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Interpreting Texas Premarital Agreements

ringsIn re Interest of HDV arose when a husband appealed a final divorce decree, arguing among other things that the trial court had erred in awarding his wife money and property under their premarital agreement. The couple had entered into the agreement, which included a provision that there would be no community property, months before their marriage in 2003. The husband obtained a judgment that it was enforceable. While married, the couple had two kids.

The wife filed for divorce in 2010, and the husband counter-petitioned. The court ordered the husband to pay the wife’s attorneys’ fees on a temporary basis. The couple agreed to a parenting trial just before the court held a bench trial on the financial issues in 2014. The parenting plan was incorporated into the decree, which affirmed that the premarital agreement was valid and that there was no community property. The court awarded the husband and the wife, respectively, all of the property that he or she possessed. It awarded the wife as separate property a 2002 car. It also ordered the husband to pay the wife an allowance of $30,000, plus $3 million.

The husband appealed, arguing that the trial court shouldn’t have awarded the wife money and property based on the premarital agreement. The premarital agreement had stated that upon death or divorce, each party would receive their separate property, and the husband would make a payment to the wife based on how long the marriage lasted. In this case, the provision about a five-year marriage applied. Based on the provision, the court calculated the husband’s net worth from the date of the filing of the divorce petition, and it accordingly found that the husband had to pay the wife $3 million.

The husband argued that the date on which liquid net worth had to be measured was the divorce date in 2014, rather than the filing date. The appellate court looked at the plain language of the agreement. The husband claimed that the language that required him to make a lump sum or installment payment began on the first day of the second month after entering the final divorce decree.

The wife relied on the language that stated “upon the date of the filing for dissolution of marriage” related to the specific payment that coincided with the length of the marriage. The court agreed with the wife that this language was determinative, since the other language relied upon by the husband was prefatory language, related to no obligation to divide separate property. The court explained that if it interpreted the contract as the husband wished, the husband would have an incentive to lower his separate property liquid net worth after the wife filed her petition and before the divorce date to reduce what he owed, which wasn’t the parties’ intent for the agreement.

The husband also argued that the value of the community assets is determined at the time of the divorce, rather than the filing of the petition for divorce. The appellate court didn’t believe this general rule could be applied to this case, since the issue was cash payment based on a premarital agreement. On this issue and the other issues of the case, the trial court’s judgment was affirmed.

If you are considering divorce, contact the Texas attorneys at the McClure Law Group at 214.692.8200.

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