Frequently people say that they are going to prepare their own premarital or post-marital agreement or they are going to get a form off of one of the internet services and prepare an agreement.
I can tell you that this is probably the most foolish thing a person can do. This person runs the risk of preparing an agreement that does not accomplish his or her objectives. Furthermore, the probability of a successful challenge to a premarital agreement goes up dramatically when people try to do it themselves. As I tell people, I consider myself to be very smart and there is no doubt in my mind that I could do appendectomies. Unfortunately, probably the first 25 appendectomies will result in death because of the learning curve. The last thing a couple wants to do is to use a premarital agreement as a learning curve experience. Furthermore, frequently when people do their own premarital agreements, upon death or divorce, the cost to untangle the mess that they created frequently far exceeds the cost of having a properly prepared premarital agreement.
To help my clients feel comfortable with the process of premarital agreements or post-marital agreements, I offer free initial consultations. Please call me today at 682-234-2006.
Traditionally, premarital agreements have been entered into when a high-net-worth individual or a high-earner is marrying an individual with very little property or low income. However, with the changing nature of our society, the number of individuals who enter into premarital agreements has broadened dramatically.
Approximately 50% of all marriages end in divorce. It is not uncommon to find two people who are in their 40s, 50s, or 60s who want to be married. Many of these couples have been divorced before or have children from prior marriages; yet, these couple want to provide a degree of certainty regarding their financial future together, protect their estates from each other’s children, and lay out a financial roadmap for their future. Also, business owners who have significant real property, income property, boats, yachts, or airplanes or who own sole proprietorships, partnerships, small businesses, or corporations, or professional associations frequently wish to enter into a premarital agreement that not only provides for the operation and management but also provides certainty upon their death or divorce.
Another growing trend in entering into premarital agreements is when two young professional people decide to get married. These are usually very accomplished people who wish to maintain their professional identity and separate professional practices; however, they also want to share life together and, in order to accomplish this, they enter into premarital agreements. Also, many people have acquired substantial savings, 401k plans, 403b plans, defined retirement plans, profit sharing plans, employee stock ownership plans, or other employee benefits that they wish to keep separate from each other. Additionally, people who have inherited property or received gifts, or who expect to inherit property or gifts, frequently wish to make provisions in a premarital agreement to protect their inheritance and gifts.
At any time after marriage, Texas spouses may enter into a post-marital agreement that partitions or exchanges between themselves all or part of their community property, then existing or to be acquired as the spouses may desire. Once the property is partitioned or exchanged, it becomes a spouse’s separate property. The partition or exchange of property includes future earnings or income arising from the property as the separate property of the owning spouse, unless the spouses agree future income and earnings will become community property. Furthermore, in a post-marital agreement, the parties may agree that all or part of the separate property owned by either or both of the spouses is to be converted into community property. The requirements for preparing a post-marital agreement are virtually identical to the requirements for preparing a Texas prenuptial agreement.
Over the years, parties’ financial needs frequently change during the term of the marriage. While the parties wish to remain married, they frequently wish to address specific separate financial needs. For example, one party to a 10-, 15-, or 20-year marriage may have a relative who is going to require special-needs care for many years to come. Rather than burdening the entire community estate, frequently the parties will partition their community property into two separate estates, so that the one person with the special-needs relative can make particular arrangements for that person and the other spouse’s property is free. Also, sometimes couples who have been married for many years will have acquired houses, ranches, and businesses that need special attention. Often it is easier to manage those properties by partitioning them in a manner that fits the party’s particular needs.