It is our experience that many folks do not understand just how useful and powerful Premarital Property Agreements (PPA) can be in Texas. We hope to bring you some helpful information in that regard today. Accordingly, here is a brief, introductory discussion of PPA:

To begin, it is important to know that Texas law broadly supports the use of marital property agreements, both those made prior to marriage, as well as those made during marriage. Today, we will discuss Premarital Property Agreements. We will later write about marital property agreements made during marriage. So, please check back later for information about those.        

Next, the Texas Family Code expressly provides that:

1. “(a) premarital agreement must be in writing and signed by both parties. The agreement is enforceable without consideration (i.e., without the exchange of anything of value, other than the terms of the agreement itself); Texas Family Code Section 4.002
2. The parties are authorized to make a wide range of property agreements, provided that they are not in violation of public policy; and which do not purport to adversely affect the right to child support.

Due to that incredible breadth of that authority, PPA can completely change how people’s assets and liabilities will be divided upon death or divorce. For example, many of our clients who have been previously divorced want to ensure that there will be no fight about assets (such as retirement benefits or home equity) either upon their death, or upon another (potential) divorce. They may also wish to agree that there will be no Community Property created; but rather, that each spouse will own his or her earnings, and the property purchased with those earnings, as Separate Property. (Texas Family Code Section 4.003). Reimbursement claims can also be affected or eliminated by these agreements. (Texas Family Code Section 3.410). When done correctly, there is nothing left to divide nor allocate upon a party’s death or divorce, unless the parties wish to create some joint property, by the terms of their agreement.

3. These types of agreements become effective upon marriage; (Texas Family Code Section 4.004).
4. Importantly, these agreements may be amended during marriage (again, without consideration) in writing, signed by the parties. (Texas Family Code Section 4.005)

To support the use of premarital property agreements, Texas law favors the enforcement of premarital agreements voluntarily entered into by parties. Accordingly, the only way for a party to such an agreement to avoid that enforcement (assuming that the agreements become an issue in a subsequent marriage dissolution, such as a divorce, action between the parties) is for that party to prove that either:

1. It was not voluntarily signed by the party seeking to prevent enforcement.

or

2a. The agreement was unconscionable when it was signed; and

2b. A fair and reasonable disclosure of the property or financial obligations of the other party was not made; and

2c. That disclosure was not waived by the parties to the agreement; and

2d. The party seeking to avoid the enforcement did not have, and reasonably could not have had, adequate knowledge of the property or financial obligations of the other party.

Unless those very narrow exceptions are proved, then the agreement will be enforced by the court, if requested. The Supreme Court of Texas has held that

“Recognizing (additional exceptions to enforceability, besides those two listed above) would judicially expand (the very limited exceptions provided by Texas law) and run afoul of our longstanding preference to protect the freedom of contract by enforcing contracts as written. Texas has a strong public policy favoring freedom of contract that is firmly embedded in our jurisprudence. We have repeatedly recognized that parties shall have the utmost liberty of contracting. And that their contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by the courts. We rarely find a contract unenforceable on public policy grounds. Premarital agreements are no exception.” (internal quotations omitted) (emphasis added). In re Marriage of I.C., 551 S.W.3d 119, 124 (Tex. 2018).

Since there is so much that can be done through the usage of a PPA, it is recommended that, prior to your marriage, you consult with an attorney who is sufficiently experienced with them, if you are thinking using a Premarital Property Agreement.[1] I advise my clients to contact us as soon as a marriage is contemplated. We will want to have adequate time to discuss matters with our client; draft the initial documents; and then, have them reviewed by the other party’s attorney. Wedding Planning is stressful enough already, without adding an unnecessary, time-crunch element to them!

That is all for today. Please check our other blog posts and return from time to time to see newer ones.

[1] Please remember that other property agreements can be made during a marriage.