As a result of his illustrious career, Dr. Dre’s net worth currently sits at a whopping $820 million – but maybe not for long. After 24 years, Dr. Dre’s wife, Nicole Young, is filing for divorce from the producer, rapper, and hip-hop icon. Reports indicate that the couple did not execute a premarital agreement prior to their 1996 marriage, which opens up Dr. Dre to significant financial exposure. In the absence of a premarital agreement, California – a community property state much like Texas – provides that property accumulated during marriage is owned by the community estate. Put simply, all of Dr. Dre’s income during the marriage, from his royalties as a solo rapper to his profits from Beats by Dre, is up for grabs. This means that Dr. Dre could see his hard-earned fortune be split in half right before his eyes in the coming months. Continue reading →
In a Texas divorce, a premarital agreement is generally enforceable. Although they are presumptively valid, they may not be enforceable if they are unconscionable or were not voluntarily signed. There is no definition of “voluntary” in the Family Code, so courts have looked to the law governing enforcement of commercial contracts. In determining if a premarital agreement was voluntarily signed, the court considers whether the party had advice of counsel, misrepresentations made in procuring the agreement, the amount of information provided, and whether any information was withheld. Additionally, the court may consider evidence of duress or fraud in determining if the agreement was voluntary, but duress and fraud alone are not defenses to a premarital agreement. A court recently considered whether a Texas premarital agreement was voluntary.
The couple signed a premarital agreement the day before they got married in Las Vegas. The agreement set out the separate property of each of them and stated community property could not be acquired during the marriage.
The wife filed for divorce after ten years. The trial court granted a partial summary judgment in favor of the husband on the wife’s claims for a Separate Property Agreement, including reimbursement, maintenance, and her challenge of the premarital agreement. Following a trial, the court found the only community property accumulated during the marriage was a travel trailer. It awarded the trailer to the wife. The wife appealed, arguing the court had erred in granting the partial motion for summary judgment because there was a genuine issue of material fact as to whether she had voluntarily signed the agreement.
Texas is a community property state, and property acquired during a marriage is generally distributed equitably at the time of a Texas divorce. However, couples may enter into premarital agreements, also known as prenuptial agreements, that alter the way property will be identified and distributed if a divorce should occur.
A premarital agreement played a significant role in one recent case. Before marriage, the couple executed a premarital agreement that identified the separate property belonging to each party and precluded the acquisition of community property during the marriage. They had two children together. The wife filed for divorce after seven years.
The parties agreed to a joint managing conservatorship. They stipulated there was a premarital agreement, and neither challenged its enforceability. The trial court ultimately entered a final decree. The court also confirmed certain real property was the wife’s separate property. It also found the husband had breached the premarital agreement by raising a claim against that property and awarded attorney’s fees to the wife. The court modified the standard possession order by not allowing overnight visits with the father on Thursdays and Sundays. The husband ultimately appealed.
In Texas, all property possessed by either spouse at the time of divorce is presumed to be community property under Texas Family Code § 3.003. A recent appellate case arose out of the divorce of a Texas couple who had been married in Mexico in 1999. In Mexico, they got their civil marriage application, which required them to choose between two marriage property systems, separate property or community property, in order to regulate ownership of their items of property. They chose to have separate property.
In 2015, the wife sued for divorce. She asked for the community property to be divided disproportionately. The husband counterclaimed and stated that he and his wife had to have separate property. He attached a facsimile of the couple’s marriage certificate that included the agreement to have separate property during the marriage, but the certificate wasn’t signed.
At trial, an expert testified for the husband and provided the opinion that in Mexico, a marriage application is treated as a prenuptial agreement. The husband testified that the couple signed the application, but the wife testified she didn’t remember signing the application. She claimed only the husband handled the paperwork, and she didn’t even remember talking about choosing a property regime before the wedding.
In 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.
I know what you’re thinking…. “I’m already married; how is it not too late?” Don’t worry; the solution is a postnup! The Texas Family Code allows for couples to enter into a postnuptial agreement (or marital property agreement), which will offer many of the same protections and advantages that a prenuptial agreement offers.
Current Property. At the time of marriage, both spouses often have separate property interests and liabilities that were acquired prior to marriage. Without a prenup, the spouses’ separate property estates often become commingled and indistinguishable from the community estate of the spouses that begins upon marriage, especially if the spouses have been married for a substantial period of time. For example, during marriage, a spouse may inherit a large estate from a relative, gifts, buy a house, sell or trade property, or put separate property money in the same bank account. Although you and your spouse did not execute a premarital agreement, it is not too late to distinguish your separate property in a marital property agreement.
Chapter 4 of the Texas Family Code, Subchapter B, outlines the statutory requirements and guidelines for a marital agreement. Section 4.102 states:
Wedding season will be upon us soon, and if you or somebody you care about will be getting married this summer, now is the time to strongly consider getting or recommending a premarital agreement Continue reading →
The short answer is “yes.” Texas Courts tend to enforce prenuptial agreements and postnuptial agreements. Section 4 of the Texas Family Code states that Courts should enforce marital agreements unless the party trying to invalidate the agreement can prove the following:
- The party did not sign the agreement voluntarily; or
- The agreement was unconscionable when it was signed and, before signing the agreement, that party: (a) was not provided a fair and reasonable disclosure of the property of financial obligations of the other party; (b) did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and (c) did not have, or reasonably could not have had, adequate knowledge of the property or financial obligations of the other party.
Should you stand to inherit family money, you should know that any inheritance is your separate property. So, your spouse is not entitled to any funds you have inherited or were gifted from your family whether before or after marriage. However, a prenup is still encouraged. The reason being is that should you make income off your inheritance, invest into your community estate, or comingle inheritance with your community income or estate, your spouse will be entitled to a portion of the money- especially if you cannot trace your separate property funds.