A prenuptial agreement may not sound romantic, but it can provide essential protections for both partners.
A prenuptial agreement can benefit couples who begin their financial partnership with eyes open.
A prenuptial agreement is not always needed, but you should see if you need to protect your rights.
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You meet your soul mate. Visions abound of the perfect wedding surrounded by family and friends. But first, let’s lawyer up and negotiate property division in case of divorce. Full stop.
The last thing an engaged couple wants to do is plan for the possibility of a divorce. It’s kind of a buzz kill to declare “what’s mine is mine,” in the breath after committing to a lifetime together. Isn’t marriage for better, for worse, for richer, for poorer, in sickness and health, until death do us part?
But maybe that idyllic vision is not the best preparation for marriage. Maybe it’s part of the reason nearly 50 percent of marriages end in divorce. Nobody thinks his or her marriage will be part of that statistic, but who wants to bet on those odds in Vegas?
Prenups carry a stigma. And not just for the buzz kill. As explained below, premarital agreements can transform the privileged into paupers, even after decades of marriage and raising a family. Premarital agreements should be treated as the powerful legal documents they are, which means you need independent legal representation before you think about signing one.
Yet, prenups can be written to protect the interests of both spouses, according to Carla Calabrese and Dawn Ryan Budner of Dallas’ vaunted Calabrese Budner family law firm. And by proactively addressing the sensitive topic of property ownership prior to marriage, the couple may reduce the risk of expensive, conflictual litigation in a future divorce.
A Quick Word On Texas Marital Property Law
Texas is a community property state. This means income and property acquired by either spouse during the marriage is shared by the “community” (both partners). In contrast, property brought to the marriage or acquired by gift or inheritance is generally separate property. The typical circumstance giving rise to a premarital agreement is when one partner comes into the marriage with extreme wealth, but the other does not. The wealthy partner (or his/her family) wants to protect that “separate property” in a future divorce.
A prenup can alter the presumption of community property in various ways, including elimination of a community property estate altogether. These decisions will impact the partners in vastly different ways in a divorce.
“The most important advice I can give regarding prenups is for each spouse to have a separate lawyer,” Dawn Budner says. She explains that often, prenups are prepared by the wealthy party’s lawyer and the other party signs without fully understanding the consequences. “Years later, when we see that party in our office, there may be little we can do.”
Let’s face it, one of the top reasons for marital friction, which can ultimately lead to divorce, is the topic of money. People come into relationships with a lot of baggage around the subject: the way it gets spent, the way it gets saved and the way it gets invested.
“It’s difficult to talk about money. But going through the process and learning how to communicate about this touchy issue can set a couple up for success,” Carla Calabrese says. “If done well, it can actually lay the foundation for a healthy financial life between partners. In that way, prenups can be proactive and thoughtful ― benefitting both partners.”
A Modern Approach to Prenups
When spouses with vastly different financial positions marry, things may get tricky in a divorce. This is especially true with a long marriage. Some prenups fail to account for non-monetary contributions of the financially disadvantaged spouse. If there is little to no retirement savings, a divorce can force a party who has not held a job for decades (perhaps while raising a family) to seek employment at over age 60 in some cases.
“While you don’t have a crystal ball,” Calabrese adds. “it’s important to explore what happens if one spouse earns more than the other, or if they choose to have children together what will happen to the spouse who steps out of the workforce.”
A premarital agreement can protect both parties by anticipating milestone events that trigger additional sharing of funds, such as ten (or more) years of marriage or the birth of a child (or 18th birthday). It makes sense to identify these events before the marriage, when objectivity is present.
Is It Possible To Bust A Prenup?
It’s difficult to challenge the enforceability of a premarital agreement in court. There are two basic grounds: (1) proving the agreement was not entered voluntarily. This requires evidence that the challenging spouse could not make an informed decision because, for example, the other spouse failed to provide disclosure of property or made fraudulent misrepresentations to induce the first spouse to sign; or (2) proving the agreement is “unconscionable”—meaning, at the time it was entered, the agreement so favored one party that no reasonable person would have entered it.
What About A Postnup?
More than a prenup, a postnuptial agreement should be viewed with skepticism and never signed without independent legal advice. “It is important to understand why it is necessary to alter the community property presumption during the marriage,” explains Budner. It is not unheard of for a spouse to move assets from the marital estate into trusts or entities such as partnerships, in order to deprive the other spouse of access.
“Sometimes spouses sign important legal documents like these without understanding the real purpose and consequences, and they are shocked to learn what’s happened after the divorce is filed,” Budner says.
In theory, it should be easier to challenge a post-marital agreement because spouses owe a fiduciary duty to one another, which includes honesty in disclosing financial information. But in practice, it is still difficult to challenge a postnup in Texas.
If you or a family member wants to learn more about premarital or postmarital agreements, contact Calabrese Budner for a consultation. This law firm is ready to protect your assets and your future with an agreement that addresses what matters most in the unfortunate event of a divorce.
For more on the practicalities of a prenup and how it can strengthen your relationship, check out the Calabrese Budner website.