How To Make A Marital Property Agreement (And Enforce It!)

The last thing two people madly in love, actively planning for a future together want to do is give plausibility to the idea of a future apart. Though uncomfortable to consider right now, creating a contingency plan will undoubtedly reduce future emotional and financial stress if you and your spouse part ways.   

Marital property agreements are gaining more traction, with more couples opting for prenuptial agreements (prenups) than a decade ago. Recent studies have also shown that couples supporting each other’s individuality are stronger together when it comes to finances. 

In this step-by-step guide, you will learn how to draft an enforceable marital property agreement.

In this Article:

• Step 1: Have “The Talk”
• Step 2: Gather Financial Information
• Step 3: Hire an R&H Texas Family Law Attorney

Step 1: Have “The Talk”

It’s normal to feel nervous when discussing finances, especially when the conversation involves planning for a future you don’t want. No one wants to manifest a divorce-case scenario. But knowledge equips us with the ability to make informed decisions, navigate challenges, and solve problems effectively. Thus, knowing what a marital property agreement entails, how it legally works, and how having one can serve you well in the future is worth consideration. 

The worst-case scenario of an engaged couple having “the talk” isn’t hard to imagine. After all, stigmas around marital property agreements exist for a reason, though they’re typically compounded by other problematic, red flag-worthy behaviors. Being able to approach this topic in a respectful way can fortify your relationship’s foundation. 

Preparation

Know what you’re asking for by getting clear on the types of marital property agreements that are recognized in the Texas Family Code. Texas is one of 26 states that have enacted the Uniform Premarital Agreement Act, giving courts more flexibility in ruling on family law cases. It also tells individuals considering such an agreement how it can be enforced. 

Types of Marital Property Agreements

1. Prenuptial Agreement (Prenup)

Also known as a premarital agreement, a prenuptial agreement (prenup) is a contract that outlines the division of assets and debts in the event of divorce or death of a spouse. 

Prenups are drawn up before the marriage to establish separate property rights. With a prenup, if the parties desire, there is no accumulation of community property – a legal term for shared property – within a marriage, or there is a specific way community property accumulates. 

A prenup can make sense for a couple where one partner has more financial wealth or assets than the other or where one partner has significant debts or other liabilities or issues. 

2. Postnuptial Agreement (Postnup)

Also known as a postmarital agreement in Texas, a postnuptial agreement (postnup) is much like a prenup except the couple signs the contract after getting married. A postnup can include a number of provisions, but a common one that deals with property is called a partition and exchange agreement. This agreement deals specifically with the division of community property between parties.  

Property Settlement Agreement

A property settlement agreement is a legally binding contract that outlines how a couple will divide their assets and liabilities during a divorce. It can be drafted during the divorce process or in conjunction with a prenup or postnup agreement. 

Provisions in a property settlement agreement may include: 

• Division of real estate, including marital home
• Allocation of retirement accounts and pensions
• Distribution of personal property, such as vehicles, furniture, and collectibles
• Assignment of debts, such as mortgages, loans, and credit card balances
• Division of business interests

In short, prenups and postnups can offer couples flexibility in managing their property rights.

Properties Covered by Marital Property Agreements

The Texas Family Code defines property as “an interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings.” (§)4.001. 

Property can include:

• Houses or land
• Vehicles
• Money 
• Life insurance policies
• Retirement accounts (ex. Pension, 401(k), profit sharing, stocks)

Texas is one of nine states considered an equitable property state. As mentioned, community property refers to everything either party acquires together during the marriage. Without a marital property agreement in place, properties such as those listed above are subject to equitable division during divorce proceedings. Equitable doesn’t necessarily mean equal. The court may consider each asset’s value, why the parties separated, and discrepancies between each party’s income and earning opportunities, among other things. 

The court also considers each party’s separate property, or what they owned before entering into the marriage. 

What’s included as property in a prenup or postnup will vary depending on the couple’s unique circumstances. Essentially, anything that doesn’t break the law, hinder a child’s ability to receive child support, or violate Texas public policy is probably fair game. 

Provisions included in a marital property agreement may include:

• Property ownership responsibilities for each party
• Division of assets and debts in case of divorce
• Alimony
• Businesses
• Property division in cases of separation, divorce, or death 
• Wills and trusts

Know The Benefits

There are a number of reasons a couple may want to create a marital property agreement before or during their marriage. Here are some advantages of having one:

• Clarify separate and community property – If one or both partners are bringing significant assets into the marriage, a marital property agreement can clarify that those assets will remain separate property in the event of divorce.
• Protect one partner from another’s debts – This could be important if one spouse has significant liabilities, such as student loan debt or credit card debt, that the other doesn’t want to be responsible for.
• Safeguard a future inheritance – For instance, if one partner expects to receive a large inheritance, the marital property agreement could confirm the inheritance as separate and eliminate any claim to commingling it. 
• Shield business interests – For business owners who are also married, a marital property agreement could protect the business and assets from division if a divorce were to occur.
• A marital property agreement can be used to determine what happens to a property if one person passes away. 
• Specify wishes in blended families – Couples with children from previous relationships face unique challenges. A marital property agreement can ensure stepchildren receive or don’t receive certain property in the event of a death or divorce.
• Establish marital expectations – You may wish to set expectations for issues unrelated to finances, such as how to handle marriage infidelity

• Limit conflict during divorce – Establishing property division terms in advance can agreements can minimize disputes and lead to a more amicable divorce.

Marital Property Agreement Enforcement 

In order for your prenup or postnup to be legally enforced, you and your partner must both: 

1. Sign the written contract
2. Agree with the contract
3. Fully disclose your assets and liabilities
4. Find the contract fair and reasonable Tex. Fam. Code §4.006

Note: Even with a marital property agreement in place, a Texas court may review the agreement during a divorce to ensure that it is fair and reasonable to both parties. 

Marital Property Agreements and Coercion

While concern about the risk of coercion is fair and valid, legal instruments like the Uniform Premarital Agreement Act are there to protect from such instances. Additionally, Sec. 4.006 of the Texas Family Code explicitly states that a prenup is not enforceable if an affected party can prove: 

1. They did not sign the agreement voluntarily; or
2. The agreement was unreasonable when signed and, before signing, that party: 
   1. Was not given a fair and reasonable disclosure of the other party’s property or financial obligations
   2. Did not voluntarily or expressly wave in writing any right to disclosure of the property or financial obligations beyond what was provided at the time
   3. Did not, or reasonably could not, have known about the other party’s property or financial obligations 

Case Study – “Financial Ruin” 

In Martin v. Martin, the parties signed a marital property agreement claiming to partition and exchange the community estate. When the parties filed for divorce, the husband sought to enforce the property agreement. But the wife claimed she did not voluntarily sign the agreement because the husband had threatened her with financial ruin if she refused to sign. 

The trial court granted the husband a no-evidence motion for summary judgment, but the Texas Court of Appeals held that the wife raised a “fact issue precluding judgment on her statutory defense of involuntary execution.” As a result, the appeals court reversed the decision and sent the case back to the trial court. 

Case Study – No Signature

In Myers v. Myers, the trial court found the parties had a common-law marriage when a dispute came up during separation about a parcel of land considered shared property. The husband claimed that a partition and exchange agreement had established that the property was his. However, the wife testified in court that the husband used threatening behavior to try to coerce her into signing the agreement, but she never signed it. Without a signature, the husband’s claim was invalidated.

Step 2: Gather Financial Information

Once you and your partner decide to create a prenup or a postnup, each of you should compile a detailed list of your individual assets and debts. This list may include, but is not limited to, the following: 

• Bank accounts
• Investments
• Real estate
• Businesses
• Student loans
• Credit cards

Next, the two of you should share accurate information about your income and expenses. This list may include, but is not limited to, the following: 

• Salaries and wages
• Income from part-time or second jobs
• Inheritances
• Ongoing financial obligations

Your lawyer will request access to this information. Having it ready in advance will help speed up the process and maintain open lines of communication as you enter into a marital property agreement. 

Step 3: Hire An R&H Texas Family Law Attorney 

Creating a marital property agreement is a significant legal action with long-term implications, so it’s essential to consult with an attorney who specializes in family law. Our family law attorneys can help you understand the legal consequences and ensure your rights and interests are protected. 

Call 214-844-3775 to schedule a consultation today.