It's not at all unusual to feel uncomfortable with the idea of a prenuptial agreement.
We've heard people say they don't like the idea of thinking about divorce before they even get married. And that's understandable.
But avoiding a potentially uncomfortable topic is not necessarily a good idea, either. It could be worth the effort to decide as a couple whether a prenuptial agreement—also known as a prenup or a premarital agreement—is right for you.
You should also know that more and more couples are seeing value in setting up some kind of premarital agreement. A 2022 survey on prenups by market research firm Harris Poll found that out of 1,000 people, 15% of married or engaged respondents had signed a prenuptial agreement, a considerable increase from 3% in 2010.
What’s more, setting up a prenup does not increase a marriage’s likelihood of ending in divorce.
As California-based family attorney and mediator Sandy Roxas told Brides magazine, from what she has seen, her clients with prenups have fared quite well.
“The divorce rate in California is over 50%, however in my sixteen years of practice, only 5% of my premarital agreement clients have returned to file for divorce or legal separation," Roxas said.
To help you navigate the pros and cons of prenups, we’ve put together this guide with basic information about prenuptial agreements, particularly in Texas.
What is a Prenuptial Agreement?
A prenuptial agreement is a legally binding contract signed by both parties prior to marriage. that determines what happens in case of a future divorce.
Specifically, a prenup outlines how assets and debts will be divided if the marriage ends.
Beyond asset and debt division, prenups can also address various other matters, such as spousal support, property rights, and even estate planning considerations.
While some may view prenuptial agreements as anticipating the end of a marriage, they can actually strengthen communication and foster transparency between partners, laying a foundation for a strong and secure relationship.
The Benefits of a Texas Prenup
There are good reasons why a Texas couple may want a prenuptial agreement. Here are some of them:
Protects assets you owned before the marriage: Without a prenup, Texas is a "community property" state, meaning all property acquired during the marriage is divided 50/50. A prenup lets you protect possessions you already had.
Clarifies financial expectations: Establishing a prenup requires open talks about finances, debt obligations, spending habits, and other personal finance topics that couples sometimes are reluctant to discuss. Getting it all out in the open prevents surprises down the road.
Promotes planning for inheritances and family businesses: If one partner expects to receive a large inheritance or already owns part of a family business, premarital agreements can ensure that those assets stay with the intended recipient.
The Downsides of a Prenup in Texas
However, there are some disadvantages to consider as well before saying "I do" to a prenup. They include:
Upfront cost: Having an attorney draft a solid prenup costs $2000+ in legal fees.
Can seem unromantic: Some partners feel prenups undermine trust and commitment. Approach conversations about prenups sensitively to avoid hurt feelings.
Terms could change: Much can happen during a marriage, so if you create a prenuptial agreement, it will be important to revisit it occasionally to amend terms as needed.
Texas judges will generally uphold updated prenups.
What Couples Can and Cannot Include in a Texas Prenup
When developing a prenup in Texas, you and your future spouse have broad flexibility in coming up with mutually agreeable contract terms about how to divide your property if you later divorce.
However, there are a few limitations imposed by Texas law on prenup content. They include:
-How to split marital property and debts
-Plans for spousal support if you divorce
-What happens to benefits and rights from wills, trusts, retirement accounts, annuities, and similar accounts and documents.
How to handle the commingling of community property with separate property
-How future earnings will be classified
While Texas generally gives wide latitude on prenup terms, there are certain stipulations Texas law does not permit in domestic contracts like prenups. They include:
-Anything promoting divorce
-Limiting child support payment amounts
-Blocking child custody/visitation rights
-Forcing one spouse onto government assistance
-Requiring illegal or morally objectionable acts
Any provisions found by a judge to encourage divorce or keep a dependent spouse impoverished risks nullifying sections or the entire prenup.
This is why enlisting an experienced attorney is crucial for crafting an enforceable agreement. They keep you safely within allowable boundaries under Texas statutes.
Broaching the Topic
Because prenuptial agreements do require what may be an awkward financial conversation, here are some tips for making it easier:
-Bring up this subject early to avoid surprises.
- Frame talks positively—explain why you want the protection.
- Be honest about all assets, debts, and property ownership details.
- Listen to any concerns your future spouse expresses.
Protecting Against Responsibility for Spouse's Debt
One crucial aspect of prenuptial agreements in Texas is the ability to shield yourself from the financial burden of your spouse's debts.
Because Texas follows community property laws, both spouses are generally responsible for debts incurred during the marriage in Texas. However, a well-crafted prenuptial agreement allows you to establish clear guidelines regarding each party's financial responsibilities. Here are some tips for approaching debit in your marital agreement.
Protection of Separate Assets: Emphasize the separation of individual assets and debts acquired before the marriage. This ensures that your personal financial standing remains unaffected by your spouse's pre-existing obligations.
Debt Division: Clearly outline how existing debts will be handled in the event of a divorce. Specify whether each spouse will be responsible for their individual debts or if there will be a shared responsibility for certain obligations.
Financial Transparency: Use the prenup as an opportunity to foster open communication about each other's financial situations. Discuss current debts, credit scores, and any outstanding financial obligations to eliminate surprises and build trust.
Limitations on Future Debt: Consider incorporating provisions that limit the extent to which one spouse can incur debt on behalf of the other without explicit consent. This helps prevent unforeseen financial liabilities during your marriage.
Including information on debt protection within the prenuptial agreement reinforces its role as a tool for thoughtful financial planning and risk management in marriage.
Safeguarding Business Interests
For entrepreneurs in Texas, a prenuptial agreement can serve as a crucial instrument in protecting their hard-earned assets and business interests. Here are key considerations for including business protection clauses in your prenup:
Business valuation: Clearly stipulate how the business will be valued in the event of a divorce. This valuation method can help determine the extent to which the business will be considered part of the marital estate.
Separation of business and marital assets: Outline the separation of business assets from marital assets. Specify that the business and its associated income remain the sole property of the business owner, safeguarding it from division during divorce proceedings.
Spousal involvement: Clearly define the level of involvement, if any, that the spouse will have in the business. This can include decision-making authority, management roles, and whether the spouse is entitled to a share of business profits.
Preventing business liquidation: Address the possibility of the business being sold or liquidated in the event of divorce. Establish terms that prioritize the continuity and stability of the business, reducing the risk of forced liquidation to satisfy marital asset division.
Future business ventures: Anticipate and account for future business ventures. If you plan to start additional businesses during the marriage, clarify how these ventures will be treated in the event of a divorce.
Buy-sell agreements: Consider incorporating buy-sell agreement provisions into the prenup. This can establish a predetermined process for selling or transferring business ownership in the event of divorce, protecting both spouses' interests.
Financial compensation: Determine whether the non-business-owning spouse will receive any form of financial compensation or support in consideration of the business's success, and if so, outline the terms of such compensation.
Including these provisions in a prenuptial agreement ensures that business owners can enter into marriage with confidence, knowing that their business interests are protected.
Get an Attorney’s Help With Your Texas Prenup
While online templates make setting up prenups seem like a quick and easy way to save money, having an experienced family law attorney customize your prenuptial agreement is highly advisable. Texas judges scrutinize DIY prenups more closely for enforcement issues compared to ones created by legal professionals.
An attorney can handle all the required formalities and legal language intricacies involved with prenups to ensure yours stands against legal challenges if needed down the road. They can also advise you on what can and cannot be included based on Texas statutes.
Fostering Peace of Mind
While certainly not essential, more and more couples see the wisdom in outlining financial ground rules for marriage ahead of time through prenups.
For those bringing significant personal assets into a marriage or looking to safeguard future inheritances, prenups can provide invaluable peace of mind.
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