Articles Posted in Prenuptial Agreement

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Amy Schumer and Chris Fischer have announced on social media that they are divorcing after seven years of marriage. Let’s evaluate the dissolution of this marriage from the perspective of a family law attorney.

Even prior to the marriage, Schumer was an internationally famous comedian. Fischer is successful in his own field as a James Beard Foundation Award-winning chef, though Schumer’s net worth dwarfs Fischer’s at the time of writing. These facts matter when weighing the division of assets and debts, though a more penetrating accounting would be necessary.

It’s unclear whether the couple signed any pre- or post-marital agreements, as they never publicly commented on this facet of their relationship. This question piques our interest because pre-marital agreements, post-marital agreements, and pre-divorce planning simply carry higher stakes in terminations involving high-income spouses with significant assets (and possibly debts) to gain or lose.

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Spouses can agree to change their rights and obligations with regard to property by signing a Texas pre-marital agreement. Premarital agreements, also known as prenuptial agreements, are often used in circumstances involving a high net worth or where one spouse enters the marriage with significantly more assets than the other.  While prenuptial agreements can be valuable tools to protect a spouse’s assets, they can also be contentious in the event of a divorce.

A husband recently challenged the property division in his divorce decree, arguing the trial court had not followed the premarital agreement in dividing the parties’ property.

Before the marriage, the parties executed a premarital agreement the husband bought online.

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A Texas marriage may end by either death of a spouse or a court order. Generally, it is clear how a marriage ended, but in some cases, there can be a dispute.  In a recent case, the Texas Supreme Court considered whether a divorce filed by the husband’s guardian resulted in a valid divorce decree before the husband’s death.

The husband had significant assets. He and his fourth wife signed a pre-marital agreement before the marriage in September 2011 and a post-marital agreement, agreeing no community property would be created and each spouse would keep their separate property unless they transferred it to the other in writing or by a will.

The husband petitioned for divorce after about seven months, but was diagnosed with dementia.  He failed to prosecute the case and it was dismissed. His daughter claimed he still wanted the divorce, while the wife alleged he changed his mind.

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A pre-marital agreement can be a valuable way to protect assets in a high net worth Texas divorce.  A pre-marital agreement can help protect a spouse’s interest in a business, identify property that will remain separate, or describe how a complex estate will be divided in the event of a divorce.  In some cases, however, a party may challenge the validity of the pre-marital agreement.  The Texas Family Code sets forth the circumstances under which a pre-marital agreement will not be enforced, but matters may become more complicated if the agreement was signed in another state.  A wife recently challenged an order applying Louisiana law to the validity and enforceability of a pre-marital agreement.

The Pre-marital Agreement

The parties got married in Louisiana in 1990.  They purportedly signed a pre-marital agreement pursuant to Louisiana law a few days before the marriage.  The agreement provided that only the husband’s salary from a particular company would be community property. All other income generated by his efforts would remain his separate property.  All revenue generated by the wife’s efforts would be her separate property.

Applicable Law

The wife petitioned for divorce in Texas in 2019.  The husband asked the trial court to enforce the agreement. The wife asserted a number of defenses to enforcement of the agreement under Texas law.

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Property’s characterization as either separate or community property in a Texas divorce is generally determined by its character at inception.  The Texas Family Code includes a presumption that property either spouse possesses during or on dissolution is community property.  Tex. Fam. Code § 3.003(a).  The Code defines “community property” as the property acquired during the marriage by either spouse, except separate property.  § 3.002.  Personal income and income produced by separate property is generally community property.  Spouses may, however, enter contracts changing their rights and obligations with regard to property. Although premarital agreements are contracts and generally interpretated according to the rules of contract interpretation, they are narrowly construed in favor of the community estate. A former husband recently appealed the property division in his divorce, argued the court had failed to apply the terms of the premarital agreement.

Premarital Agreement

The parties had signed a premarital agreement two days before their wedding.  The husband drafted the agreement based on a form from the internet.  The agreement was partially typed and partially handwritten.  The agreement included a Separate Property Provision that provided that the separate property each party brought to the marriage would stay their separate property.  It also included an Acquired Property Provision that provided, “All property acquired by each during the marriage shall be deemed [th]eir property.” The agreement also stated that the husband’s 401(k), along with “income profits, Deferred Retirement Option (D.R.O.P.) or any benefits of any kind accruing from it” would remain his separate property.  The agreement further provided that the wife’s “personal income or retirement will remain her separate property.”

The dispute was over the meaning of the Acquired Property Provision, specifically related to the marital home and a vehicle. The husband bought the house four years into the marriage with funds received from the sale of a house in Hurst, Texas, he had purchased with his separate property in 2006.  The parties had lived in the home in Hurst from 2006 until 2014. The wife said she paid for improvements to both.

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In some situations, a Texas premarital agreement can be used to protect the parties’ assets.  To be valid, a premarital agreement must be signed by both parties.  A wife recently challenged a trial court’s finding there was no enforceable agreement when neither party was able to produce a signed copy of the agreement.

Premarital Agreement

The appeals court’s opinion stated parties started their relationship around six months before the marriage.  The wife raised the issue of premarital agreement a month or two before the wedding.  The wife signed in front of the notary, but the notary refused to notarize the husband’s copy because he signed it before he arrived at the store and did not have his ID with him.

The wife testified she forgot what she did with the signed copies.  She said she thought she had an electronic copy on the husband’s computer, but he had taken the computer.

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iStock-481542709-300x179A couple may choose to enter into a Texas pre-marital agreement to protect their respective assets in the event of a divorce.  A pre-martial agreement allows the parties to agree on use, control, and transfer of property, characterization of property or income, disposition of property in a divorce, and a number of other issues.  In some cases, pre-marital agreements may lead to results that the parties did not consider.

Parties Signed Premarital Agreement

In a recent case, a husband challenged an award of attorney’s fees to the wife because their pre-marital agreement provided for property to remain separate.  According to the appeals court’s opinion, the parties signed the pre-marital agreement which provided that their pre-marital separate property and property acquired during the marriage would stay separate.  They married in 2016 and had a child the next year.

When the wife petitioned for divorce in 2018, she requested attorney’s fees.  She indicated she sought fees “[t]o effect an equitable division of the estate” and for the services she provided related to support and conservatorship of the child.  The trial court entered a final divorce decree in November 2019.  The husband was ordered to pay $14,900 in attorney’s fees, with $10,000 of that being paid directly to the wife’s attorney.

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iStock-1287431987-300x200Texas prenuptial agreements may include a provision requiring arbitration in the event of a divorce.  The Texas Family Code includes provisions making arbitration of divorce cases different from the arbitration of other types of cases.  A wife recently sought mandamus relief after the trial court ordered arbitration pursuant to a prenuptial agreement.

Parties Executed Islamic Premarital Agreement

According to the court’s opinion, the parties had executed an “Islamic Pre-Nuptial Agreement.” It included a provision requiring resolution of conflicts in accordance with Islamic law by either in a Muslim court or by a three-member Fiqh panel.

The wife denied knowing the contents of the agreement when it was executed.  She claimed she thought it was a second copy of the parties’ marriage contract.

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Premarital agreement

Some Texas premarital agreements may include a binding arbitration clause. A party may compel arbitration when the claims at issue are within the scope of a valid and enforceable agreement to arbitrate.  If the claim falls within the agreement’s scope and there is no defense to enforcing it, the court must compel arbitration. Fraud may be a defense against compelled arbitration, but the party must show that the fraud was specifically related to the arbitration provision.

A husband recently appealed a denial of his motion for arbitration in his divorce proceeding.  The parties signed a premarital agreement that included an arbitration clause. The wife filed a petition for divorce in July 2014.  In 2016, she filed an amended petition.  Neither petition mentioned the premarital agreement.  The husband filed an answer in 2016, but did not mention the premarital agreement either.

In a second amended petition, the wife stated there was a premarital agreement and requested it be set aside and vacated.  She alleged she entered into it involuntarily and that it was unconscionable.

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iStock-654702696For many Texans, their 401(k) plan is one of their largest assets – particularly for those who have made regular contributions throughout their career. On top of that, 401(k) plans often hold symbolic significance above and beyond their sheer dollar value. To some, they represent safety, security, and an end to the monotonous rat race. For others, they are a prize, a badge of honor earned after countless late nights at the office. However, no matter the role they play in your life, the thought of losing half of your hard-earned nest egg can be terrifying. This begs the question: how much of your 401(k) is actually at stake in a Texas divorce? Continue Reading ›

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