A prenuptial agreement is an agreement/contract entered into by two parties before marriage.
A prenuptial agreement is generally used to predetermine how assets will be divided if the marriage does not work out and the parties get divorced.
Upon marriage, a spouse usually has the following rights, unless a prenuptial agreement states differently:
- The right to share in the ownership of property acquired during marriage, with the expectation that this property will be divided in a just and equitable manner in the event of divorce.
- The right to incur debts during the marriage with the expectation that the other spouse may be required to be at least partially responsible for the payment of in the event of divorce, and
- The right to share in the control of any community property, including the right to sell it or give it away.
- A prenup lets you decide before the marriage even takes place how your property and debts should be handled both during the marriage and, if things don’t work out, upon divorce.
Who Needs a Prenuptial Agreement?
If a party has significant assets coming into the marriage, a prenuptial agreement is something that should at least be considered. However, this is not the only reason a prenuptial agreement may be important for you. A lot of times the need for a prenuptial agreement has more to do with the unequal amounts of money each party may have at that time of their marriage rather than the overall value of the assets. If one party makes significantly more than the other party or if one party has significantly more assets than the other, it is important to consider a prenuptial agreement.
It is important to note, that Texas is a community property state which means that under Texas law it is assumed when divorcing that everything the parties own at the time of divorce is part of the community estate.
If no prenuptial agreement has been signed, and a party files for divorce and claims that certain assets or accounts are separate property rather than community property, it is the burden of the party claiming separate property to prove that such property is in fact separate property and not community property. This may require the party to hire one or more tracing experts to prove the claim of separate property. This can be an expensive and laborious undertaking; possibly much more so than the cost of a prenuptial agreement.
A prenuptial agreement not only protects those assets that are in existence at the time of marriage, it can also protect future assets.
For example, if you have a 401(k) retirement account you can agree, through a prenuptial agreement, that any funds added to the account during marriage shall remain separate property funds. This is the same with any type of financial accounts. You can agree through a prenuptial agreement that any funds added to your investment accounts or other financial accounts shall remain your separate property funds.
A prenuptial agreement can also protect each party from the debts that may be incurred by the other party during marriage. You can each agree that whatever debts are incurred by a party during marriage shall be their debts if divorced.
What a Prenuptial Agreement Can Not Do
A prenuptial agreement cannot predetermine the custody of your children or who or how much child support will or will not be paid.
What is a Postnuptial Agreement?
If the couple does sign a prenuptial agreement before marriage, they can sign a postnuptial agreement after marriage. A postnuptial agreement will cover the same rights and obligations as a prenuptial agreement. The main difference between a prenuptial agreement and a postnuptial agreement is that a prenuptial agreement is created and signed by the parties before they get married and a postnuptial agreement is created and signed by the parties after they get married.