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How does commingling property affect a prenuptial agreement?

Changing marital status changes finances whether Houston couples are heading into or out of marriage. Texas community property laws influence property ownership and debt responsibility. Individuals retain rights to some separate property upon entering marriage, but otherwise, assets, income and liabilities are shared with a spouse or, in many cases, an ex-spouse.

Prenuptial and post-nuptial agreements allow couples to arrange finances according to their own wishes. The contracts can bypass community property laws and create a new, customized financial arrangement between spouses. Texas courts will honor the agreements as long as state guidelines are followed.

Asset preservation is one reason couples sign prenuptial agreements, but that’s a blanket term that means more than divvying up property. Boundaries are drawn that define ownership of property and equally as important, debt. For instance, with a prenuptial agreement, a spouse’s student loan can be designated as a separate debt.

Debt accumulated before marriage is generally considered separate property during divorce, with or without a prenuptial agreement. However, if the debt is taken on during marriage, the bill becomes a joint liability under community property laws. A prenuptial agreement can assign the debt’s responsibility to one spouse.

Inheritances normally are excluded from marital property during divorce, provided the bequest is not jointly inherited. Property division problems occur when assets or debt are commingled or mixed together with marital property. For example, when inheritance money is used to purchase a joint asset like a marital home, the status of the inheritance is no longer separate.

Prenuptial agreements designate property ownership. Attorneys often advise couples to make individual property that is not commingled to avoid complications and court challenges to the terms of the contract.

Estate and pension division, marital money management, family business protection and spousal support are some issues prenuptial agreements can address. Attorneys will help engaged individuals draft and refine the terms of a mutually-desirable financial arrangement.

Source: FIndLaw, “Sample Premarital/Prenuptial Agreement” Oct. 20, 2014

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