What does a prenuptial agreement do? This practical legal document sets clear terms for the financial aspects of a marriage, safeguarding assets, detailing debt responsibilities, and ensuring that your marital property rights are honored in the event of a divorce or death. A prenup can bring peace of mind and mutual understanding between partners by defining what is shared and what remains separate before saying ‘I do.’
Austin family law attorney Ben Carrasco has deep experience crafting prenuptial agreements that protect the best interests of his clients. He’ll assess your specific circumstances, explain your options, and map out a path to protect what matters most to you.
Take control of your future. Reach out for a confidential consultation with prenup expert Ben Carrasco today.
What Are Prenuptial Agreements?
At its core, a prenup agreement or premarital agreement is a written contract between engaged couples that outlines their rights and responsibilities regarding:
- Premarital and marital property and assets
- Debts
- Entitlements for the surviving spouse upon the death of the other
These agreements empower couples to manage their property according to their preferences, deviating from the community property laws that would otherwise apply without an agreement.
In the absence of a prenup, Texas state law governs property ownership during marriage and its subsequent division in case of divorce or death of one spouse. Prenups, however, can specify the allocation of assets such as:
- Personal property
- Cash
- Joint bank accounts
- Retirement funds
- Investments
- Real estate
- Life insurance policy benefits
They may even include directives for creating wills or trusts and can establish which state’s laws will govern the agreement.
These agreements outline ownership of assets and how property is allocated, along with protection against each other’s debts, ensuring fair distribution in case of a separation. If one spouse dies, a prenup can allow a waiver of legal rights to the deceased spouse’s property or can agree on a fixed payment from their estate.
Why Are Prenups Important?
Couples from all income brackets are increasingly embracing prenups. This rise is in part due to millennials marrying later with more assets and increased accessibility to information about marital laws through social media.
A prenup can simplify the divorce process by providing a predetermined framework for the division of finances, assets, and debts, making the process quicker and less emotionally draining.
Couples may consider prenups to protect their significant assets, such as businesses or real estate, or to responsibly manage substantial individual debts, such as student loans, when entering a marriage.
The essence of a prenup is similar to insurance; it is a precaution meant to safeguard critical financial aspects of one’s life and doesn’t imply a negative expectation for the marriage.
Why Would a Couple Enter a Prenuptial Agreement?
Many seek prenuptial contracts, sometimes called premarital agreements, to protect the wealth they acquired before a marriage. Some individuals might inherit from family and want to ensure their inheritance stays with them and their children even if the marriage ends. Such worries can be common when a party or parties have children from past relationships.
Divorce law can be complex and unpredictable. If a couple details how they wish to divide property, including major assets, any potential divorce litigation may take less time and cost less money.
Another situation in which a couple may want to draft a prenup is when one party is going to marry someone who already has a great deal of debt. The agreement can protect the other party from taking on their spouse’s debts if the marriage ends.
Austin lawyer Ben Carrasco can help a couple draft a solid prenuptial agreement that caters to their needs and reasons for entering this type of contract.
Terms Included in Prenups
Prenups serve primarily to divide property between two parties. The goal is not to provide one party with an unfair advantage over the other. The terms may allow the parties to protect assets that are of particular importance to them.
These agreements can also protect individuals by providing terms for spousal support. In some marriages, one party may sacrifice their professional development to invest more time in their children. The terms of the agreement could help prevent that decision from hurting that spouse in the future.
Terms Not Covered by a Prenuptial Contract
Courts will not enforce prenuptial agreement terms that detail custody or child support arrangements. Custody determinations depend on the children’s best interests, and the court looks at many factors when making these decisions.
While a prenuptial agreement can remove some of the complicated issues involved in a divorce, child custody arrangements are not one of them. A couple is always welcome to agree on parenting terms, but the court must still approve them at the time of a divorce.
Prenuptial agreements are also not intended to create marital responsibilities. Courts will not uphold terms that detail the spouses’ duties to the home and marriage.
What Are the Legal Requirements for a Prenup?
An enforceable prenuptial contract must comply with specific requirements. The Uniform Premarital Agreement Act, enforced in Texas and many other states, requires these documents to be in writing and both parties sign the agreement in contemplation of their marriage. The individuals also must voluntarily agree to all terms.
Courts will not consider the terms valid if one or both parties fail to completely disclose their assets and debts to the other. Prenuptial agreements cannot treat one party unfairly as a court will refuse to enforce unconscionable terms.
Protecting Your Assets and Financial Future
Prenups primarily serve to protect individual assets. Prenups stipulate the separation of individual assets, ensuring they remain the private property of the original owner in the event of a divorce. They also contain provisions to distinguish between premarital property and property acquired during the marriage, protecting personal investments and businesses.
Prenups can also establish guidelines for spousal support, providing certainty and financial protection to stay-at-home parents. They serve the specific financial interests of elderly individuals, those entering subsequent marriages, or with significant wealth, who wish to maintain stability for their estates.
Prenups can be comprehensive, covering an array of issues, including debt liability, alimony terms, and business interests to accommodate the unique aspects of each marriage.
Separate vs. Marital Property
Separate property includes:
- Assets and property owned before the marriage, including those from a previous marriage
- Gifts received individually during the marriage
- Inheritance used to acquire property during the marriage
On the other hand, marital property refers to assets and debts acquired by either spouse during the marriage, which are considered community property in some states and must be divided equitably in a divorce.
A prenup assists in differentiating between separate and marital property, thereby clarifying ownership. The agreement can specify the characterization of property brought into the marriage, including whether it remains separate property or may become community property under certain circumstances.
Specific terms in a prenup can outline the division of property if the parties separate, divorce, or die, such as using a family beach house. The classification of separate and marital/community property in a prenup can help avoid unexpected splits of assets in the event of a divorce.
Debt Protection
Provisions in a prenup can:
- Shield one spouse from being liable for the other’s premarital debts in the event of a divorce
- Ensure that debts incurred by one spouse before the marriage remain their sole responsibility
- Safeguard the other spouse from having to contribute to their repayment
A prenup can specify the approach to handling both premarital and marital debts, defining them as separate or joint, and how they should be divided in a divorce scenario.
Marital debts incurred during the marriage can be addressed in prenups, offering the possibility to divide them equally and proportionally or keep them as separate responsibilities based on each spouse’s role incurring these debts.
Family Matters: Children, Inheritance, and Business Interests
Beyond protecting individual assets, prenups also safeguard the financial future of the broader family. They ensure that assets from previous relationships are preserved for children and clarify aspects of their financial future.
Prenups protect inherited assets from becoming marital property through co-mingling, ensuring a clear inheritance framework.
Prenups also have a significant role in safeguarding family businesses from division or joint control in the event of a divorce. Provisions within prenuptial documents help ensure that management stays within the immediate family, preventing non-owner spouses from interfering with or acquiring a portion of the family business.
Ensuring a Valid and Enforceable Prenup
For a valid prenuptial agreement to be enforceable, it must be written, signed by both parties and notarized, as required in many states. Both partners must fully disclose their financial assets and liabilities in a prenup, ensuring fairness by avoiding any terms that are unlawful or unconscionable.
To avoid conflicts of interest and increase the likelihood of enforcement, each person entering into a prenup should:
- Retain separate counsel (separate lawyers) for legal representation
- Enter into the agreement voluntarily and without coercion, duress, fraud, undue influence, or other forms of force
- Have adequate time provided before the wedding for review and decision-making
Compliance with state laws is crucial for the enforceability of a prenup, which might include specific requirements and restrictions on certain objectionable terms.
Navigating the Prenup Conversation With Your Partner
When broaching the subject of a prenuptial agreement with your future spouse, strive for open communication, mutual respect, and a shared understanding of each other’s priorities. Starting prenup discussions well before the wedding, ideally, 3 to 6 months before the day, allows for sufficient emotional processing and agreement finalization.
Conversations about a prenuptial agreement should occur when both partners are relaxed, receptive, and free from interruptions. Communicate openly about any fears, concerns, and the practical reasons for wanting a prenup, ensuring honesty throughout the conversation.
Initiate talks by focusing on financial goals and transparency about debts and earnings, building a common approach to money management.
Acknowledge that discussing a prenuptial agreement can be uncomfortable, but stress the importance based on lessons from other experiences. To get a prenup that is fair and successful, make the discussion a cooperative effort where each partner has an equal voice and their priorities are understood, possibly with the help of an attorney or mediator.
Drafting Your Own Prenuptial Agreement
Even though couples can draft prenups, engaging a family law attorney based in your area is crucial for enforcing a self-made agreement, given the intricate legal details. Seeking legal counsel from a family law attorney like Ben Carrasco in Austin can ensure the agreement is valid and enforceable.
Couples can negotiate specific terms within their prenups, such as provisions for child support, a stay-at-home parent that may include life insurance, retirement contributions, or mandatory monetary contributions to a joint account. Creating a prenuptial agreement is relatively affordable and can help avoid substantial litigation costs that may arise without one.
Hire Ben Carrasco, Austin’s Premier Prenuptial Agreements Attorney
If you are getting married and considering a prenup, take the time to learn how it can help protect you and your interests. Austin prenup lawyer Ben Carrasco is also Board Certified in Family Law by the Texas Board of Legal Specialization – a rare distinction held by a small percentage of family law attorneys in the state. Ben can review your circumstances and counsel you on how a contract might work for you and your future spouse. Contact Ben today to get started.
