What is a Post Marital Agreement?
A post marital agreement is a type of agreement between two people who are already married. It is in the same general form as a pre-marital agreement, except that it is entered into after the marriage rather than before. As such, it serves the same purposes for a marriage as a pre-marital agreement does before the marriage.
Post marital agreements can involve the same topics as a pre-marital agreement. Texas law provides that the rights and obligations of the parties with respect to any of the following topics may be the subject of a post marital or spousal agreement:
A common reason to enter into a post marital agreement is that the parties are expecting a child and either expect or hope to make an agreement to share custody of the child, or want to agree not to seek custody in order to leave that decision up to the other spouse . Other examples include the desire to agree to the ownership of a specific piece of property in advance to avoid disputes or litigation in the event of death of one of the spouses or in the event of divorce.
The only two topics that cannot be addressed in a post marital agreement are (i) decisions that are reserved to the court under Tex. Fam. Code §153.134, meaning that those decisions have to be made by the court, or (ii) medical rights and duties. As noted above, property rights can be included in a post marital agreement. The one thing you cannot typically do, is to opt-out of child support.
Requirements in Texas
A post marital agreement must be in writing and signed by the parties and be entered into voluntarily and have been made with a full and frank disclosure of the property or financial obligation of both parties. A post marital agreement is enforceable without consideration. A party may not be bound by a post marital agreement if the party proves that such party did not have knowledge of the facts or was not given a fair and reasonable opportunity to have the terms of the agreement reviewed by independent legal counsel or that the terms of the accrual are not unconscionable. In addition, and to the extent feasible, a party to an agreement should be advised by an attorney of the legal effect of the waiver.
Benefits and Importance Explained
In Texas, the most significant benefit of entering into a post marital agreement is that you are able to retain control over your own property during your marriage and the distribution of your property in case of divorce or death, assuming of course that neither you nor your spouse will be forced by the law to make an unequal division of property. Without a post marital agreement, the assets acquired during the marriage are divided according to community property laws, which could lead to a situation where you lose the property you want to keep. Post marital agreements negate that outcome, as long as neither the husband nor the wife is subject to a right of election as mentioned above. Post marital agreements may also be used to relieve a spouse of specific debts or liabilities that spouse has either incurred before or after the marriage and that the other spouse would otherwise be obligated to pay under Texas law. In this way, a post marital agreement can be used to ensure a clearer picture of the community estate created during the marriage. Having a post marital agreement is also important from the standpoint of income. If you wish to keep the income from certain property without the other spouse having a claim to your income, then a post marital agreement should be signed to validate the understanding. Separately, although courts in Texas encourage parents to agree on custody, support, possession and access of the children post-divorce, post marital agreements can also be used to agree on these issues and make such an agreement enforceable in a divorce, if it is not settled with a divorce decree.
Common Clauses and Provisions
Post marital agreements are governed by Texas Family Code Section 4.103 and can include any terms that the husband and wife agree to as long as the terms are not contradictory to public policy or state law, and, as a practical matter, as long as the terms address something that can not be addressed by the agreement. With that said, the following terms are ones most commonly made part of a post marital agreement and how the terms protect both parties.
First, marital property has to be identified. The agreement typically can only identify community property and separate property that is quasi-community property regarding the characterization of the property as community or separate, but identifying the specific property can be helpful in making transfers later on of separate property. Also, identify the debts. While the characterization of the property as community or separate is important for dividing property without future debate, identifying the property can also be helpful later on in meeting the agreement terms.
Second, a waiver of spousal maintenance can be a term of the agreement. Most agree that no party should become impoverished by the divorce. However, if there have been large inequities in the marketable skills of each spouse, then it is not likely that a waiver of spousal maintenance would make the other spouse impoverished. In those cases, one spouse should agree to waive spousal maintenance so that the other spouse is not entitled to this type of support that will last for a period of time after the final divorce decree is entered.
Third, the agreement can change the characterization of the property from community or quasi-community to the separate property of the other party. Finally, each will agree to not seek to have the provisions of the agreement overturned in court, but the court does have the ability to do so if the court determines that the provisions in the agreement are illegal, unconscionable, etc.
Potential Challenges and Limitations
There are a number of limitations and drawbacks to post marital agreements. One of the most prominent issues is that the spouse with a significantly greater economic advantage will often litigate any agreement they may have entered into during the marriage. This is especially likely with divorce actions. Even when these spouses might risk being found liable for unnecessary legal costs, they will sometimes attempt to use their financial advantages to extract greater concessions from their spouse. Some divorcing spouses might not wish to enter litigation, which will likely give the spouse with greater legal and financial resources even more leverage in the course of litigation.
Another potential drawback is that divorcing spouses may be subject to financial blackmail. This does not mean that divorce agreements are without merit. A divorce agreement can be appropriately drafted to account for all assets , including unreported income or estate matters. Property that is given as a gift and valuable marital property may require a fuller disclosure of its value and use at the time of setting the agreement.
Different states have varying laws regarding the enforceability of post marital agreements. This means that such agreements may be more difficult to void out of necessity. Although the Texas Supreme Court has favorably viewed the means by which parties can negotiate and make amendments to contracts under Texas law, the validity requirements for premarital agreements may be invoked to avoid their transferability to a post marital agreement. This could happen even when the spouse with greater assets is satisfied with signing the agreement.
A post marital agreement may also be subject to a statute of limitations. This means that the agreement might be rendered ineffective if the statute of limitations elapses prior to a divorce decree. These agreements can become very difficult to enforce after the passage of a statutory period.
Steps to Drafting an Agreement
From the onset, it is important to note that ALL parties need to be represented by an Attorney that is not related or connected with each other. It is strongly suggested that a third-party, independent attorney is hired for each spouse’s representation in the negotiation and drafting of the postmarital arrangement, as their interests may be adverse from each other. The process is started off by having the non-titled owner spouse do a complete disclosure of every asset and debt existing at the time the post-marital contract is entered into. The agreement provisions should define what property will be owned by which spouse and how any future acquisitions of property will be handled. The agreement also provides for disclosure of the titled owner spouse of income from separate property to the non-owner. After a complete disclosure of property and income, both attorneys will draft the terms of the agreement and include both spouses signatures. Your agreement will include specific provisions detailing the valuation of property, and the treatment of all future property, income, debts, financial assets, and the identification of separate versus community property. The agreement shall be executed contemporaneously with a written statement of disclosure, and shall require the execution of a certificate of competent legal counsel, which is intended to ensure that each party has received independent legal representation. The agreement shall be executed in duplicate, one original for you and one original for your spouse.
Enforcement and Modifications
The only way a post marital agreement is enforced is if it is voluntarily entered into by both parties and then signed by a judge. A post marital agreement is not valid or enforceable until it is either incorporated into a divorce decree, or other order, or it is signed by a judge without being incorporated into a judgment. Until then, in a dispute, the other spouse could challenge whether the post marital agreement should be upheld because it wasn’t entered into voluntarily.
In a post marital agreement, the parties can agree that it will survive a divorce and will be enforceable, or some of the provisions will be enforceable, after a divorce. If the language is not clear or specific, it may not survive a divorce even if it wishes to. If some of the provisions are enforceable, the parties can agree that others will cease to have any further legal effect. For example, they may agree that provisions relating to child support should cease to have any further legal effect as child support is not a waivable claim. Or, if spousal support, palimony, or alimony is expressly allowed, they may agree that these provisions will be unenforceable upon divorce. Again, it would have to be clear and specific as to what happens at divorce.
A Texas post marital agreement cannot be modified. Once signed and if expressed to survive or cease at divorce, a post marital agreement survives and could be enforced under contract law.
When to Consider a Post Marital Agreement
Post-marital agreements can be considered at any time, ideally before a life change is anticipated which would make such an agreement necessary or at least more important for the spouse signing it. When married couples are contemplating a divorce, they are likely to be highly contentious and emotional. Trying to sign a contract dividing community property in such an environment could be extremely difficult, if not impossible.
Post-marital agreements can be especially beneficial when parties are anticipating certain life events, including , but not limited to:
- Birth of a child
- Second Marriage
- Inheritance/large gift received
- Selling a business or real estate
- Receiving a substantial bonus or commission
- Anticipating employment change with an employer with unusual property division requirements
- Starting a business
- Increased earnings from a career change or promotion
- Incurring substantial debt
- Anticipating health issues
- Anticipating the possibility of death
- Anticipating litigation against one or both spouses which could impact the community estate
It may be difficult to anticipate when certain events will occur but having a post-marital agreement can be a way to deal with uncertainty.