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Protecting Your Assets in the Event of Divorce


One of the best ways to protect your assets during marriage is to enter into a premarital agreement (also known as a prenuptial agreement or prenup) prior to getting married that details all the assets and liabilities of both parties prior to marriage and details each party’s rights and obligations to the other’s income earned during marriage.

You might be thinking that a premarital agreement may cause strain on the marriage before it even begins so you instead plan to protect your assets by setting up separate bank accounts for your separate property and ensuring no community assets are ever commingled into the account during marriage. While this may seem like a suitable alternative, these measures may be insufficient to protect your fortune. Since interest accrued during the marriage, salary earned during the marriage, and cash dividends distributed the marriage will all be community property without a premarital agreement stating otherwise, a premarital agreement will often be necessary.

So how do you ask your fiancé to sign a premarital agreement without causing strain on the engagement? The answer lies in the actual terms of the premarital agreement. The words ‘prenuptial agreement’ are too often associated with misconceptions about one-sided deals with the non-monied spouse getting nothing. In reality, prenups are simply agreements to define the rights and obligations of couples who are about to marry. Additionally, the future spouse who is wealthier should know that the more one-sided the agreement, the more likely it is to be attacked upon divorce. As such, the wealthier future spouse has an incentive to make the agreement attractive to his or her fiancé.

To make a premarital agreement more attractive to the party with less money, it is important for the wealthier party to fully understand his or her goals.  For example, if the wealthier party just wants to protect assets that were owned before marriage and the income and interest generated from those assets during the marriage, then the premarital agreement does not need to change the characterization of the parties’ salary earned during marriage.  This means that if the wealthier party is expected to accumulate a great deal of money from his or her salary during the marriage, then the party with less money could take comfort in knowing that his or her soon-to-be spouse’s salary will still belong to the community estate.

Conversely, if the wealthier party’s interest is in protecting salary earned during the marriage from being considered community property, then the party with less money might do well to ensure that he or she is entitled to alimony upon divorce, which could be based upon the length of the marriage at the time someone files for divorce.

The terms of a premarital agreement can be broad and diverse, but there are certain restrictions on what can be enforced in a premarital agreement. For example, a premarital agreement cannot violate public policy or a statute that has a criminal penalty. It also cannot adversely affect a child’s right to receive child support, and it cannot be used to intentionally defraud creditors. Given these restrictions, it is important for the parties to a premarital agreement to hire lawyers to ensure all terms of the premarital agreement are valid and enforceable.

Both parties to a premarital agreement should have their own lawyers. Premarital agreements proven to be signed “involuntarily” by one side will not be enforced by a divorce court.  If each party has independent representation, then it will help to negate any potential argument upon divorce that the premarital agreement was not signed voluntarily.

Another way to best ensure the enforceability of a premarital agreement is for the parties to a premarital agreement to provide each other with a fair and reasonable disclosure of their property and financial obligations. If the parties elect not to do this, then they at least need to waive this right to disclosure in writing.

Without this disclosure or written language waiving the right to disclosure, a spouse going through a divorce who wants to set aside the agreement could argue that it should not be enforced as a result of it being unconscionable or too one-sided. This further illustrates why the future spouse who has more money should not want the agreement to be too one-sided.

Regardless of the value of your assets, it is imperative to protect yourself by hiring experienced lawyers who can advocate in your best interest. If you are considering a premarital agreement, contact the Dallas family law attorneys at McClure Law Group at 214.692.8200.

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