if they are valuable and important to preserve.

A prenup can be used for many reasons.  It is, at its most basic, a contract between two people.  It can be used to simply define what each spouse has going into the marriage so everyone is on the same page if a divorce becomes necessary about what belongs to each outside of the marriage relationship.  Or, a prenup can be more complex in dividing up money and propery earned or acquired during the marriage.  A prenup can also preserve as separate property an asset such as a business interest that may transform or mutate during a marriage from suddenly transforming into a community property asset. For example, if a business is of one type (such as an LLC) at the beginning of the marriage, but maybe due to changes in tax laws, it becomes necessary to change the formation to something different (such as an LLP), the mutation can be defined in a prenup as to not change the characterization of the asset as one spouse's separate property.

A prenup can also address protecting the inheritance rights of children from prior relationships or how each spouse will designate beneficiaries.  I've even seen prenups that provide an amount of spousal support for one or both spouses in the event of a future divorce.

If you are thinking about getting married and think you may need a prenup, contact a lawyer to discuss how a prenup could benefit your particular situation.

 

Prenup Bump -- Is Tiger Woods Changing Minds About Them?

Tiger Woods recent marital problem highlights the need for premarital agreements sometimes called prenuptial agreements.  There's been speculation that Tiger Woods and his wife may have reached an agreement to stay married and avoid divorce -- which in Texas is called a postnuptial agreement.  The gritty details of actor Dennis Hopper's and golf aces Tiger Woods' and Greg Norman's prenups have all been hot topics on the internet.

Suze Orman encourages every engaged couple to get one to protect their current and future assets as well as to sheild themselves in case a mate secretly runs up massive credit card debt. "People are hopeful," Orman says. "They want their relationship to last. ... It's just natural that they don't think they'll need a prenup. Never in a million years do they think (divorce) will happen." In 2008, the divorce rate was about 50%. Among married Americans, the median duration of their wedded life in 2008 was 18 years, according to Pew Research Center's analysis of government data. Given those odds, "Hope is not a financial plan," says Orman, who urges that every couple get a prenup. "The time to plan for a divorce is not when you're in a state of hate," she says.

Among the divorced, 15% say they regret not having a prenup in their most recent marriage, according to the Harris poll. Men are more likely than women to have this regret, at 19% vs. 12%. Nearly 40% of divorced Americans also say they would ask their significant other to sign a prenuptial agreement if they remarried.

Elizabeth Gilbert, the author of Eat Pray Love and Committed, advocates for couples to get prenups:  "Marriage is not just a private love story but also a social and economical contract of the strictest order," she says.  "If it weren't, there wouldn't be thousands of municipal, state and federal laws pertaining to our matrimonial union."

USA Today writer Laura Petrecca in the USA Today article Prenuptial agreements: Unromantic, but Important cites to a Harris Interactive study that nearly 2/3rds of singles say they would ask for a prenup.  On the other hand, of those polled, only 3% actually had prenups.

That statistic may mean that prenups are on the rise.  Or, it could mean that they chicken out of throwing cold water on the afterglow of the engagement. Let's face it: The afterglow of that Valentine's Day proposal often begins to dim as discussions of wedding details get started. The happy couples face potential buzz killers that are financial (how to keep reception costs down), logistical (where to seat relatives not on speaking terms) and, in recent years, even more controversial (So, honey, I love you, but how about that prenuptial agreement ...).

The prenup seems so utterly unromantic — or just plain wrong — but it's also become so right for so many these days: those keenly aware that a marriage may end up in a legal separation, divorce or death. Most prenups tackle financial issues such as real estate, division of bank accounts and potential spousal support in the case of divorce or separation.

Prenups can focus on the obvious disparity in earnings or wealth, credit card or student loan debts, future spousal support, or child support paid to children from another relationship.  But prenups can also address emotional or behavioral issues.  One example cited in the USA Today article references a husband who wanted to make sure his wife remained drug-free so he conditioned payment of spousal support upon a clean drug test each month.  Other prenups have addressed issues such as adultery, intimacy, weight-gain, division of household duties. Those clauses may seem unnecessary to some folks, but nailing down what is important to each individual — be it the ownership of a ski house, retaining the rights to an antique tea set or determining who keeps the pets after the breakup — is vital to do before the marriage laws kick in.

The bottom line is that a prenup can address whatever issues are important to the spouses -- from simple identification of assets and debts going into the marriage, to the more complex issues about how the marriage relationship will work.  There is really no "form" prenup -- it should contain the provisions that are important to the people signing it.  A prenup gives the soon-to-be-spouses a way to re-write the law that governs a divorce to conform to their own expectations.

Keep in mind, however, that even if  a prenup is executed, a party may still seek to challenge it.  Under Texas law a person may challenge a prenup based on the circumstances surrounding its signing -- was it signed under "duress"?  Or, it may be challenged based on the contents being so unfair as to be termed "unconscionable".  Parties to a prenup must make a full disclosure of income, assets, and debts.