Marital Agreements & Prenups

INTRODUCTION
Texas has a variety of marital agreements in place: prenuptial, postnuptial, cohabitation, nonnuptial, and right of survivorship. Each of the agreements is governed by different and nuanced statutory and common law, and can significantly impact the way that parties enter into and dissolve their formal or informal relationship under Texas law.

DIFFERENCE BETWEEN PRENUPTIAL AND POSTNUPTIAL AGREEMENTS
A Houston Texas prenuptial agreement is an agreement entered into before marriage which binds both parties as to rights and obligation should the marriage come to an end. By contrast, a postnuptial a an agreement for the very same purpose, but one which was entered into after the marriage had already occurred. Texas recognizes both prenuptial and postnuptial agreements.

Such agreements are essentially contracts which govern the division of property, spousal maintenance (alimony), and other possible issues which may arise during a divorce. Common reasons why parties enter into such agreements include preserving assets brought into the marriage as separate property which may otherwise become a communal asset during the marriage, preserving family fortunes for children from an earlier marriage, to agree on future alimony (or, lack thereof), to agree on how assets would be split in the event of a divorce, and other such issues.

PRENUPTIAL AGREEMENTS UNDER TEXAS LAW
Texas prenuptial agreements are governed under Texas Family Code Chapter 4, wherein they are called “Premarital Agreements.” Under said chapter, in order for a prenuptial agreement to be enforceable, it must be in writing, and, signed before marriage. It is that simple. In fact, the statute which outlines the requirements for Houston prenuptial agreement to be valid is Texas Family Code §4.002, which merely states: “[a] premarital agreement must be in writing and signed by both parties. The agreement is enforceable without consideration.”

Note that Texas Family Code §4.106(b) provides that for prenuptial agreements which affect a party’s interest in real estate, the agreement should also be sworn or acknowledged (which in practice normally means signed before a notary public), so that it may then possibly be filed with the county records in the county where the real estate is.

In Houston TX, Prenuptial agreements do have limits, however. For example, under Texas Family Code §4.003, prenuptial agreements are limited the following way:

(1) they cannot violate public policy (this statutory verbiage has been interpreted by the Courts to mean that an agreement shall not advocate divorce or make divorce mandatory in case of an event, or, unreasonably limit a child’s religious tutelage);
(2) shall not defraud creditors, and;
(3) shall not adversely affect child support. [The child support doctrine does not state mean that the parties cannot pre-agree on a child support amount; it simply means that the court may override that provision of the agreement if the Court feels that it is in the best interest of the child. (Texas Family Code §154.124(b); see also Radke v. Radke, 521 S.W.2d 749, 751 (Tex.App. – Houston [14th Dist.] 1975, no writ). For this reason, child support provision in prenuptial agreements are never certain to hold up in a court of law.];
(4) prenuptial agreements cannot waive a prospective spouse’s ERISA retirement benefits;
(5) at the time of this publication, court precedent has been developing that a prenuptial agreement may not waive a prospective spouse’s non-survivorship interest in ERISA, but this doctrine is not yet “ironclad.” And finally,
(5) a premarital agreement cannot decide on custody of future children born into the marriage.

Per Texas Family Code §4.005, once a prenuptial agreement is executed, it may be amended or revoked only in writing. Per Texas Family Code §4.001(1) and 4.004, if the couple decides not to marry after executing the prenuptial agreement, then there is no need to formally revoke the agreement, as it becomes binding only once and if the couple marries. If the couple divorces, the prenuptial agreement is typically introduced in Court as evidence by one of the parties, in order to enforce its provisions.

CONTESTING PRENUPTIAL AGREEMENTS IN TEXAS
There are multiple methods to contest a prenuptial agreement in Texas. These methods may be generally divided into two categories – agreements made prior to September 1, 1993, and, agreements made on or after September 1, 1993.

PRE SEPTEMBER 1, 1993 AGREEMENTS

For a prenuptial agreement entered into before September 1, 1993, a party may generally assert all the defenses available to him or her were the prenuptial agreement a simple contract. This includes but is not limited to the following: fraud, duress, mistake, lack of consideration, impossibility, unconscionability, repudiation, and so on – any and all common law affirmative defenses to contract may be asserted.

Note that unconscionability as applicable to prenuptial agreements applies only to procedural unconscionability, only. In other words, for prenuptial agreements, unconscionability does not mean “it is not fair, so it is not valid.” Unconscionability for such agreements only exists when one of the parties signing was not provided a reasonable disclosure of the other’s assets and liabilities, did not waive their right to receive such disclosure, and, could not have reasonably known about the other’s assets and liabilities prior to signing the prenuptial agreement. Texas Family Code §4.006(a)(2).

POST SEPTEMBER 1, 1993 AGREEMENTS

The State of Texas amended its laws in 1993, making it impossible to set aside the prenuptial agreement based on common law defenses unless one an prove (1) unconscionability, or, (b) involuntary execution of the agreement.

Unconscionability for post September 1, 1993 agreements is defined the same way as for pre September 1, 1993 agreements. Involuntary execution for prenuptial agreements in Texas is decided on the following subjective factors:

(1) was there advice received from counsel;
(2) did one of the parties misrepresent their assets, liabilities, or intention for marriage;
(3) what amount of information was provided to the party prior to signing;
(4) was any information deliberately withheld;
(5) fraud;
(6) duress; and
(7) coercion.

POSTNUPTIAL AGREEMENTS UNDER TEXAS LAW
Texas postnuptial agreements are governed under Texas Family Code Chapter 4, wherein they are called “Martial Property Agreements.” By executing postnuptial agreements, parties can generally agree to change the future characterization of assets from separate to community, or, vice versa, although a postnuptial agreement can also cover the same topics as a prenuptial agreement (and often does). Like prenuptial agreements, postnuptial agreements must be in writing and signed by both parties. Texas Family Code §4.104.

Largely mirroring defenses against prenuptial agreements, defenses against postnuptial agreements include (1) the agreement not being executed voluntarily, or, (2) there was no reasonable disclosure of the other’s assets and liabilities, the party did not waive their right to receive such disclosure, and, the party could not have reasonably known about the other’s assets and liabilities prior to signing the prenuptial agreement. Texas Family Code §4.205. However unlike prenutpial agreements, postnuptial agreements may also be defended against under common law doctrines of fraud, duress, mistake, lack of consideration, ambiguity, and so on.

IMPORTANT CONCLUSIONS TO BE DRAWN ABOUT TEXAS PRENUPTIAL AND POSTNUPTIAL AGREEMENTS

  • While Texas law only requires that prenuptial and postnuptial agreements have to be in writing and signed, it is a good idea to have them notarized, as well. This helps to ensure that a party cannot claim that their signature was forged. In addition, it allows the agreement to be filed with the county records in case it discusses interests in real estate property. Some attorneys even recommend impartial witnesses. While witnesses are not required, their testimony can help establish that the execution of the agreement was voluntary;
  • A good prenuptial agreement must state that each party had reasonable disclosure of the other’s assets and liabilities, or, that the party knowingly and willingly waives his or her right to receive such disclosure. If either of these options are not followed, then the prenuptial agreement may be attacked in a Court;
  • Prenuptial agreements executed prior to September 1, 1993 are subject to a broader attack under contract law doctrine in general, whereas Prenuptial agreements executed on or after September 1, 1993 are more protected;
  • Child custody and child support issues may be voided by the Court if the Judge believes that the terms are not in the best interest of the child[ren];
  • No agreement is ever 100% ironclad.

COHABITATION AGREEMENTS UNDER TEXAS LAW
Texas also allows for creation of “cohabitation agreements” under Texas Family Code Chapter 1. They cover much the same items as prenuptial and postnuptial agreements. Cohabitation agreements are enforceable agreements entered into by parties who wish to live together but not to marry. To be enforceable, a cohabitation agreement must be in writing, signed by both parties, and, made in consideration of nonmarital conjugal cohabitation. Texas Family Code §1.108.

OTHER AGREEMENTS UNDER TEXAS LAW
Texas also allows other agreements under common law contract doctrine which can be enforceable. A “nonnuptial agreement” is an agreement which confirms that the parties will/do live together, but are not to be considered married (this is to prevent the possibility of one of the parties claiming a common law marriage under Texas law once the parties begin living together). A nonnuptial agreement may is often incorporated into a cohabitation agreement as a clause, or, can be a stand-alone agreement.

Another type of agreement is called a “separation agreement.” While Texas has no formal separation status, a party may enter into a contractually-binding separation agreement while informally apart. To be enforceable, a separation agreement must be in writing, signed by both parties, entered into without coercion or undue influence, and, fair and equitable. Corrigan v. Goss, 160 S.W. 652, 654-55 (Tex.App. – El Paso 1913, writ red’d). If the separation agreement touches base on status martial property as to whether it is to be considered separate or communal property, those provisions of the agreement are governed separately under the Texas Family Code statutes which apply to those types of agreements.

There also exists a “right of survivorship agreement” which has the community property acquired during marriage become guaranteed to be converted to a surviving spouse’s separate property upon the death of one spouse. This is governed by Texas Estate Code §112.051 and Texas Constitution Art. 16, §15.

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