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.

Prenuptial Agreement Precludes Admissibility of Fault

Where parties in a divorce case enter into an agreement as to the division of property, a party is then precluded from using fault in the final division. Such was the case in Bufkin v. Bufkin, No. 05-06-01719-CV, 259 SW3d 343 (Tex.App.- Dallas, July 1, 2008, pet. denied Nov. 2008).

Facts of the Case

Edward O. Bufkin, Jr. (“Edward”) sued his wife, Elizabeth W. Bufkin (“Elizabeth”), for divorce in 1996, after nine years of marriage. The ensuing, protracted divorce proceeding, including two trials and several mandamus proceedings, has been focused on what property is subject to division under the terms of a prenuptial agreement.

Edward and Elizabeth both stipulated to the validity and enforceability of the Agreement. The El Paso court held that once Edward made this stipulation, he could not then argue it was invalid. Section XI of the Agreement expressly provided for the division of property in the event of divorce. Specifically, “each party will take, in full settlement of his or her property and all other rights due upon divorce, only his or her separate property estate and his or her one-half (½) share of the community property estate of the parties.” The Texas Family Code authorizes such written agreements. Tex. Fam. Code Ann. §§ 4.001-4.009 (Vernon 2006). The Supreme Court, then opined that since the parties contracted how the community estate was to be divided in the event of divorce, provisions of the Texas Family Code allowing evidence of fault in divisions do not apply. The Agreement's terms dictated an even division of the community estate. Accordingly, evidence of fault was not relevant and the trial judge did not abuse her discretion when she excluded it.