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Specialty tag(s): Prenuptial and Postnuptial Agreements

Pre-Marital and Post-Marital Agreements: The Gold Standard for Protecting Assets

Jonathan James | October 3, 2022

Texas is a community property state, which means there is a presumption that money made, and assets acquired during a couple’s marriage are community property (jointly owned). And in the case of a divorce, they’re typically divided between the parties in a settlement that aims to be fair and equitable, if not entirely equal. However, there are also laws that apply to inheritances or gifts received during the marriage and other assets gained by one of the spouses before marriage, which they would own exclusively if they can prove the inheritance, gift, or ownership was before marriage.

What happens when assets are commingled during a marriage?

But what happens when separately held assets and community assets become commingled during the marriage? Or what happens when the acquisition of an asset comes into question during divorce proceedings, with one spouse claiming it was acquired before marriage and the other spouse claiming it was acquired during the marriage? What about stocks or other investments that gain value or produce income during a marriage?

Those questions make divorce proceedings complicated and contentious – but fortunately, something is available that keeps questions about separate and community property from entering the divorce equation. Pre-marital and post-marital agreements (also known as pre-nuptial and post-nuptial agreements) are the gold standard for protecting assets in a divorce and protecting couples from the acrimony that can result from fights over assets.

What are the advantages of a pre-marital agreement?

For many couples, the biggest obstacle to getting a pre-marital agreement is bringing it up in the first place. People can’t get over the feeling that it’s unromantic to bring up the possibility of the marriage not lasting forever. While I understand that people are optimistic about their marriages working out as they plan their weddings, I know that a pre-marital agreement is an insurance against future disputes – so it should be part of a financial discussion that couples have as they prepare to make plans for a long future together. They can also be reminded that, for engaged couples who have children from a prior relationship, the pre-marital agreement helps protect assets for their children—not just in the case of divorce, but also if a spouse dies during the marriage. So, it doesn’t necessarily assume divorce.

What are the advantages of a post-marital agreement?

A post-marital agreement can be just as effective as a pre-marital agreement and can be applied for specific scenarios to protect assets. For example, if a couple wants to use part of the wife’s inheritance toward a down payment on a house, the couple can draw up an agreement stating what amount went toward the house and how the house sale proceeds would be divided. In this case, the couple can get a home that they might not be able to get with just jointly held assets and avoid disputes that might arise down the road. Some married couples decide to have a post-marital agreement just to decrease disputes and stress over finances. This can save marriages, but if it doesn’t, the divorce is often more straightforward because the assets are already divided.

What are the options if you do not get a pre-marital or post-marital agreement? 

If a couple doesn’t opt to get a premarital or post-marital agreement; there are other actions each spouse can take toward protecting their assets, including:

• Having physical proof of when inheritances and other pre-marital assets were awarded and acquired
• Avoiding commingling of separate and community assets (including avoiding commingling income produced by separate property, which is generally considered community property without a pre-marital or post-marital agreement)
• Moving separately held assets into a trust prior to marriage

But if a client of mine has a significant amount of money in inheritance or has a high-net worth estate or other assets acquired prior to marriage, I strongly advocate for the gold standard of a pre-marital or post-marital agreement. It’s simply the best insurance against arguably the most contentious legal battle in which a person might find themselves. And the cost of the pre-marital agreement is nominal compared to a contentious divorce, which no one expects to have but happens every day.

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Jonathan James is a highly skilled litigator and negotiator in high-conflict legal situations and consistently receives praise from his former clients for his integrity, professionalism, and responsiveness. Jonathan is Board-Certified by the Texas Board of Legal Specialization in family law and is a member of the State Bar of Texas. Additionally, he is trained in Collaborative Divorce and has been named a Super Lawyers Rising Star, 2019-2022 and Best Lawyer 2020-2021 and 2023 by The Best Lawyers in America.  

To learn more about premarital and postmarital agreements, please contact Jonathan James at 214-473-9696.