Clint Westhoff | March 2, 2021
It is relatively common for lawyers, when asked whether someone should have a Last Will and Testament, to say something like “if you don’t have a will, Texas has one for you.” The same is true for Marital Property Agreements. When a person says, “I do” to the love of their life, they have just agreed to a large body of law that governs their property rights and income. Who has the right to manage property and income, who can receive that property if a spouse dies, and in the unfortunate event of divorce, who can claim the right to that property, is often determined by a set of rules and regulations that may, or may not, be consistent with what you and your spouse want.
Newlyweds often do not even know, let alone discuss in detail, what they expect their marital property rights to be. They talk about whether to have children, where they plan on living, what cars they should drive, where they should go on vacation, and what kinds of cake to have at the wedding; the rules that should govern their marital property rights are a topic to be avoided or seen as taboo. They can discuss the most intimate of topics, but who gets the premarriage house if you die, or who gets the 401(k) if you divorce, is often just too hard to discuss.
Texas law allows those that want to control their own marital property rights to set out in writing what they want those rules to be. If the parties agree, they can completely change the effect of Texas marital property law as it relates to their own property and income. On the other hand, if they wanted to, they could enter an agreement that was the same as Texas law. However, it is by discussing your marital property rights with your spouse, and making sure you are both on the same page regarding what those rights and duties should be, that you can take control of your own rights; finances will be an integral part of your marriage and engaging in a frank discussion about your marital finances is healthy for your relationship if approached in the right way. The alternative is letting other people – state legislators and judges – determine your rights for you.
There are different types of agreements that spouses, and spouses to be, can reach regarding their marital property rights. Before marriage you can enter into a premarital agreement; after marriage you can enter into a partition and exchange agreement or other marital property agreements. For purposes of this article, a “Marital Property Agreement” is any written agreement that expresses the agreement reached by the spouses, or spouses to be, regarding the rules that will govern their rights and duties relating to their income and property during their marriage and upon death or divorce. It was not always the case that Marital Property Agreements were even allowed. However, it is now firmly part of the law of the State of Texas that spouses, and spouses to be, can reach binding agreements regarding their marital property rights.
Part of the evolution of the law regarding Marital Property Agreements has been a change regarding whether such agreements would be enforceable, and when they would not be. The law has gone from a refusal to recognize such agreements at all, to a disfavored view of such agreements, to a point now where, absent unusual circumstances, a Marital Property Agreement will be enforced. In fact, a well-drafted agreement should be enforceable unless it was executed involuntarily, and that is a very high standard to meet.
There are very few things you cannot do in a Marital Property Agreement. You cannot have your agreement do anything that is illegal. There is some question about whether a prospective spouse can waive certain rights protected by Federal law in certain employer-sponsored retirement plans. You cannot eliminate a court’s ability to decide issues of custody and support of your children, although you can reach some agreements regarding children. You cannot make agreements to dispose of your property in a certain way upon death, unless your Marital Property Agreement also meets all the requirements of a Last Will and Testament.
There are many things that you can do in a Marital Property Agreement. You can create a situation where you accumulate no community property at all. At the other end of the spectrum you can agree that there will be no separate property at all, and when received it will be converted to community property. You can identify specific types of property or income that should be treated differently than would be dictated by Texas law. You can engage in asset protection, although you cannot do so to defraud creditors.
Discussing, and hopefully agreeing, regarding your expectations in a marriage is important. This is no less true regarding your marital property rights as it is for other personal and private topics. Even if you discuss financial issues and it is determined that existing law is consistent with your desires, at least you have discussed it. You and your spouse, or spouse to be, are the ones determining your financial destiny. To make sure it is done right, you should also make sure to hire an a family attorney to draft a document that is enforceable, consistent with Texas law, and that carries out your agreements.
If you have more questions about marital property rights, contact the attorneys at Goranson Bain Ausley. We have offices in Plano, Dallas, and Austin, and we will be happy to assist you.
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