How Are Prenuptial Agreements Used in Texas?

December 7, 2023
Bradley Campbell
Young couple getting engaged who need to learn how a Prenuptial Agreement Works in Texas
Explore the essentials of prenuptial agreements in Texas with our comprehensive guide. Understand how prenups work in a community property state, their impact on assets, debts, and more. Prenups are ideal for couples planning to marry or seeking financial clarity and protection.
Bradley Campbell Tyler and Mineola TX Lawyer
Bradley Campbell
Bradley Campbell has over 35 years of experience. A trusted advisor and counselor, Attorney Campbell will help you find solutions for your case by focusing on personal attention, communication, and professionalism. If you need an attorney for probate, business law, or real estate with the experience and understanding to serve you with the individualized care and attention that your case deserves. Attorney Campbell provides consultations throughout the week at our convenient locations in Tyler, TX and Mineola, TX.
Understanding prenuptial agreements is crucial for any couple planning to get married, especially in a community property state like Texas. This article delves into the intricacies of prenups, offering valuable insights for those considering such agreements. Whether you're looking to protect your assets, clarify financial responsibilities, or ensure fair division in the event of a divorce, this guide provides the essential information you need.

What is a Prenuptial Agreement?

A prenuptial agreement, often referred to as a prenup, is a written contract between two people planning to get married. It outlines the rights and obligations of each spouse regarding assets, debts, and other financial matters. In Texas, a prenup becomes effective upon marriage and is governed by specific state laws.

Why Do People Use Prenuptial Agreements?

Premarital agreements are used for at least three reasons, only one related to divorce, explains Kiplinger’s article entitled, “Lessons to Be Learned from Kevin Costner’s Premarital Agreement.”  If two people have vast differences in income and property, a prenuptial agreement is often used to protect the spouse whose assets are much smaller and create provisions to transfer money or property to the spouse who is economically disadvantaged.  For instance, Actor Kevin Costner and his now ex-spouse Christine Baumgartner signed a prenuptial agreement before their wedding 2004, which included benefits that Baumgartner would receive upon divorce.

Three Reasons Couples Considering a Prenup Might Sign the Agreement:

  1. A well-drafted premarital agreement can be used before marriage to clarify the character of property or assets (separate or community property states) and the allocation distribution of assets and income in the event of divorce.
  2. A premarital agreement establishes the individual or joint responsibility for debts and liabilities, including claims, losses, and lawsuits. This type of premarital agreement is designed to provide greater asset protection for one spouse from claims from the other spouse from their business, financial, or other activities.
  3. A premarital agreement may also be used for estate tax planning purposes. Some estate planning tools to minimize estate tax can be utilized only with separate properties from each spouse.

How Did Kevin Costner's Prenup Impact His Divorce?

Costner and Baumgartner 's divorce was finalized in September 2023, and the legal arrangements outlined in their prenup decided distribution of the property and assets.  A large part of the four month divorce proceedings dealt with the disputes over their home.  According to their prenup, Baumgartner had 30 days to vacate their shared home after their separation. However, Baumgartner refused to move out claiming that Costner was trying to influence her ability to challenge the prenup, leading to legal disputes.

What Happens if One Spouse Challenges a Premarital Agreement in Court?

As was the case for Costner and Baumgartner, a premarital agreement frequently has a clause similar to a no-contest clause in a will.  The benefits that would otherwise be provided are lost if the agreement is contested. By challenging the premarital agreement, Baumgartner risked losing the $1.5 million that she would receive pursuant to that agreement. If the agreement is upheld after a legal challenge, any funds or other assets that would be paid to the other spouse under the agreement are lost. For a wealthy spouse providing contractual benefits that aren’t otherwise available for the other spouse, the in terrorem provision is an important tool to prevent a spouse from contesting the agreement.

Enforcing Prenuptial Agreements in Texas

The enforceability of prenups in Texas depends on various factors, including voluntariness and full disclosure. It's important to understand what makes a prenup legally binding in the state.

Who Needs a Prenup in Texas?

Contrary to common belief, prenups aren't just for the wealthy or famous. They are beneficial for anyone with assets, debts, or children from previous relationships. More and more Texans are getting married later in life and frequently have more assets and children from prior relationships. During a highly emotional divorce, a premarital agreement helps you divide assets and property. It can also protect you from your spouse’s debts, allocate assets for children from a prior relationship, protect the family business, and ensure the family home stays with the family. Understanding who needs a prenup and why can help couples in Texas make informed decisions about their financial future.

How Do Prenups Work in a Community Property State?

Texas is a community property state, meaning that most assets acquired during the marriage are considered jointly owned. A prenup can specify different arrangements, protecting individual assets and clarifying financial responsibilities.

Protecting Separate Property in Marriage

Separate property, such as assets owned before marriage or inheritances received during the marriage, can be protected through a prenup. This is vital in Texas, where separate property can become commingled with community property.  Additional ways to protect property in marriage is through creating a comprehensive estate plan. Read more in our article: Here’s Why You Need an Estate Plan.

How is a Couple's Debt Handled in Prenuptial Agreements?

Debt is a significant factor in prenups. Couples can use a prenup to protect themselves from each other's debts, such as student loans or medical bills. This is particularly important in Texas, where spouses might otherwise be responsible for debts incurred during the marriage.

Postnuptial Agreements: An Alternative to Prenups

For couples already married, postnuptial agreements offer similar protections as prenups.  Working with a Texas estate lawyer like Bradley S. Campbell will help guide a couple about how a postnuptial agreement in Texas can provide additional security for marital assets.

Drafting Your Own Prenup: Is it Advisable?

While couples can draft their own prenups, it's crucial to understand the legal complexities involved. In Texas, prenups must meet certain criteria to be enforceable.  Seeking professional legal advice from a Texas estate planning attorney is recommended.

Key Takeaways

  • Prenups are not just for the wealthy; they benefit anyone with assets, debts, or children from previous relationships.
  • In Texas, a community property state, prenups can protect individual assets and clarify financial responsibilities.
  • Professional legal advice is recommended when drafting a prenup.
  • Prenups can address alimony, separate property, and debts.
  • Postnuptial agreements offer similar protections for already married couples.
  • The enforceability of prenups in Texas depends on factors like voluntariness and full disclosure.
By working with an experienced Mineola estate lawyer, couples can draft provisions that allow the spouses to define their financial relationship and protect their assets in various ways, ensuring clarity and fairness in the event of a divorce. Book a consultation with Campbell Law Firm to ask how you make informed decisions about your financial future and protect your interests in marriage.
Share This Post
we will make the difference:
Briefcase icon
Over 35+ Years of Experience
Convenient Office Locations icon
Convenient Office Locations
Friendly and Helpful Staff icon
Friendly and Helpful Staff
Comprehensive Legal Services icon
Comprehensive Legal Services
Book A Consultation With Us Today
Book a Consultation
Subscribe to Our Informative e-Newsletter
Mineola Office

228 West Broad Street,
Mineola, Texas 75773

Tyler Office

3310 S. Broadway Ave, Suite 101
Tyler, Texas 75701

IMS - Estate Planning and Elder Law Practice Growth Advisors
Powered by