Reasons to Consider Prenups, Postnups, and Cohabitation Agreements
A woman came into my family law office last week. “Maya” shared with me that she has been married for 16 years and is considering divorce. Maya and her husband have a teenage daughter. They own a home together and the couple is considering selling it as their best bet for moving on and dividing assets. Maya told me that they have a prenuptial agreement that she hoped was “ironclad.”
As an only child, Maya had insisted on the prenup with her husband because her own parents had had a messy divorce, and she wanted to be protected in case the marriage dissolved. The first thing that I said to her was “Bravo.” With couples marrying later in life, many come to the marriage owning real estate, their own businesses, substantial savings/investments/retirement accounts, and a prenup is a smart self-protection tool.
A prenuptial agreement can be created to achieve multiple goals. However, there are several legal and practical considerations that affect these agreements to ensure that they are crafted to withstand the test of time.
Prenups are similar to wills: If you die without a will, the Probate Code will determine how your assets will be distributed to your heirs — or you could write a will and predetermine how your assets will be distributed upon your death.
If you divorce without a prenup, the Family Code will determine how your assets are divided — or you could sign a prenup and predetermine how your assets will be handled upon your divorce.
You can be as creative as you and your future spouse want to be, and you will ensure that the timeline, heartache, and cost of divorce will be much more limited.
And, prenups are not just for the wealthy or celebrities (though we do read about celeb divorces all of the time and these cases become fodder in the court of public opinion immediately after they are announced). Who hasn’t been bombarded by the trial between Johnny Depp and Amber Heard?
To create a prenuptial agreement that holds up in court, there must be a full and fair disclosure of assets, and both parties must enter into the agreement of their own free will. Interestingly, it is not important that the agreement is “fair” to both parties, and the proximity to the wedding date is not relevant.
Prenuptial agreements can be powerful tools, provided they are carefully crafted. In order to be effective, the language must be clear, and nothing can be overlooked. Remember that it is important to have a neutral advocate assisting in this process because when everyone is starry-eyed, in love, and ready to make one of the biggest commitments of their lives, it is hard to imagine many of the potential pitfalls that could come later.
At my firm, Weinman & Associates, P.C. in Austin, our attorneys have more than 25 years of experience drafting and reviewing these agreements. When we encounter a new client like Maya, we understand the legal and practical considerations that affect these agreements, and how to craft them so that they withstand the test of time. And don’t worry: The romance of getting married is not hurt by having a prenup. Believe me.
Why consider a prenup?
Prenups can protect a legacy for the children of a parent entering into a second marriage, they can protect the assets of a person who is marrying later in life, and they can ensure that a family-owned business stays in the hands of the original family members.
Also important to remember is that prenups can prevent marital strife regarding the ownership of property and provide peace of mind for each spouse. Frankly, they can make a potential divorce process much less painful for all involved.
At the outset, you will want to consider your reasons for seeking a prenuptial agreement and your goals. A family law attorney can help you think this through and weigh your options, and then they can either draft an agreement for you or review a proposed agreement.
Together you and your attorney can negotiate improvements in a proposed agreement with your future spouse’s attorney, taking into consideration all kinds of potential issues that you may not have considered.
What are postnuptial or cohabitation agreements?
A postnuptial agreement is created after the couple is already married, rather than before a marriage. This type of agreement is frequently used when a couple is experiencing difficulties in the marriage, yet want to work on a reconciliation, or when they are experiencing financial pressures from some outside source. Postnuptial agreements can cover similar ground as prenuptial agreements, serving to state how assets should be divided in the event of a divorce or even how alimony may be handled.
Let’s say, though, both parties have been married before, everyone is in love and the couple just wants to live together. In this case, there are benefits of having a cohabitation agreement, which can accomplish similar goals as prenuptial agreements, except these agreements are for unmarried couples who are living together. They may be used by couples who plan to marry in the future, or who do not intend to marry, but want to define terms by which their commingled assets will be divided if they break up or if they die.
Cohabitation agreements are an important consideration for couples who do not want to be perceived as common-law married (common law marriage is still recognized in nine states, including Texas). These couples want it to be clear for their families, the court, and future creditors that they are not legally married and never had any intention of creating a common law marriage. Then, they can define the character of whatever assets they have and how they may want those assets divided later.
Last year, I worked with a couple in their 60s. They were in love but chose not to marry. They bought a house jointly and wanted to have it in writing that they each owned 50 percent of the home. This was mostly to protect their grown children from previous marriages (the children really disliked one another, and holiday dinners were a nightmare!) and they did not want there to be a fight over the home when they died. Basically, they were defining their property rights from “beyond the grave.”
If this seems like too many details to understand, I get it. Here is a simple list to consider your options, especially if you are thinking of getting married soon:
The author of this article, attorney Daryl G. Weinman, is offering a FREE 30-minute consultation for TEXAS RESIDENTS ONLY, to discuss prenups, postnups and cohabitation agreements. All you have to do is mention you read her article on SheVentures. Offer expires December 31, 2022. Click the button below or call the main number of her law office at 512-472-4040.
10 Important Reasons to Get a Prenup Agreement
Protect your legacy for your children from a prior relationship.
Protect your assets for your retirement.
Protect your business and all that you’ve built and will continue to build.
Protect yourself from someone else’s pre-relationship debt, shopping binges, or expensive taste in cars.
Decide how marital and separate property will be divided as per state laws.
Getting a prenuptial agreement does not diminish the nature of your love for your partner. It can actually strengthen your marriage when done properly, because it prevents marital strife down the line.
When discussing the idea of a prenuptial agreement, remember that marriage is a contract and that a prenuptial agreement is simply a way to enhance this union.
Predetermine how your assets will be divided should you separate in the future, so that you can go your separate ways without a long, ugly and expensive battle.
Prenups protect your assets in death, too, to ensure that your assets go where you want them to.
When marrying a non-citizen, protect your assets from unintended international and cultural consequences.
In any case, it is a good idea to consult a family law attorney either together or separately to best understand your options. Even if you are not a celebrity, a business owner, a parent, or someone who has immense wealth, protecting yourself is always a good idea.
This expert produced this original thought leadership piece free of charge to SheVentures. This expert values educating female entrepreneurs and the SheVentures community. SheVentures is not receiving affiliate compensation from the author/expert. Questions? Contact social@sheventurespodcast.com.
