What is a Prenuptial Agreement?
A prenuptial contract is an agreement between two people who intend to marry that will become legally binding upon the solemnization of the marriage. Written and signed before the marriage, this legal document will contain various types of provisions. While each prenuptial contract is different, most will stipulate which of the assets and debts that are currently owned by one or both of the individuals will be excluded from the comprehensive property division scheme provided in the Texas Family Code in the event of divorce, and describe how all property that is obtained in the future (while both spouses are married) will be categorized as separate or community property.
Often , a prenuptial contract will contain a waiver by one or both parties of the right to support in the future if a divorce is filed (also known as spousal maintenance in Texas). It is essential that spouses also attempt to address what are known as "reserved" issues — matters that might come up in the future that neither spouse can foresee now. A prudent approach is to provide for these "reserved" issues in general terms that will still allow for negotiations between the divorcing spouses or the intervention of the court if one of the spouses is seeking to have an issue addressed by the courts.
Other provisions of a prenuptial contract may include a description of how specific assets are valued in the event of a divorce, who will pay the debts of the marriage, and how property that is owned prior to the marriage will be characterized and divided after a divorce.
Requirements in Texas for Creating a Prenuptial Agreement
Legal requirements for prenuptial Agreements in Texas
Regardless of where you are located it is important that you understand the legal requirements that go into making a prenuptial agreement valid; this is especially true in Texas where these agreements are governed under Chapter 4 of the Texas Family Code.
In order to be valid, a prenuptial agreement must be in writing, signed by both parties, and signed and notarized. In Texas, it is not legally required to have the agreement witnessed by a notary. In fact, witness signatures are not even specifically mentioned in the law providing for prenuptial agreements: Texas Family Code § 4.003-5. The only way that a prenup can be valid without being in writing is if the agreement is enforceable without being in writing as stated in subsection (b).
One important thing to point out when establishing the validity of a prenup is that it is not automatically invalid if one party is relieved of the obligation imposed or receives a benefit from the agreement. An example of this occurring is if one spouse does not pay child support, but is relieved of his or her obligation to pay child support according to the prenup. If child support is in the prenup, it must still be enforced, even if that spouse has been relieved of paying that child support. The validity of the remainder of the prenup will remain intact.
Under Texas Family Code § 4.004, a prenup will not be enforceable if:
There are a few other "out" clauses that a spouse may take advantage of, and get out of the type of agreement that he or she may have initially agreed to. Again, it is important that you fully understand legal requirements and limitations that are required in your state of residence, and the enforceability of various provisions in your agreement. You should also remember that legal rights cannot be waived. You may also be required to testify in open court, unless findings of fact and conclusions of law are filed by the court; and an obligation of support resulting from a marital property regime may not be waived under a premarital agreement.
Essential Elements of a Prenup Template in Texas
Understanding Texas prenup templates goes beyond starting and finishing a document and obtaining signatures. It requires an understanding of the language that exactly reflects the desires of both partners. Certain sections must be included to succeed, such as the three key components below.
Separate Property Clauses
Since property can become commingled, often through actions of one partner or the other, it’s important for each to agree on the type of property they’re bringing into a marriage. A separate property clause should include every item brought in, and also stipulates that a spouse can manage their own property without express permission from the other spouse. This means that if one spouse buys a truck, for instance, and registers it in their own name, they can do whatever they want with the truck, and the other spouse has no right to access it.
Confirmation of Rights and Interests in Property
This section is run-of-the-mill for many states, with a few variations depending on the state law that supersedes. Basically, it lists all property offered to the other person, and both partners’ investment in that property. The investing spouse must retain a right to their property for it to truly be their separate property.
Provisions to Change
Because language must be clear, changes should always be written and agreed upon by both partners. Oral changes are not legally binding. It’s best to have this clause also include a provision for resolving disagreements, should they arise. It can also outline how the original prenuptial agreement may be used to build on a postnuptial agreement in the event of divorce.
Not all the language of a prenuptial agreement template will apply to every couple. For couples in Texas, it’s important to work within the legal framework the state provides.
How to Prepare a Texas Prenuptial Agreement
The first step in the prenuptial agreement process is to have an in-depth conversation with your partner about each of your needs and expectations regarding a marriage, and the financial impact of a divorce. If you have children from prior relationships, or children you expect to have soon, you should also discuss with your partner your desires for your children’s future and for your partner’s role in their lives.
If you have any assets that you consider important, such as a family business, a special home or a cherished family heirloom, you should also explain your concerns, so that those assets can be adequately protected.
You may also wish to prepare a list of expectations and/or concerns in chief, so that it’s easier to go through each of them with your partner.
The next step is to have your attorney draft the agreement to be reviewed by both you and your partner. Your attorney should include a proposed draft of the basic elements to be covered in the agreement and a legal explanation of what they mean. You and your partner then should carefully review each item, paying close attention to how each provision will affect lives should a divorce be necessary. Both of you should have selected advisors (such as an attorney, CPA or financial advisor) review the drafts, in order to ensure that all of the most critical areas of concern are addressed.
The third step is for you and your partner to sit down with your attorney and go through the draft of the agreement. If both you and your attorney are satisfied, you should take the final draft to your partner so that he or she can consult with his or her own attorney.
Common Pitfalls of a Texas Prenuptial Agreement
One of the most common mistakes couples make when drafting a prenuptial agreement is to sign documents already prepared by someone else, whether it’s a parent, friend, or the original Drafter. Couples have a natural instinct to save money which is already unexpected or burdensome; as a result, they may be tempted to sign templates or forms found on the internet or drafted by someone other than an attorney. The results may be disastrous.
The Houston Bar Association issued a warning in May 2019 against using internet templates. Most templates make no attempt to limit application to Texas Family law. Many templates will be appropriate for use in other states and may even contain Texas specific language , which is entirely inappropriate for another state’s laws. Templates may also be written in such a way to nullify the remainder of the agreement. Another mistake often made by those who draft their own is to simply disregard the validity requirements of a Texas prenuptial agreement. Because the Texas family code changed in 2016, there are a few new requirements to review before executing the agreement. Some of these include requirements that the Agreement be signed in front of a Notary Public and another witness. A common mistake I see with new clients transferring Texas property to a "Texas Joint Venture". Such a joint venture is simply two or more people (such as after marriage) agreeing to hold property or investments in joint names. A real estate joint venture is a limited liability company or unit trust, in which real and personal property are held in common. It is important to disclose such property as part of a prenuptial agreement; contrary to common assumptions, the law does not read minds.
Texas Prenuptial Agreements and Lawyers
Do You Need a Lawyer for a Texas Prenuptial Agreement? Well there are a lot of lawyers that will sign a prenuptial agreement that they drafted themselves. Dave Ramsey even says that you don’t need a lawyer to create one.
With all due respect, there are lines of the Dave Ramsey creed that I simply do not agree with. I have been known to disagree with Dave Ramsey before. This is one of those times. And the reason is that the State Bar of Texas requires lawyers who draft prenuptial agreements to sign what’s called a Certificate and it states (in part):
All the information in this agreement was fully and honestly disclosed to my prospective spouse. I did not enter into this agreement in reliance on any representation or statement made by the other party. I voluntarily consent to this agreement.
The problem with that is that if you do it without the advice of a lawyer, then how can you say that? You should not be putting your signature on something pretty important with regard to your future financial well being without having consulted a lawyer. Maybe you are a legal expert in contract law, much like Judge Judy, but most people don’t know the nuances of what laws apply to each provision of a prenuptial agreement.
In addition, a prenuptial agreement must be signed a certain period of time before the marriage. And without a lawyer advising you to sign it, who knows when that time begins to run. Plus, the agreement has a requirement that the parties can’t use coercion to get the other to sign. So who is going to be able to establish that you were not coerced into signing it without a lawyer advising you?
Of course, one of the most important reasons of all to not use a template or do-it-yourself prenuptial agreement is that they are not written by lawyers. It is always a good idea to consult an experienced lawyer who will give you the answers you need with regard to your personal situation. Everyone’s situation is different. While there may be a quality template that addresses your needs, odds are that it doesn’t, unless it was specifically written for you.
It is also important to have the document properly notarized. You don’t want a third party or family member later to claim you didn’t sign it.
Even if you get a lawyer to look at the agreement before bank employees view it, if they have an issue with it, your bank might return the document instead of approving a transfer. Also, a lawyer cannot represent both parties to a prenuptial agreement. So, you don’t have to worry that your lawyer will take advantage of you.
Yes, I really think it is that important. While a prenuptial agreement should not be used as a bargaining chip in a relationship, you don’t want to steamroll your future spouse. In fact, a failure to handle a prenuptial agreement properly could potentially result in it being declared void after the marriage is over.
So, the best prenuptial agreement templates in Texas still need a lawyer to review and advise you about.
Making Changes to a Prenuptial Agreement Template
Customizing a standard prenuptial agreement template may seem like a straightforward task, but it is essential to ensure that it addresses the unique needs and circumstances of both parties. A prenuptial agreement is a legal contract that outlines how assets, debts, and other financial matters will be addressed in the event of divorce or death. However, a standard prenuptial agreement template may not account for all the individual circumstances of each couple, such as specific assets or personal interests that need protection.
To customize a prenuptial agreement template, couples should first identify their specific needs and priorities. For example, one person may own a business or a piece of property before the marriage that they want to protect from being divided during divorce proceedings. Another person may have children from a previous marriage and want to provide for them in the event of their passing. It is essential to discuss these matters with a qualified lawyer in order to get a better understanding of what to include in the agreement.
Once the couple has identified their specific needs and priorities, they should work together to modify the standard prenuptial agreement template to reflect their unique circumstances. This may involve adding or removing clauses, specifying the division of property or assets , or outlining the details of spousal support. Couples should be careful to ensure that all provisions are legally enforceable and clearly stated to avoid confusion or disputes in the event of divorce or death.
In Texas, customizing a prenup agreement is straightforward. Many Texas prenuptial agreements are based on a common template that is common in many states, and adding or removing clauses is simple. A few examples of how a prenuptial agreement template may need to be customized in Texas include:
It is essential that all provisions included in a customized prenuptial agreement are clear, specific, and unambiguous. Any vague or ambiguous language can lead to disputes down the road and may render certain provisions unenforceable. When in doubt, couples should seek the guidance of a qualified lawyer to help them draft a prenuptial agreement template that meets their needs and is compliant with Texas law.
Ultimately, customizing a standard prenuptial agreement template is crucial to ensuring that the agreement protects both parties’ individual interests and meets their long-term needs. By discussing their specific circumstances with a qualified lawyer and making necessary modifications to the agreement, couples can enter into their marriage with confidence and peace of mind knowing that their prenup agreement has set the safeguards in place to protect their future financial interests.