The division of property is a highly contested issue in most divorce cases. Individuals going through a divorce frequently inquire about protecting their assets, especially those they owned prior to the marriage. Common methods of asset protection are marital property agreements. A prenuptial agreement is not solely for lavish celebrity divorces; it is a useful tool that can clarify property ownership and prepare the parties in the event of divorce. There is also the oft-forgotten brother of the prenuptial agreement, the postnuptial agreement.
Proving Separate Property
Texas is a community property state, meaning that all property acquired during marriage is presumed to be community property (i.e. belonging 50% to each spouse) unless proven otherwise. Property owned prior to marriage, as well as inheritances and gifts, is separate property. The divorce process divides community property and confirms separate property.
The spouse asserting the claim of separate property has the burden to prove it. If you own property prior to marriage, maintain careful records. Deed records, gift letters, and bank statements can go a long way in proving the separate property nature of an asset, which will be required absent a pre- or post-marital agreement.
A premarital agreement, commonly referred to as a “prenup,” is an agreement between prospective spouses that is executed before marriage, and becomes effective upon the marriage occurring. A premarital agreement must be in writing and signed by both prospective spouses. The premarital agreement can provide for a variety of issues, such as ownership and characterization (community or separate property) of assets, whether spousal support will be paid after termination of the marriage, the division of property upon divorce, and the right to manage property. A premarital agreement can be amended or revoked, but the amendment or revocation must be in writing and signed by both parties.
What happens if you file for divorce and your spouse refuses to abide by your premarital agreement? The spouse who does not wish to follow the provisions of the prenuptial agreement must prove either that they did not sign it voluntarily, the agreement was unconscionable before it was signed, or that they were not provided a fair and reasonable disclosure of the property or financial obligations of their prospective spouse prior to the agreement.
If you are engaged and wish to enter into a premarital agreement, speak with a family law attorney experienced in writing and enforcing such agreements. It is best practice for each spouse to be represented by his or her own attorney regarding the premarital agreement. It will also be important to prepare an inventory of all your property, debt, and other financial obligations to ensure fair disclosure.
If you are already married, it doesn’t mean it is too late to enter into an agreement regarding the characterization of property. Postnuptial agreements, or partition agreements, allow parties to set out what property is the separate property of each spouse. Spouses can also agree that any income from a separate property asset is also separate property. For example, if a husband inherits funds prior to marriage, those funds are his separate property. Let’s say that during the marriage, he purchases a lake house with that inheritance money. Because the lake house was purchased during marriage, it is presumed community property until the husband proves otherwise. To avoid having this fight during a divorce, and having to trace the funds used, the husband and wife can enter into a post-marital agreement that confirms the lake house as the husband’s separate property. This will save the parties in stress, conflict, and attorney’s fees.
Like premarital agreements, partition agreements must be in writing and signed by both spouses. The agreement must be signed voluntarily and after fair and reasonable disclosure of the property or financial obligations of both parties.
Talk to Hammerle Finley
If you are considering a divorce and are concerned about the protection of your assets, speak with the team at Hammerle Finley Law Firm, which includes experts in divorce, child custody, contracts, and estate planning. You have worked hard for your assets; find the attorney who will fight to protect them.