Premarital agreements, more commonly referred to as “pre-nups” get a bit of a bad rap. A good chunk of society sees them as a means of planning for the marriage to fail before it even begins. Premarital agreements, and their post-wedding counterpart, the Marital Property Agreement, are in fact very useful financial planning tools for many reasons beyond anticipation of divorce. But if you are reading this guide, I will assume that you are going through a divorce, and your area of concern is more likely to be one of three things: a) you have one of these agreements and want to know if you can hold your ex to it; b) you have one of these agreements and want to know how to get out of it; or c) you don’t have one of these agreements and want to know what you could have done if you did have one. I’ll handle this last concern first.
The Texas Family Code gives a list of eight things you can do with a premarital agreement, and one specific thing you cannot. You and your spouse-to-be may contract with respect to:
- the rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;
- the right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;
- the disposition of property on separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;
- the modification or elimination of spousal support;
- the making of a will, trust, or other arrangement to carry out the provisions of the agreement;
- the ownership rights in and disposition of the death benefit from a life insurance policy;
- the choice of law governing the construction of the agreement; and
- any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.”
You cannot make a contract that adversely affects the rights of any children the two of you have together to receive child support. The State of Texas believes it is too important that parents be responsible for supporting their own children to allow you to contract your way out of this responsibility.
Let’s break down the “can-dos”. According to item one, you can decide what rights and responsibilities you will each have in ANY of your property; no matter who owns it, when you bought it, or where it is. Item two is a list of the specific rights you can give each other in the property; sort of a “who gets to do what with what.” Items three and four may concern you the most in your present divorce context. These allow you to decide before you are even married who will get what property in the event that you divorce or separate and whether and how much you may pay in spousal support (more commonly known as “alimony”). Items five and six deal with making arrangements for who gets what if you or your spouse dies. Item seven deal with deciding which state’s law you want to govern your contract. What if you married in Dallas and then move to Chicago? Or Tokyo? You would want to decide in advance what rules are going to govern your agreement. Item eight is the “catch-all”. Within reason, you can essentially make a contract for anything so long as it isn’t illegal or completely against society’s collective conscience.
If you have a premarital agreement, hopefully the attorney who drafted it explained all of this to you already. If you don’t have one, then hopefully this gives you a rough idea of what you missed out on. Either way, let’s move on to the “can I enforce it” and “can I get out of it” questions.
The Texas Family Code has this to say about enforcing a premarital agreement:
“A premarital agreement is not enforceable if the party against whom enforcement is requested proves that:
- the party did not sign the agreement voluntarily; or
- the agreement was unconscionable when it was signed and, before signing the agreement, that party:
- was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;
- did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and
- did not have, or reasonably could not have had, adequate knowledge of the property or financial obligations of the other party.
An issue of unconscionability of a premarital agreement shall be decided by the court as a matter of law.
The remedies and defenses in this section are the exclusive remedies or defenses, including common law remedies or defenses.”
In short, you have exactly two ways out of the agreement. One way is to prove that you didn’t sign the agreement voluntarily, and this is extremely difficult to prove. Unless your soon-to-be-ex held you at gunpoint and forced you to sign, the Court will likely find the agreement was voluntary. Texas courts generally like to think that we are adults who are capable of making our own decisions, and should therefore be held accountable for them.
The second way out of the agreement is more complicated and equally difficult to prove. You must show that the agreement was unconscionable, that is, so one-sided and grossly unfair as to be completely against society’s collective conscience. A plain old bad deal won’t cut it. You must also prove that it was unconscionable at the time you signed it. Some deals don’t seem so bad at the time, and only later prove to be terrible. Hindsight may be 20/20, but that won’t help you here. It will be up to your judge to decide if the agreement is unconscionable.
A note on unconscionability: my former law professor said of pre-nups, “Pigs get fat. Hogs get slaughtered.” Meaning roughly that you can be a greedy pig in a premarital agreement and the court will still uphold it. You can reserve 90% of the property for yourself, and get by with it, but take 100% and the judge may cut you down.
Once you have proven that the agreement is unconscionable and was so when you signed it, you still have another hurdle to jump. You have to prove that the other side did not disclose to you what property he/she owned and what debts he/she owed coming into the marriage, that you did not give up your right to be told about these things, and that there was no way you could have known what he/she owned and owed without being told.
These are your only two ways out of a premarital agreement. Even if you marriage is declared void (He’s a polygamist! She’s really my sister!), the agreement will be enforced to some extent. This is bad news if you want out of an agreement, but good news if you are trying to enforce one. If the other side can’t prove either of those two grounds for avoiding the agreement, the agreement wins. You should also know that a valid premarital agreement trumps community property law (see section III of this guide).
I mentioned earlier another kind of contract called a martial property agreement. These function in essentially the same way as a premarital agreement, are just as difficult to defeat, and may only be defeated in the same two ways. The two fundamental differences between a “pre-nup” and a “post-nup” are when they are signed (before the wedding or after), and in what terms they are written. A quirk of marital property agreements is that they must be phrased in terms of partition and exchange. For example, “I’ll take the north 40 acres of the ranch as separate property and you take the south 40,” would be a partition. Whereas, “I’ll agree that you can have the truck as your separate property, if you’ll agree that I can have the SUV,” would be an exchange.
As I said, both types of contract will trump the usual rules of community property law. It is actually possible under Texas law to have either a completely community property marriage or a completely separate property marriage. The latter would make a divorce that much simpler, since the property is divided in advance! Whatever your agreement may be, the court will apply it first, then apply regular rules of community property law to any assets that weren’t covered in the agreement. Then the court takes the separate property out of the pot and sets about the task of dividing up whatever community property is left.