Many people have heard of pre-marital agreements or “pre-nups” in Texas. Pre-marital agreements are property agreements made between two parties before they get married to clarify how the parties wish to characterize their property during their marriage.
However, what is lesser known, is that Texas law also allows for post-marital agreements, which are property agreements made between already married parties. While post-marital agreements are less common than pre-marital agreements, married couples may find the need for post-marital agreements to partition their already existing marital property or to determine what characterization property in the future acquires.
1. How Does Texas Law Characterize Property?
“Characterizing property” are the legal words used by the Courts to determine if property is community or separate property. When a Texas Family Law Court looks to characterize property, they look at when the property was acquired by the party or when it was purchased by a party.
Under Texas law, Tex. Fam. Code Ann. § 3.001, A spouse's separate property consists of:
(1) the property owned or claimed by the spouse before marriage;
(2) the property acquired by the spouse during marriage by gift, devise, or descent; and
(3) the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.
- Separate property means that only one party in the marriage owns 100% of the interest in a piece of property.
- Examples of separate property are a house bought before marriage, money in a 401k or other retirement plan before marriage, inheritance from family members during the marriage, etc.
Community property consists of the property, other than separate property, acquired by either spouse during marriage. Tex. Fam. Code Ann. § 3.002.
- Community property means that the property is equally owned by a married couple, i.e.. each party owns 50% interest in the property.
- Examples of community property include all money during a marriage earned by a spouse as a salary, commission or bonus, a house or car purchased during the marriage, and stocks earned during the marriage.
In Texas, under Tex. Fam. Code Ann. § 3.003, the Courts will presume all property that belongs to a married couple is community property unless clear and convincing evidence is presented to the Court to prove that property is separate property.
2. Why Do a Post-Marital Property Agreement?
Sometimes married couples decide that they either want to: change the characterization of the property from community property to separate property, they want to change the separate property to community property, or they want to protect future property from being characterized in a certain way. For these reasons, the Texas law allows the parties to draft, agree to and sign, post-marital agreements.
Examples of situations in which couples have done post-marital agreements:
- married couple has contemplated divorce but is not ready to actually divorce but want to divide up the property;
- husband’s family owns a company that they want to pass down only to blood family;
- husband has been sole financial support of family with a special needs child; parties want to live apart but keep financials tied together.
3. What Can Go Wrong with A Post-Marital Agreement?
While the Texas Family Code requires a post-marital agreement be in writing and signed by both parties, this is a deceptive simplification of the power behind drafting a post-marital agreement. Parties believe that if they have an agreement they drafted and signed, that it should just be enforced by a Court. However, many issues arise with post-marital agreements and the time people find out about the problems are in Court, after one party has filed for divorce. This leaves the Court having to decide disputes such as if each party signed voluntarily or if the agreement unconscionable.
Post-Marital Agreements are good tools to effectuate a married couples’ agreement to characterize property. However, there can be pitfalls if the agreements are not done in the safest, most transparent way possible. Please contact Hunt Law Firm to hire one of our expert attorneys to help navigate the Post-Marital Agreement to help you effectuate an enforceable agreement so that you can relax in your choice for your future.