When people are newly married, they focus on their hopes for a happy future with their new spouse. Even after years of wedded bliss, most couples expect things will work out. They rarely prepare for the possibility of divorce, yet failing to consider how the end of a marriage may affect you financially can be disastrous.
Circumstances and people can change, and establishing an agreement between partners can benefit both partners. The best way to protect your assets after marriage is with a postnuptial agreement. A skilled family law attorney can explain how this document works for each spouse in the event of divorce.
Prenuptial vs. Postnuptial Agreements
Most of us are aware of the idea of a prenuptial agreement, which is written up and signed before the wedding. However, if a couple gets married without a prenup, a postnuptial agreement is an option. Understanding how assets can be protected by a postnuptial agreement can help give spouses peace of mind that their interests are being protected.
The purpose of both a prenup and postnup is to protect each spouse’s assets if they part ways. Assets and financial ties that are brought into a union can often be a driving factor in divorce proceedings if not adequately addressed. Because of this, prenuptial agreements are typically utilized to ensure certain parameters are set for how assets and property will be divided in the event of divorce.
A postnup clearly lists who owns what and how assets will be distributed. It limits the chance for surprises and can be altered if your financial circumstances change over the years. Since Texas is a community property state, assets are divided equitably by the state unless there is a marital agreement between the couple.
What is a Postnuptial Agreement?
Despite what one may think, pre and postnuptial agreements are fairly similar in nature. A postnuptial agreement (called a marital property agreement in Texas law) is a legally binding contract signed by a couple after they are married. These agreements can dictate how a couple’s assets will be split should the marriage end in divorce.
In order for a postnuptial agreement to be valid, it must meet the following criteria:
- Be formalized in a written document
- Be voluntarily executed by both parties
- Disclose all assets, income, and liabilities owned by each spouse
- Be fair to both spouses
Both parties must sign of their own free will since any sign of coercion or duress can invalidate the document. It’s important that an experienced family law attorney review the proposed postnuptial agreement to ensure all necessary elements are contemplated within the agreement and that it is fair.
If the marriage is dissolved, the postnuptial agreement must be upheld over the state law. However, a judge has the discretion to throw out a portion or the entirety of a postnup in the event they determine it is punitive or unreasonably one-sided.
Using a Postnuptial Agreement to Protect Your Marital Property in Texas
In nearly every relationship, couples tend to disagree about children and money the most. Differences in income levels or spending expectations should be addressed prior to the wedding for the strongest chance of success. Yet, discussing financial habits and goals in the context of divorce can be uncomfortable for most people.
However, using a postnuptial agreement can actually make your marriage better since it removes the questions about dividing assets. Divorce is fraught with complex emotions, and individuals often let their anger get the better of them, stubbornly refusing to negotiate. When the decisions are made before problems arise, couples can rely on the logic and experience of a neutral party to craft an agreement for them both.
Situations When a Postnuptial Agreement Can Benefit You
When you are first married, you may not see the use of a prenup if you both have an equal income or property. Many couples starting out don’t have a lot to protect, but that can change dramatically over the course of the union. A postnup is typically created when situations arise where finances are affected, such as:
- One partner wins a substantial lottery payout.
- A spouse inherits money or property in their name only.
- A parent wishes to ensure family assets are handed down instead of divided.
- One partner begins a successful business in which the other partner invests a significant amount of “sweat equity.”
- The couple buys vacation or investment properties, vehicles, or other items, and they wish to clearly state how these will be divided in a divorce.
- Each partner has separate bank or retirement accounts they wish to retain as separate property after divorce.
- There are children brought into the marriage, and the respective parents want to clarify their wishes for custody and child support.
It’s important to acknowledge that Texas postnuptial agreements cannot establish child custody. This is done when the marriage ends at the discretion of a family court judge.
However, when the parents have stated their wishes in a formal document, the court will take these into account when making its decision.
What To Avoid When Negotiating a Postnuptial Agreement
In general, a postnup is extremely useful for removing the emotions from post-divorce property division. By the time a couple breaks up, they may not be thinking clearly, and fighting can delay the process. However, it’s critical that you work with a skilled lawyer who can help you avoid pitfalls and can make your postnup everything you need it to be.
Don’t Let Your Spouse Rush You to Sign
If your partner springs an agreement on you and says you need to sign it quickly, that’s a sign to wait. In some cases, they may be preparing to end the marriage, or they may be trying to hide something. Regardless of your situation, there is no reason you have to sign right away.
Avoid Signing a Postnup Without a Legal Review
Try not sign a postnup or any marital agreement without having your own lawyer review it first. While you may believe your spouse to be trustworthy, every family law attorney has stories about documents that were unfair or outright illegal. Just as in a divorce, it’s worth your time to engage a lawyer who is exclusively on your side for negotiations.
Having a legal professional examine the document can also alert you to potential fraud or hidden assets. If you are presented with a postnup to sign and suspect your spouse isn’t listing everything, your attorney can hire a forensic accountant to determine if anything is devalued or hidden.
Don’t Sign if You Are Under Duress
Your partner may be subtly pressuring you to sign the agreement, or they may blatantly threaten to harm you if you don’t. While you can claim fraud and duress as reasons to invalidate the postnup during a divorce, it’s far better to avoid signing until the document conforms with your needs as well as your spouse’s.
Can A Postnuptial Agreement Be Broken in Texas?
If you signed a postnuptial agreement without closely reviewing it or feel that your spouse may be hiding something, you may have options to have the document nullified or adjusted. Both parties must agree to this. Below, we discuss three reasons a spouse can break a postnup in Texas.
You Didn’t Sign Voluntarily
If you can provide proof that you did not sign the agreement voluntarily, you can request that a judge allow changes or invalidate the postnup. Examples of this could include showing that you were misled or misinformed about the contents of the document, that your partner didn’t allow you enough time to review it, or that you were pressured into signing.
Your attorney can request witness testimony and look for other ways to show this reason. This might include text messages or other ways you indicated to others that you didn’t feel ready to sign or that you signed under false pretenses. Your lawyer may also be able to find statements or indications from your spouse that they were trying to fool or push you to sign.
The Agreement Was Incorrect
If the details of the postnup were incorrect when it was signed, it could be broken or altered if your attorney finds proof. One spouse may have left out or given wrong information on purpose or by accident. In addition, you must show the following:
- You didn’t have a full understanding of your spouse’s assets on your own.
- You didn’t receive a full and accurate disclosure of your spouse’s property and financial resources (perhaps because of fraud).
- You didn’t sign a waiver that released your partner from having to make a full and accurate list of their income, assets, and liabilities.
One Spouse Changes the Status of an Asset
A marital agreement is intended to include a complete and accurate list of each partner’s assets at the time of its creation. In Texas, all assets acquired during a marriage are considered marital property unless they are specifically given to or inherited by one spouse during the marriage or owned by one spouse prior to the marriage.
Part of a postnup will likely include statements indicating the status of an asset (marital or separate) and who receives it after a divorce. Changing the status of an asset can be a reason to nullify the document.
For example, if a bank account is considered separate for one partner, but they then use money from that account to buy a jointly owned home with both spouses’ names on the deed, the account becomes marital property. The document will need to be altered to reflect the change, and the couple must agree on how to treat the account if they divorce.
Brazoria County Divorce Attorneys
When considering marriage, it’s important that all assets and finances being brought into the union are accounted for. While the stress of drafting a valid postnuptial agreement can be daunting, with the help of an experienced family law attorney, couples can have peace of mind in knowing their assets are taken care of.
At Terry & Roberts, we can help you plan for your future by drafting prenuptial and postnuptial agreements. Contact our experienced legal team today for more information on how we can help you protect your assets.