Anyone who lives in Texas should think about entering into a prenuptial agreement before marriage in the event of divorce.
According to a recent report from CNBC, the financial expert Suze Orman specifically addressed prenuptial agreements in Texas. Couples in Texas and other community property states should always have a premarital agreement in place. As Orman explained, without one, property division can be complicated in a community property state. Indeed, property division can be difficult for both spouses.
Nearly all property acquired during the marriage is community property.
For married couples with debt acquired by one spouse, the prospect of sharing that debt can be devastating. Further, a spouse who spent time working for much of the couple’s wealth can be shocked by Texas property division rules. For example, if one spouse earns a significant portion of the couple’s income, savings from that income will likely be community property. Even if that property grew in value due to one spouse’s investment knowledge, the money will be community property. However, a prenuptial agreement can limit what assets and debts are classified as community property.
If a person does not want to be responsible for a spouse’s debt, a prenuptial agreement is essential.
In particular, credit card balances accumulated during the marriage often will be classified as community property in Texas. Other debts amassed by just one of the spouses during the marriage also are likely to be community property. For example, medical debt acquired during the marriage likely will be divisible as community property.
Prenuptial agreements can limit the classification of certain assets and debts as community property.
Texas law identifies prenuptial agreements specifically as premarital agreements. Under Texas law, premarital agreements become effective on the date of the marriage. The Texas Family Code allows people to reach an agreement about different types of property, including real property. Income and earnings can also be included in a prenup. Many premarital agreements in Texas also consider both present and future assets and debts.
According to Texas family lawyer Lauren Cain, premarital agreements are extremely important in case of divorce.
As Cain explains, “premarital agreements can limit a spouse’s responsibility for community debt amassed by the other spouse’s careless behavior.” Cain further clarifies that spouses have options even if they did not execute a prenuptial agreement in time. Indeed, “Texas law also allows spouses to partition or exchange community property after the date of marriage.” A partition or exchange agreement can allow certain community property to become separate property.