Understanding the Role of Prenuptial Agreements in Protecting Your Assets

Are you preparing to get married in Texas? You may be considering a prenuptial agreement. A prenup is a type of marital agreement that can protect assets. They are enforceable in Texas—as long as they are properly drafted and meet all of the state’s legal requirements. At Thornton Esquire Law Group, PLLC, we have extensive experience with prenups. Our Houston family law attorney provides a comprehensive overview of the role that a prenuptial agreement can play in protecting your assets.

Under Texas law (Tex. Fam. Code § 4.001), a prenuptial agreement (premarital agreement or prenup) is defined simply as “agreement between prospective spouses made in contemplation of marriage and to be effective on marriage.” In other words, a prenup is a contract that outlines the division of assets, debts, and responsibilities in the event of divorce, separation, or death. These agreements are designed to provide clarity and protection for both spouses. They can be useful for:

• Asset protection;
• Debt allocation;
• Business protection; and
• Estate planning (inheritance).

While some view prenups as unromantic, they can actually strengthen a relationship by promoting open communication about financial matters. Of course, that is not to say that prenups are right for every relationship in Texas. Still, they can be a useful tool. Here is how a prenup can protect assets:

• Clarification of Separate Property: Texas is a community property state. Separate property (pre-marital property) can be kept separate. A prenup is often used to define assets owned before marriage that will remain separate. A prenuptial agreement can also protect inheritance and/or gifts received during the marriage.
• Protection of Business Interests: For business owners in Southeast Texas, a prenuptial agreement can be especially important. It can shield personal business interests from becoming a divisible marital asset. In other words, a well-drafted prenup can prevent a spouse from acquiring an interest in the business upon divorce.
• Debt Protection: In some cases, one spouse may enter into marriage with significant debt. A prenuptial agreement can separate individual debts from marital debts. It ensures one spouse is not responsible for the other's liabilities. In other words, it can protect one spouse’s personal credit score and overall financial standing.
• Control Over Asset Distribution: A prenuptial agreement in Texas can override the default community property laws in Texas. A properly drafted agreement allows for customized distribution of assets upon divorce or death.
• Spousal Support: You can use a prenuptial agreement to resolve any future issues related to spousal support (alimony) before the start of the marriage. The agreement can set the terms for alimony, including amount and duration. In fact, one (or both) spouses can waive the right to seek alimony entirely.
• Protection of Children's Interests (Previous Marriage): Finally, a prenup can help to protect the financial interests of one spouse’s children from a prior marriage. It can be used to specify assets for these children in the event of a divorce or a death.
• Privacy in a Divorce: A prenuptial agreement in Texas can include a confidentiality clause that keeps certain financial information private if a divorce happens in the future. You may be able to use a prenup to prevent public disclosure of assets and liabilities during divorce proceedings if they ever occur.

Texas law recognizes prenuptial agreements. A prenup can be legally enforceable. However, that is only the case if the agreement meets certain core legal requirements. Here is an overview:

• Written Agreement: In Texas, a prenup must be in writing. State law is very clear: verbal agreements are not enforceable. Your prenup should be drafted and reviewed by an experienced Houston family law attorney.
• Voluntary: Both parties must sign the agreement voluntarily. Otherwise, it can be thrown out of court. Indeed, if there is evidence of coercion, fraud, or duress, it can invalidate a prenuptial agreement.
• Full and Fair Disclosure: Each party must provide a fair and reasonable disclosure of their financial obligations and property. The failure to disclose assets can render the agreement unenforceable. It may be ruled invalid on those grounds.
• Not Unconscionable: Texas has a broad provision that allows courts to invalidate provisions on the basis that they are unconscionable. The agreement must be fair and not excessively one-sided at the time of signing.
• Compliance with Public Policy: Finally, a prenup in Texas should not contain illegal terms. State law does not allow spouses to enter into prenups to deal with issues related to child custody, child visitation, or child support.

Tip: The best way to ensure a prenup is enforceable? Both spouses should have their own lawyer review the agreement before it is signed.

A prenuptial agreement can be a tool to protect your assets. One may or may not be the right option for your specific situation. At Thornton Esquire Law Group, PLLC, we have extensive experience assessing, drafting, negotiating, and reviewing prenuptial agreements. Our firm can help you protect your assets with the right prenuptial agreement. We provide personalized legal representation. Among other things, our Houston family lawyer is prepared to:

• Answer your questions and help you understand prenuptial agreements;
• Help you gather all financial information about your assets and your spouse’s assets;
• Ensure that you and your spouse satisfy Texas prenup disclosure requirements;
• Draft and negotiate your prenuptial agreement; and
• Take any legal action necessary to protect your rights and your interests.

At Thornton Esquire Law Group, PLLC, our Houston family law attorney has the experience to handle all types of prenups. We draft, negotiate, and review prenuptial agreements. If you have any questions about your options, our team can help. Call us now at (888) 378-1784 or contact us online for a confidential consultation. With an office in Houston, we provide family law services throughout the region, including in Harris, Fort Bend, Brazoria, Galveston, and Montgomery counties.