Post-Marital Agreements

A Post-Marital Property Agreement is an agreement between spouses altering their rights in separate property, community property, or both.

 

At any time, spouses may partition or exchange between themselves all or part of their community property.  This rule applies regardless of whether the property is in existence at the time of the agreement or is to be acquired after the agreement.

 

A property agreement between spouses can change the character of the property involved.  Property or a property interest transferred to a spouse by a partition or exchange agreement becomes that spouse's separate property. Although typically, the earnings and income from separate property are community property, a partition or exchange of property includes future earnings and income arising from the property as the separate property of the owning spouse unless the spouses agree that the future earnings and income will be community property after the partition or exchange.  There must be a record made of such an agreement.

 

In the absence of an agreement to the contrary, income from separate property is community property.  At any time during a marriage, however, spouses may agree that the income or property arising from the separate property that is then owned by one of them, or that may after that be acquired, will be the separate property of the owner.

 

To be enforceable, any partition or exchange agreement between spouses must be in writing and signed by both parties.

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At any time, spouses may agree that all or part of the separate property owned by either or both spouses is converted to community property.  It is critical to note, however, that the mere transferring of a spouse's separate property to the name of the other spouse or the name of both spouses is not sufficient to convert the property to community property.

 

Additionally, an agreement to convert property to community property will, in all likelihood, not be enforceable against a spouse that can prove that he or she did not execute the agreement voluntarily or was not given a fair and reasonable disclosure of the legal effect of converting the property to community property.

 

In order to meet this requirement of a fair and reasonable disclosure, Texas Statutes provide that the following statement may meet the obligation:

 

"THIS INSTRUMENT CHANGES SEPARATE PROPERTY TO COMMUNITY PROPERTY. THIS MAY HAVE ADVERSE CONSEQUENCES DURING MARRIAGE AND ON TERMINATION OF THE MARRIAGE BY DEATH OR DIVORCE. FOR EXAMPLE:

 

"EXPOSURE TO CREDITORS. IF YOU SIGN THIS AGREEMENT, ALL OR PART OF THE SEPARATE PROPERTY BEING CONVERTED TO COMMUNITY PROPERTY MAY BECOME SUBJECT TO THE LIABILITIES OF YOUR SPOUSE. IF YOU DO NOT SIGN THIS AGREEMENT, YOUR SEPARATE PROPERTY IS GENERALLY NOT SUBJECT TO THE LIABILITIES OF YOUR SPOUSE UNLESS YOU ARE PERSONALLY LIABLE UNDER ANOTHER RULE OF LAW.

 

"LOSS OF MANAGEMENT RIGHTS. IF YOU SIGN THIS AGREEMENT, ALL OR PART OF THE SEPARATE PROPERTY BEING CONVERTED TO COMMUNITY PROPERTY MAY BECOME SUBJECT TO EITHER THE JOINT MANAGEMENT, CONTROL, AND DISPOSITION OF YOU AND YOUR SPOUSE OR THE SOLE MANAGEMENT, CONTROL, AND DISPOSITION OF YOUR SPOUSE ALONE. IN THAT EVENT, YOU WILL LOSE YOUR MANAGEMENT RIGHTS OVER THE PROPERTY. IF YOU DO NOT SIGN THIS AGREEMENT, YOU WILL GENERALLY RETAIN THOSE RIGHTS.

 

"LOSS OF PROPERTY OWNERSHIP. IF YOU SIGN THIS AGREEMENT AND YOUR MARRIAGE IS SUBSEQUENTLY TERMINATED BY THE DEATH OF EITHER SPOUSE OR BY DIVORCE, ALL OR PART OF THE SEPARATE PROPERTY BEING CONVERTED TO COMMUNITY PROPERTY MAY BECOME THE SOLE PROPERTY OF YOUR SPOUSE OR YOUR SPOUSE'S HEIRS. IF YOU DO NOT SIGN THIS AGREEMENT, YOU GENERALLY CANNOT BE DEPRIVED OF OWNERSHIP OF YOUR SEPARATE PROPERTY ON TERMINATION OF YOUR MARRIAGE, WHETHER BY DEATH OR DIVORCE."

 

Reading the aforementioned statement can give insight into the importance of the characterization of property during a divorce.  Attempting to draft or review a Marital Property Agreement without competent legal representation can have devastating financial consequences.