The subject of premarital and prenuptial agreements is one that I find is often based as much on hearsay as it is on reality. We tend in our culture to assume that the only reason a prenuptial agreement will be sought would be if there are issues regarding fear of your spouse to be receiving too much of your property in a divorce. However, entering into a premarital agreement can be a decision that stands to benefit you and your spouse in the future. The most important consideration for you to make is whether or not the premarital agreement contains everything that you need to based on your circumstances.
In today’s blog post from the Law Office of Bryan Fagan, I would like to share with you my thoughts on this subject. Specifically, what should be included in your premarital agreement as well as some details about each topic. It is one thing for you to be able to begin the process of understanding what goes into a premarital agreement. Since many people hold the wrong ideas about premarital agreements I would like to share with you my thoughts on this subject so that you can determine whether or not a Premier until an agreement is right for your family
Distinguishing between separate and community property
Texas is a Community property state. this means that property acquired during your marriage is presumed to be owned by you and your spouse in equal shares. Community property can be divided in your divorce it’s so it is important for there to be a clear line defining what is Community property and what is separately owned property. For example, if you acquired property during your marriage by gift or inheritance then that property could be classified as separate property instead of Community property. However, you must be able to prove and provide evidence of how you acquired the property.
Because Community property can be divided into divorce and separate property cannot be divided in divorce you need to be able to determine what property belongs in each category from your divorce. As such having a premarital agreement be able to make that determination before your divorce can be a great leg up for you and your family. The truth is that negotiating on a subject like this during your divorce can be difficult not only because of the legal ramifications of making this determination but also because of the emotional difficulties you may encounter having to negotiate a subject like this with your spouse.
The trouble with leaving this subject undecided until your divorce is that you are potentially putting yourselves in a situation where a family court judge will be making the decisions for you in terms of what property belongs in each category. He did that, or you are relying upon your spouse to be able to negotiate with you in a way that is fair considering your circumstances. Even spouses who normally get along will have problems to some extent being able to work with one another during a divorce. This is due in large part to the stressful circumstances that oftentimes come about as a result of entering into a divorce
The benefit of negotiating on Community property before divorce is that you can determine for yourselves, between you and your fiance, what property will belong in the Community property column in what property belong in the column of either of your separate properties. Note that this can still be done and achieved during negotiations on your divorce and property division but that you will have several hurdles to get passed to do so. For one, you will have accumulated more property at that stage which may change your perspective on what property belongs in which column. Additionally, you will have the emotion of a divorce weighing on you which may make having objective discussions on this topic more difficult.
Determining how debt will be handled in advance of a divorce
Debt collectors, creditors, and lenders can try to go after Community property even if only you or your spouse is listed as a debtor. The law on this in Texas is pretty complicated and we do not necessarily have space to go over all the different scenarios that may be relevant here in today’s blog post. However, what you should be aware of is just because your name isn’t listed on a credit card application or another type of loan that you may still be viable for a debt taken out in your spouse’s name only.
A prenuptial agreement can be used to prevent you from being liable for the debts taken out by your spouse and vice versa. You can create provisions in your premarital agreement that clearly state your spouse is not responsible for your debts and vice versa. You can specify that certain debts, like mortgages and other loans, are the dual responsibility of both parties. However, many spouses do not want their partners to be included on loan payments that were taken out without their knowledge or permission.
For example, if you took out a loan for your business without the knowledge or direct permission of your spells the net would not be out of the ordinary. While I am sure that you would speak to your spouse about many of the decisions you make regarding your business, the decision to take out loans or two put items on credit may not be issues that you discuss with your spouse every day. As a result, you may have taken up loans that you have had to personally guarantee. This means that you are liable for the loan and that your spouse may be as well under the Community property laws of Texas.
By determining in advance that any loan associated with your business will be treated as your separate property could go a long way towards helping to ensure that your spouse is protected as much as possible from creditors. At the very least, it would prevent your spouse from having to worry about a particular debt falling into their lap after your divorce. This way you and your spouse can determine in advance how you want debts to be characterized and handled rather than having to argue over them during a heated divorce case.
How do you want to handle your personal financial decisions during a marriage?
Many times, people choose to include personal financial decisions within the context of their premarital agreement. Specifically, how would you and your fiancé have handled the investment and retirement savings decisions? If you all would like to have certain amounts of money spent each month to save for retirement, go into debt reduction, or spent it in various other ways then you can specify this in a prenuptial or premarital agreement. This won’t necessarily become part of a divorce but it is relevant to your marriage and how the money will be handled by your family.
You all may have an idea of how you want bill paying and your house sold to function as far as the day-to-day workings are concerned. If so, then you can include this in a premarital agreement as well. The best way there will be no question during the marriage on how money is to be spent in the role each spouse is to fill in that regard.
Keeping the property in the family in the event of a divorce
Suppose that your family business was passed down to you recently before your marriage. This business has been in your family for many generations and you are concerned with the prospect of you are spouse’s family ending up with a portion of that business as a part of a divorce trial. Rather than leaving it to chance as to how the business would be divided in your divorce, you can choose to specify how the business is to be handled in your premarital agreement.
As we have talked about earlier you can simply make clear that a particular piece of property will be treated as separate property and not subject to division in your divorce. The same treatment can be extended to personal property, family heirlooms, and things of that nature. This is a property from the standpoint of making sure that your family stands to inherit from you rather than having to be in a situation where you own something with your spouse. This is an undesirable situation to find yourself in can certainly not be ideal considering the chances of divorce causing your family to go through stressful times worrying about how property will end up being divided in your divorce.
Contractual alimony and spousal support
In Texas, there are two types of post-divorce spousal support: contractual alimony and spousal maintenance. Contractual alimony is agreed to with your spouse in mediation. Spousal maintenance is ordered by a judge as to the result of a divorce trial. You may be awarded one of these benefits but not both in your divorce. It is important to learn the distinction between the two because most states do not have setups like this where different types of support are offered in different situations. Therefore, this may be the first you’ve ever heard of spousal maintenance or contractual alimony.
One of the benefits of negotiating a premarital agreement is that you can anticipate a divorce in advance and plan accordingly. You can agree to a certain amount of contractual alimony or post-divorce spousal support before your marriage even begins. This will keep you all from having to go back and forth and negotiate over fine details when it comes to income and proven needs of whichever one of you is requiring spousal maintenance. There are limits to how much spousal maintenance can be ordered by a judge. Typically, no more than 20% of your spouse’s growth monthly income can be paid to you in spousal maintenance. Therefore, if you would like to negotiate a number higher than that doing so during the negotiations of your premarital agreement would be prudent.
What cannot be included in a premarital agreement?
So far in today’s blog post, we have covered what topics can be included in a premarital agreement. As you can see, the topics that can be covered are pretty diverse and allow you and your spouse to potentially become very creative and well thought out in terms of how you prepare for your marriage and a possible divorce. However, you should know that you cannot include just anything in a premarital agreement in Texas. Let’s walk through a few subjects that cannot be included in the premarital agreement as we close out today’s blog post.
As opposed to spousal maintenance or contractual alimony, you cannot include anything having to do with child support in your premarital agreement. This may seem like a contradiction but on many levels it makes sense. Keep in mind that the purpose of child support is to provide your child with a minimum ability to live their lives in terms of having shelter, food, and clothing. Since you do not have any children, or at least any children of the marriage since you are not yet married, it is impossible to predict the proving needs of your child before your child is even born.
A family law court will be charged with making decisions that are in the best interests of your child. The best interest of the child standard is one that is utilized in most courts throughout the United States in is also utilized in Texas. A family court judge will need to take into consideration many factors when determining the best interests of your child. With that being said it is important to be able to understand that you cannot anticipate what your child needs accurately enough to negotiate on this subject and include any language regarding child support in your premarital agreement.
For instance, you have no idea if your child will have some sort of medical, psychological, or other need where child support may be justifiably higher than the guidelines levels of support as contained in the Texas family code. You would be selling yourself and your child short by agreeing to guideline child support in a premarital agreement when you do not even know what needs your child will have. As a result, any language included in a premarital agreement that has to do child support will not be enforced by a family court judge in the future where you to get a divorce.
Additionally, you are not able to negotiate and include anything regarding child custody in a premarital agreement. The same reasoning here holds as we saw forward child support. Since you do not yet have children of the marriage it is impossible to anticipate what their future needs and best interests are. Complex issues like Visitation, possession, and child custody can only be accurately negotiated once your children are born and you understand what their needs and best interests are. It is not worth your time or effort to try and prognosticate or anticipate what those needs may be by negotiating for them too early.
Just ass you can negotiate for spousal support within your premarital agreement negotiations comma you could not forfeit your rights to alimony or post-divorce spousal support. The state of Texas does not want you to be in a position where you cut your legs out from under you by canceling out any right you may have to receive post-divorce spousal support in the future. Again, you cannot reasonably estimate what your needs will be or what your financial situation would be at the time of a divorce. As a result, the state does not want you to be able to contract yourself out of any kind of spousal benefits that you may be entitled to or in need of.
Another topic that many people try to include in premarital agreements but are unenforceable is so-called lifestyle clauses. Many people try to include clauses that include prohibitions against infidelity and other types of behavior like this. These types of infidelity clauses are difficult to enforce in most family court judges in Texas would be hesitant to rule on anything having to do with Fidelity when it comes to looking at a prenuptial agreement. Decisions to have children, issues having to do with family, alcohol or substance abuse, and the decisions to have children are other types of lifestyle clauses that are typically unenforceable in my experience.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today’s blog post please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great opportunity to learn more about Texas family law and also to learn how your family may be impacted by the filing of a divorce or child custody case. Thank you for your interest in our law practice and we hope that you will join us again tomorrow as we continue to write about relevant and relatable subjects regarding family law in Texas.