Prenuptial Agreements: The Bone of Contention

Americans are divided on their opinion concerning the morality behind a prenuptial agreement. Around one fourth of Americans think premarital agreements are for the “rich and famous”, while well over a fourth agree they are a must for making smart financial decisions in a marriage. Although pre-nups are often used to protect the assets of a wealthy spouse, many couples of more modest means, such as a middle class income, are turning to prenuptial agreements for their own purposes. Some of these reasons might be to split up property for children from previous marriages, define each spouse’s financial rights, and avoid conflict in case of divorce by splitting up assets in advance.

“San Francisco family law attorney Stephen Ruben sees more Baby Boomers entering such contracts after marriage-known as post-marital agreements- as their parents die. “They want to preserve their inheritances so it doesn't go to their spouse. They want it to remain within the bloodline,” he says. Kathleen Pender, San Francisco Chronicle 05/04/08.

What is a prenuptial and what purpose does it serve?

A prenuptial agreement is a contract written between two prospective spouses on the terms of marriage and property. It is a legally binding agreement between a couple before entering marriage and secures or segregates separate and community property such as rights to certain real property, account, and other assets as well as debts. The contract states all of the property each person owns and how the assets will be divided in the event of a death or divorce.

Is it right or wrong for you?

A prenuptial agreement may be beneficial to you and your spouse for many reasons. If you or your spouse have a substantial amount of wealth, expect to acquire a hefty inheritance, have been married in the past, own a business, have children from a prior marriage, have a high risk job, wish to keep all assets and debts separate, own income producing property, or wish to protect your hard earned existing assets then entering into a prenuptial agreement might be for you.

On the other hand, many people feel a prenuptial agreement takes away from the sanctity of marriage. Some view the prenuptial agreement as a big trust factor between prospective spouses, and say a prenup is never needed when the two people involved really love each other. Some feel the contract can doom a marriage from the start, and the topic can be an uncomfortable one to bring into a relationship.

These contracts only benefit a couple if they are planning ahead of the marriage and are comfortable with segregating property, income, and debts that will be utilized into the marriage or earned and acquired during the marriage. It will also help to segregate acquired or debt and liabilities incurred during the marriage between spouses. For most individuals, a prenuptial may not be necessary. However, if you are a high net worth individual or a person who has a high earning capacity, it is advisable to enter into a prenuptial with your prospective spouse as well as consult with a Texas prenuptial lawyer or family law attorney before entering into the marriage vow.

Texas PreMarital Agreements

In Texas pre-marital or pre-nuptial agreements are enforceable so long as it is in writing and is signed by both parties. The agreement is enforceable even though without consideration, unlike a deed where consideration is necessary. Under Section 4.001 of the Texas Family Code, a 'Premarital Agreement" is a written agreement between prospective spouses in contemplation of marriage and is effective upon marriage.

The parties to a premarital agreement may contract with respect to:

(1) the rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;

(2) the right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;

(3) the disposition of property on separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;

(4) the modification or elimination of spousal support;

(5) the making of a will, trust, or other arrangement to carry out the provisions of the agreement;

(6) the ownership rights in and disposition of the death benefit from a life insurance policy;

(7) the choice of law governing the construction of the agreement; and

(8) any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.

Writ of Mandamus in Family Law Cases

On occasion a trial court may abuse its discretion with respect to rulings on family law cases so as to warrant an immediate review by a higher court. This process is called a writ of mandamus against the trial court judge making the incorrect ruling or abuse of discretion.

To be entitled to the extraordinary relief of a writ of mandamus, the relator must show that the trial court clearly abused its discretion and he has no adequate remedy by appeal. In re Team Rocket, L.P., 256 S.W.3d 257, 259 (Tex. 2008) (orig. proceeding). A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). In determining whether the trial court abused its discretion in the resolution of factual matters, the court of appeals may not substitute its judgment for that of the trial court and may not disturb the trial court's decision unless it is shown to be arbitrary and unreasonable. In re Sanders, 153 S.W.3d 54, 56 (Tex. 2004) (orig. proceeding) (per curiam). Therefore, the relator must establish that the trial court could have reached only one decision. Walker, 827 S.W.2d at 840. An abuse of discretion does not exist if the trial court bases its decision on conflicting evidence and some evidence supports the trial court's decision. IKB Indus. (Nigeria) Ltd. v. Pro‑Line Corp., 938 S.W.2d 440, 445 (Tex. 1997); Ruiz v. Conoco, Inc., 868 S.W.2d 752, 758 (Tex. 1993).

Appellate courts do not generally overrule trial court rulings, especially when conflicting evidence are submitted by opposing parties. Such was the case in the recent ruling by the 14th Court of Appeals last February in the case of In Re John W. Small who asked the higher court to compel the presiding judge of County Court at Law No. 1 of Galveston County, to set aside her October 31, 2008 order finding relator in contempt for failing to pay court-ordered temporary spousal support to real party in interest, Murriah S. McMaster, and to to reverse her November 1, 2005 order awarding temporary spousal support to McMaster. Because the trial court did not abuse its discretion, writ of mandamus was denied.

Spousal Support in Texas

Although in Texas, alimony is not recognized, the Texas Family Code does allow for limited spousal support under certain circumstances. In order to qualify for spousal support in Texas, a claiming spouse must show that either the spouse from whom support is requested was convicted or that the duration of the marriage was 10 years or longer.

Sec. 8.051. ELIGIBILITY FOR MAINTENANCE; COURT ORDER.

In a suit for dissolution of a marriage or in a proceeding for maintenance in a court with personal jurisdiction over both former spouses following the dissolution of their marriage by a court that lacked personal jurisdiction over an absent spouse, the court may order maintenance for either spouse only if:

(1) the spouse from whom maintenance is requested was convicted of or received deferred adjudication for a criminal offense that also constitutes an act of family violence under Title 4 and the offense occurred:
(A) within two years before the date on which a suit for dissolution of the marriage is filed; or
(B) while the suit is pending; or

(2) the duration of the marriage was 10 years or longer, the spouse seeking maintenance lacks sufficient property, including property distributed to the spouse under this code, to provide for the spouse's minimum reasonable needs, as limited by Section 8.054, and the spouse seeking maintenance:
(A) is unable to support himself or herself through appropriate employment because of an incapacitating physical or mental disability;
(B) is the custodian of a child of the marriage of any age who requires substantial care and personal supervision because a physical or mental disability makes it necessary, taking into consideration the needs of the child, that the spouse not be employed outside the home; or
(C) clearly lacks earning ability in the labor market adequate to provide support for the spouse's minimum reasonable needs, as limited by Section 8.054.

Just And Right Division of Marital Property in Texas

In a divorce proceeding, the trial court "shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage." Texas Family Code Ann. § 7.001.

Trial courts have wide latitude and discretion in dividing community property. Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex. 1998). When dividing community property, the trial court may consider many factors, including:

1. each party's earning capacity,

2. abilities,

3. education,

4. business opportunities,

5. physical health,

6. financial condition,

7. age, and

8. size of separate estates,

9. any future needs for support,

10. expected inheritance,

11. custody of any children,

12. reimbursements,

13. gifts to a spouse during marriage,

14. fault in the breakup of the marriage,

15. length of the marriage,

16. attorney's fees,

17. a spouse's dissipation or waste of the marital or community estate, and

18. any tax consequences.

See, Texas Family Code Ann. § 7.008 (Vernon 2006) (tax consequences); Murff, 615 S.W.2d at 699; Hailey v. Hailey, 176 S.W.3d 374, 380 (Tex. App.--Houston [1st Dist.] 2004, no pet.); Alsenz v. Alsenz, 101 S.W.3d 648, 655 (Tex. App.--Houston [1st Dist.] 2003, pet. denied); Vannerson v. Vannerson, 857 S.W.2d 659, 669 (Tex. App.--Houston [1st Dist.] 1993, pet. denied); Baccus v. Baccus, 808 S.W.2d 694, 700 (Tex. App.--Beaumont 1991, no writ); Massey v. Massey, 807 S.W.2d 391, 398 (Tex. App.--Houston [1st Dist.] 1991, writ denied).