Prenuptial agreements can be an invaluable tool for protecting assets in divorce. Couples who don’t have such an agreement don’t have as much control over how their assets will be divided, and the outcome in terms of property division is more uncertain.
While there are plenty of reasons for certain couples to strike a prenuptial agreement, it just doesn’t always happen in cases where it would be highly recommended. It could be lack of foresight, fear that striking a prenuptial agreement would taint the marriage, or an inability to secure the cooperation of one’s fiancé. Whatever the reason, couples who enter marriage without the protection of a prenuptial agreement can still take steps to protect their assets from potential divorce.
The general way to protect one’s assets from divorce without a prenuptial agreement is to keep separate property separate. The way a couple goes about doing this depends on the state in which they live. Actually, what really matters should be the state where a couple gets divorced, but this isn’t exactly something a couple would ordinarily plan out. Community property, such as Texas, states have a different way of categorizing assets than equitable distribution states.
Under Texas law, separate property is defined as property owned or claimed by a spouse prior to marriage, property acquired during the marriage by inheritance, and proceeds for personal injuries sustained during the marriage minus recovery for loss of earning capacity. Community property is defined as all non-separate property acquired by either spouse during the marriage.
In Texas, courts divide a marital estate in a way determined to be “just and right” under the circumstances. Courts presume that property possessed by either spouse at the time divorce is filed is community property and a spouse must present clear and convincing evidence to prove otherwise, a higher burden than the ordinary civil standard of preponderance of the evidence. In order to prevent separate property from being divided in divorce, then, a spouse has to make sure it is very clearly separate property.
In our next post, we’ll look at some specific suggestions for keeping separate property separate in marriage.
