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How can a marital agreement protect partitioned property?

How can a marital agreement protect partitioned property?

On Behalf of | Aug 25, 2022 | Marital Agreements |

Many wealthy Texas residents have concerns about protecting money or property from division in a divorce. The question of exchanging property can be particularly thorny. If your spouse gives you a new car, is it truly yours or can you lose it in divorce? Creating a marital agreement may provide some clarity.

Texas establishes how couples may compose pre- and post-marital agreements through the Texas Uniform Premarital Agreement Act. This law creates guidelines for a married couple to protect property that one spouse gives to the other or otherwise partitions as separate property.

Designating or exchanging property

Community property consists of assets that you own equally with your spouse. A divorce settlement will divide this property between you and your wife or husband. However, a marital agreement allows you to assign some community property as the separate property of yourself or your spouse.

Alternatively, you can exchange property to your spouse and vice versa. Whether you partition or exchange property, you should spell out the designation in your marital agreement.

Protecting resulting income

Even if your spouse assigns property to you, you may worry that any income your property generates could still become community property. The good news is that a marital agreement may make this a non-issue. In addition to designating property, you and your spouse can agree to assign any income created from separate property to the spouse who owns it.

Make sure your agreement is valid

You might not realize the benefits of your marital agreement if a court does not enforce the document. Texas law mandates that any partition or exchange agreement must be in written form and that the spouses have signed it. Additionally, each party must consent to sign the agreement, and there should be no unconscionable provisions in the compact.

Even if a divorce is inevitable, a well-drafted marital agreement may be enough to guard property and wealth that you could otherwise lose through property division.