How a Prenuptial Agreement in Texas Works

In Texas, a community property state, all assets and property acquired by either spouse during the marriage are generally considered jointly owned by both partners. Assets brought into the marriage by an individual spouse are typically regarded as separate property, provided they are not commingled with marital property. A prenup in Texas, referred to as a premarital agreement in the state, serves as a legal tool to manage these matters, allowing spouses to define certain assets as separate property that would otherwise be classified as jointly owned, or, in some cases, to designate individual assets as shared.

Do you have financial planning questions for the future? Speak with a financial advisor today.

Why Are Prenups Necessary?

There are several reasons a prenup might be needed. Anytime a partner brings assets to the marriage that he or she doesn’t want to become joint property, a premarital agreement may be needed. This property could be an inheritance, a business or future income earned from working in a career or from investments, such as producing oil wells.

Premarital agreements are also often used when there are stepchildren. Texas law requires parents to shoulder responsibility for their birth children, but not for stepchildren. A premarital agreement can make sure that stepchildren get provided for after death or divorce using assets from the marriage.

A premarital agreement can also ensure that one partner will receive alimony. Texas law is not generally open to the idea of one spouse being required to support the other after divorce. However, if a premarital agreement specifies alimony, the lower-earning partner won’t suffer financially in the event of divorce.

Premarital agreements are often avoided because they are seen as unromantic or likely to increase distrust between partners. They can also can have important benefits, however. One is that negotiating a premarital agreement requires parties to have substantive discussions about each partner’s income, assets and debts before getting married. Otherwise, these topics are often never discussed until after the ceremony, when they can become major bones of contention.

Texas Premarital Agreement Basics

A statue holding scales in front of the Texas flag. There are few requirements for Texas premarital agreements.

There are few requirements for Texas premarital agreements. Primarily, the agreement just has to be in writing and signed by both spouses. Of course, it has to be signed before the marriage is official. Otherwise, it would be a post-marital agreement, which is a different sort of agreement. Also, it is only effective after the marriage is official. If the couple never goes past the engagement phase, the premarital agreement isn’t effective.

In addition to specifying the conversion of community property into separate property or the reverse, and providing for financial support stepchildren and spouses, premarital agreements can address other concerns. For instance, a premarital agreement may require partners to keep using the family name.

A premarital agreement may also assign responsibility for certain expenses, such as paying for a child’s education. It may describe specific financial effects of some types of behavior, such as infidelity. And it may lay out a preferred way to resolve disputes, such as mediation instead of going to court.

Limits of Texas Premarital Agreements

Premarital agreements in Texas can’t determine everything about how assets will be parceled out in the event of divorce or death. For instance, they can’t rule out or assign a cap to child support payments. Texas child support is determined by the court, usually using a standard formula based on the paying parent’s income. The premarital agreement can’t affect that.

Premarital agreements also can’t condone acts that would be illegal under state law, such as polygamy or being married to more than one person. And a premarital agreement may be ruled invalid if it can be portrayed as an attempt to defraud creditors by moving ownership of assets from one partner to the other.

Bottom Line

Premarital agreements in community property states like Texas are often used to help one partner retain separate ownership of property that would otherwise be jointly owned. These agreements can become important in the event of a divorce or the death of one spouse because they control how the assets of the marriage will be divided. They can also be used to provide for the financial support of an ex-spouse or stepchildren beyond what state law would require.

Tips on Premarital Finances

If you are planning to get married, and one partner has assets that they would like to be treated as separate property, consider working with a financial advisor. An advisor can help determine the best approach. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area. You can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Prenups can range in cost based on several factors. For most couples, the cost will range from $1,000 up to $10,000 for more complicated situations. There are templates and information available online. But it’s wise to use an attorney to ensure that the agreement is valid and legally binding.