Despite the connotation, prenuptial agreements are an undervalued and underestimated tool that can increase the odds of your marriage being happy and successful. The common assumption of prenuptial agreements is that they are unromantic and planning for failure. While prepping for the possible negative outcome can be a little uncomfortable, it is generally a good habit in life. It encourages couples to have difficult and often avoid conversations about finances and expectations before the walk down the aisle, and in turn begin their marriage on the same page regarding one of the leading causes of divorce.
People buy life insurance in case they pass away unexpectedly, they buy auto insurance in case they crash their cars, and they purchase home insurance in case the house burns down. No one wants these things to happen, and no one begins a marriage hoping for a divorce, but the possibility of it exists, so why not be prepared?
Differing opinions and expectations regarding money and financial management are one of the most common contributors to divorce and one of the most avoidable. While money comes and goes and the future is unpredictable, couples who take the time to communicate their financial expectations to one another before exchanging vows have a much higher chance of surviving hard times and making things work in the long term.
Suppose you feel like it’s just too uncomfortable to talk to your prospective spouse about their assets, debts, and financial expectations. In that case, I caution you to consider that you may not be ready for marriage. That may seem harsh, but the reality is that over 50% of marriages in the US end in divorce. When statistically half of all marriages end in divorce, you are doing yourself and your future spouse a major disservice by failing to take advantage of a tool that significantly increases the likelihood of a long and successful marriage.
A prenuptial agreement is a legally binding document that details how you and your spouse will divide your assets and debts if you decide to divorce. Divorce is often an expensive and long, drawn-out process because it is a highly emotional and deeply personal area of litigation where one or both parties are making decisions from a place of anger and resentment. Unfortunately, once the relationship is approaching the end and emotions are high, it is much more unlikely that both parties will agree on a fair and amicable settlement, resulting in a drawn-out, painful, and expensive divorce process. This can easily be mitigated by signing a prenuptial agreement and addressing all of the important issues while you are still in the premarital love bubble and capable of seeing eye to eye.
Prenups are not just for the rich and famous. Whether you realize it or not, everyone has something to protect. Many young couples make the mistake of thinking they don’t need a prenup because they have minimal assets at the time of marriage without considering that their circumstances will likely change in the future when it matters most. Some of the most common topics addressed in a prenuptial agreement are the allocation of current and future earnings, the allocation of assets and debts, the characterization of property, and the duration/amount of alimony.
Here are some commonly overlooked but practical things to consider when drafting your prenup:
Income Allocation
In Texas, all income during the marriage is considered community property. If one party anticipates making substantially more or less money during the marriage, it can be beneficial to agree in advance regarding what portion of each person’s income will be considered community property.
Separate Property Interests
In Texas, any assets owned by an individual prior to marriage are considered their separate property and will be awarded to them in the event of divorce. This widely-known rule of law can often lead people to believe they don’t need a prenup to protect their separate property assets, but it’s not that simple. Usually, the assets worth protecting, such as a home or even a vehicle, are not owned outright and are encumbered by a loan. As a result, once you get married, and your income becomes community property, you begin creating a community interest in your separate property asset as soon as you start paying down the balance of any outstanding loan with community funds. As a result, your spouse could be entitled to a reimbursement claim. If these interests are not waived or predetermined by way of a prenuptial agreement, you will likely have a complicated and costly accounting nightmare on your hands as you will need to hire an expert to do a proper calculation of the community property interest and appreciation your spouse has developed in addition to having to find and produce documents from what could be many years ago to prove your separate property rights and interests.
Another consideration is when a party contributes more to purchasing a community property home during the marriage with their separate property or a separate property gift from the family. A prenup is a great way to ensure reimbursement of these funds upon divorce or sale of the home or to ensure no reimbursement claim.
Issues During Divorce Case
When a divorce is filed, a spouse can ask for certain things to happen while the case is pending. These requests include payments of specific bills, temporary living arrangements, attorney’s fees, and even payments for temporary support. Spouses can put provisions into a prenup that prevents these remedies from being available. If a court still orders some of these things, a prenup can include a condition where the spouse receiving the temporary money must reimburse the other spouse at the end of the case.
Spousal Support
We do not have alimony in Texas, but a spouse can request post-divorce spousal maintenance. Spousal maintenance is based on how long the parties were married. The length of the marriage will determine the duration and the amount of maintenance payments. Couples must be married longer than ten years to qualify for post-divorce maintenance, but even then, it is extremely difficult to qualify. A prenup can predetermine the time and the amount of time spousal maintenance will be paid and doesn’t have to require a specific length of the marriage.
Utilizing the services of a qualified family law attorney is the best way to ensure that your prenuptial agreement is valid and enforceable.
Rob McAngus, Partner with Verner Brumley Parker, P.C., is Board Certified in Family Law and his practice is devoted primarily to family law, including high conflict divorce, custody cases, and complex property issues. In addition to being selected on the Board of Directors for the Family Law Section of the Dallas Bar Association; he values your priorities as a parent and works with you to achieve the goals that will help transition your family to a new normal. As both an adopted child and a member of a blended family, Rob can provide a unique perspective in the practice of family law.
Rob has been recognized in Super Lawyers as a Rising Star in 2016 through 2021, and recently The National Advocates recognized Rob as one of the Top 40 Under 40. He can be reached by calling 214.526.5234 or email at rmcangus@vernerbrumley.com. Mr. McAngus received his bachelor’s degree cum laude and master’s degree from Baylor University and graduated cum laude from the Dedman School of Law at Southern Methodist University.
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