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According to older generations, millennials are guilty of destroying everything. But one area that millennials’ parents can be proud of is seemingly longer-lasting marriages and the foresight to protect their assets. Millennials are more likely than any generation before to get prenuptial agreements. This isn’t a coincidence but rather a correlation. Millennials are getting married later in life, which means they have more assets to protect, including and not limited to keeping finances separate, social-media use, student debt, embryo ownership, and even pet care. Divorce financial planning isn’t a complicated process, nor should it be.
Additionally, millennials are the children of Baby Boomers who, statistically, are the generation with the highest divorce rate. Many saw what their parents went through and want to avoid the pitfalls of divorce. While a prenuptial agreement may not be something you want to discuss while basking in the early days of your engagement, it is something you will eventually need to address. Even if you and your spouse never draft an agreement, having an open and truthful conversation starts your marriage off on the right foot.
What is a prenup?
A prenuptial agreement is known as a premarital agreement in Texas. By Texas definition, a premarital agreement is an agreement that prospective spouses make in contemplation of marriage. The agreement becomes effective once the parties are married. Essentially, the document determines the division of real or personal property in the event the marriage ends in divorce. Further, the document can be used to protect one spouse from the other’s debts and potential creditors.
Texas is a community property state. That means that property obtained during the marriage is presumed to be the joint property of both spouses. Prenuptial or premarital agreements can remove that presumption and assign how property is going to be owned between the spouses during the marriage. For example, business interests of one party, patented ideas, lottery earnings, and tangible assets are all subject to property division in a divorce, and can likewise be accounted for in the premarital agreement. The agreement can also assign property interests and obligations on the parties in the event of a divorce.
What should a prenup include?
The point of a prenup is not to keep property from your spouse, it’s to protect the both of you should your marriage dissolve. When there are discrepancies in wealth and assets, you risk losing everything or walking away worse than you were coming into the marriage. Additionally, premarital agreements can reduce legal fees in a divorce since the property and debt would already be decided through the premarital agreement.
A qualified family law attorney can help you examine your assets and determine what should be included in your prenuptial agreement.
In Texas, a prenup can be drafted to include the following:
- Division of property. Each state has its own laws to distinguish between separate and communal property. Without a prenup, the burden will be on you to prove that any assets you acquired prior to marriage, by gift, or inheritance, are in fact your separate property. Absent a prenup, a Texas court will presume all assets are community property until a party has overcome the burden of the presumption. Additionally, without a prenup, your spouse may see reimbursement for money paid during the marriage that helped improve any property you owned prior to the marriage.
- Alimony or spousal support. Texas allows couples to modify or eliminate spousal support through a prenup.
- Debt liability. Creditors often can go after marital property even if only one spouse is the debtor. A prenuptial agreement can protect the debt-free spouse’s assets from the other spouse’s creditors.
- Protection of children from a previous marriage. If you have children from a previous marriage, a prenuptial will protect the assets you want left to them.
- Stipulate financial obligations during the marriage. A prenup can also help a couple plan for how household expenses will be managed. This includes who is responsible for paying what, or how household bills will be divided.
- Protect family heirlooms and other inheritances. Prenuptial agreements can help protect family property that you may inherit. For example, a prenup can shield family heirlooms, business shares, real estate, trusts, etc. from communal property laws.
- Your income. Since Texas is a community property state, all income received by either spouse during the marriage is considered to be community property. With a prenup, the parties can agree that any income the spouse earns is the separate property of that spouse.
Finally, premarital agreements in Texas cannot negatively affect child support or contain matters that involve criminal activity.
Reasons for the increase in prenups among millennials
According to an article from Business Insider, more than half of attorneys surveyed saw an increase in prenups among millennials. About 62% of lawyers saw a rise in prenups overall between 2013 and 2016. One of the reasons for this uptick is that Americans are marrying later in life.
Rise in marital age
Traditionally, prenups have been used to protect the party with money. In the past, prenups protected men and their assets. Since 2005, the median age of men to marry jumped from 27 to 29.9. But more importantly, women are putting off marriage longer in pursuit of attaining their own career before entering a marriage. The marital median age for women went from 25.5 to 28.1.
Part of the rise in marital age is because single women:
- Are attaining more college degrees at higher rates;
- Have access to high wages; and
- Are purchasing homes more often than their single male counterparts.
Further, when millennials decide to marry, they wait longer to do so. For example, the average millennial couple waits nearly five years before walking down the aisle. The longer millennials wait to marry, the more wealth and assets they build and as a result, need to protect.
For these reasons, the rise in prenups may be because millennial women want to protect their financial assets before entering into marriage.
Single and divorced parents
More than one-third of millennials grew up with single or divorced parents. For this reason, millennials are more realistic about the possibility of divorce and have an intimate look at what can happen if a marriage dissolves. Millennials recognize that divorce is never off the table. As a result, millennials rationalize entering into a marriage without protection can lead to significant financial difficulties or future instability.
Why should I get a Prenuptial Agreement?
A premarital agreement isn’t for everybody. But it can give you peace of mind and allow you to enjoy your marriage knowing that the worst-case scenario of your “I Dos” won’t leave you destitute. While some people look at prenups as “planning for a divorce”, the reality is that you are protecting your financial future.
Divorce inherently strains finances and emotions. When you have a premarital agreement, this can be one less stress, if your marriage ends in divorce.
How Important is Financial Planning for a Divorce?
Financial planning for a divorce is necessary for ensuring that you and your children are protected in the event of a split. There are no guarantees that a marriage will last and planning for the possibility that it doesn’t is smart. Simply put, a prenuptial agreement protects you in the same way life insurance does. No matter if you are in a one-income marriage or a dual-income marriage, the aftermath of a divorce can change your financial situation drastically.
Having a prenuptial agreement isn’t dooming your marriage. Nor is it you entering into your marriage with a ‘me, me, me’ frame of mind.
What Should my Premarital Agreement Contain?
When going into a marriage, if you are considering a premarital agreement, it is important to consider that a prenuptial agreement can create tension or resentment among spouses. This is one reason that it’s best to have a qualified attorney representing you and your best interests.
Can my Spouse Challenge a Prenup in a Divorce in Texas?
While it is a great idea to get a prenup, these documents can still be challenged. Even if you have a premarital agreement, it may not stand up to scrutiny in a courtroom. Challenging a prenup in Texas requires a skilled divorce attorney.
A prenup can be invalidated for the following reasons:
- Premarital agreements require each spouse to make full disclosure of their assets. It’s best to be upfront about your financial income or assets. If a person undervalues assets or fails to disclose them, a court may have reason to throw out your premarital agreement.
- If you can prove that you signed a premarital agreement under coercion, duress or without mental capacity, you may have grounds to have it thrown out.
- Poorly drafted premarital agreements may also get thrown out during a divorce. This is not a situation where you want to go the do it yourself route. Instead, you should find a seasoned family law attorney who can help you navigate the process.
- Both parties agreeing to a prenup should have separate and individual counsel, and have adequate time to speak to their counsel about the agreement before it is signed.
Is it too late for a prenup?
If you’re already married and reading this, you might be considering whether or not you made a mistake by not protecting the assets you brought into the marriage. Texas allows couples to enter into a post-marital agreement. In Texas, post-marital agreements are called partition or exchange agreements and are acceptable as long as it meets the proper requirements. A qualified family lawyer can assist you in preparing and executing a partition or exchange agreement to meet your goals.
The Carlson Law Firm Can Help
No matter if you’re celebrating Valentine’s Day with an engagement or contemplating the end of your marriage—a Carlson Law Firm Texas family law attorney can help.