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Using a marital agreement to protect your property, P.2

We’ve been looking in recent posts at the topic of keeping separate property separate in marriage as a way to protect one’s assets in the event of divorce. Then, in our last post, we began to look at using marital agreements to protect separate property from division in divorce.

As we noted, marital agreements allow a couple to partition or exchange property, as well as designate income or property arising from separate property to remain separate, but they must follow established formalities to be effective. We’ll look a bit more at this issue here. 

Under Texas law, partition or exchange agreements are only enforceable if they are voluntary and both parties have fair and reasonable disclosure of property and financial obligations of the other party. When one party does not provide full disclosure and the other party did not expressly waive the right to full disclosure in writing, and could not have had adequate knowledge of property or financial obligations, the agreement will not hold up in court.

The possibility of coercion and fraud in the formation of a marital agreement is why it is so important for each spouse to be represented by experienced counsel. Coercion and fraud are not always obvious to the spouse being taken advantage of at the time it is occurring. In the moment, it might seem only like rushing things, concern about getting things in order, or taking control of the couple’s finances, but in hindsight it may turn out to be something more.

In our next post, we’ll continue looking at this issue.  

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