You’ve probably heard a lot about prenuptial agreements from various celebrity engagements and divorces. But are they legally binding? And are they something that ordinary folks really go ahead with?
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Originally published by Robert Epstein.
Texas law generally favors the freedom of contract. This principle also applies to prenuptial agreements. In Texas divorce cases, prenuptial agreements are generally valid and enforceable unless they were involuntarily signed or were unconscionable and signed without proper disclosures.
A wife recently challenged the enforceability of a prenuptial agreement. The couple met online while the wife lived in Vietnam. When the husband visited Vietnam, he gave her a copy of the prenuptial agreement his attorney drafted. The wife did not speak English, so she had it translated. She requested a change to the agreement.
The wife came to the U.S. and told the husband she was pregnant a few months later. He told her she needed to sign the agreement before they got married. The husband stated a paragraph was removed from the agreement based on the wife’s request.
He took her to a Vietnamese-speaking attorney for a consultation. The husband paid the fee, but was not there for the consultation. The parties signed the prenuptial agreement in the attorney’s office after the consultation.
The wife filed for divorce in 2015. The trial court found the prenuptial agreement was enforceable and incorporated it into the final divorce decree. The wife appealed, arguing the agreement was unconscionable, involuntarily signed, and violated both federal law and the Texas Constitution.
In support of her unconscionability argument, the wife asserted she was pregnant “when it was made clear” she had to sign or go back to Vietnam. She also argued it was unconscionable to “forc[e] a mother to accept a likely future in which her child would seldom see his father,” especially when both “would be at risk of shame and humiliation” in Vietnam. She said she thought her child’s life would be better in Texas. She argued it was unconscionable to require her to sign to avoid having to go back to Vietnam. She claimed taking her to a lawyer found in the yellow pages was just “window dressing.” She asserted she was more unsophisticated than the husband and did not speak English. She also argued he had not disclosed information about his assets and liabilities. Finally, she argued it was a one-sided agreement.
When reviewing unconscionability, courts consider the circumstances, including available alternatives, bargaining ability, illegality or public policy against the contract, and whether it is “oppressive or unreasonable.” When reviewing prenuptial agreements, courts may consider age and maturity, business and educational backgrounds, and prior marriages. The court will generally enforce a voluntarily-entered contract unless there is mistake, fraud, or oppression.
The wife knew the husband expected a prenuptial agreement before she met him in person. She testified they commonly discussed it after their engagement. He gave her a copy when he was in Vietnam in the summer of 2007. They executed the agreement in August 2008. The appeals court found she knew about the prenuptial agreement long before she arrived in the U.S. and became pregnant.
The court found the wife’s various reasons for not wanting to return to Vietnam did not make the agreement unconscionable. There was no evidence the mother or the child would be in danger there.
The appeals court also rejected the mother’s argument regarding her attorney. She argued the attorney could not have performed independent due diligence, such as finding out the property values. The appeals court found no evidence that information was necessary or the wife did not already know it. She testified she understood the terms of the agreement.
The wife argued the husband had not disclosed information about his assets and liabilities. There was testimony the husband had disclosed. Even if he had not, it would not make the agreement unconscionable. Lack of disclosure is the second prong of the test and only matters once the agreement is found unconscionable.
The appeals court also rejected the wife’s argument she was less sophisticated and had less bargaining power. Both parties were mature adults. Although she had less formal education, the wife had owned and operated two businesses in Vietnam.
An agreement is not unconscionable just because it is one-sided or unfair. The appeals court found no evidence of mistake, fraud, or oppression.
There was no error in the trial court’s finding the agreement was not unconscionable.
The wife also argued the agreement was not voluntarily executed. In reviewing voluntariness, courts consider whether the party had an attorney’s advice, whether there were misrepresentations, what information was provided, and whether anything was withheld. She argued her attorney had not had opportunity to study the agreement, analyze the information about the assets and liabilities, and “review the immigration agreements.” The appeals court found no evidence the attorney did not have sufficient time to review the agreement. Both the wife and the attorney testified she understood the agreement’s terms. She did not claim she received incompetent legal advice.
The appeals court rejected her claim the agreement was involuntary because it contained material misrepresentations regarding whether it disclosed the value of assets and liabilities. There was evidence the husband had disclosed the information regarding the assets and liabilities.
The wife also argued she was under duress because she did not want to return to Vietnam. The appeals court noted duress is only a defense to a contract if it involves a threat to do something the party has no right to do. The husband did not have a legal duty to marry the wife, so his threat not to marry her if she did not sign did not constitute duress.
The wife argued the agreement violated federal law because it conflicted with the affidavit of support the husband signed. She argued the affidavit created an obligation requiring the husband to use all of his assets to support her, while the prenuptial agreement only obligated him to use community property. The appeals court found any obligation created by the affidavit ended when she became a citizen. The appeals court also rejected the wife’s argument the agreement violated the Texas Constitution.
The appeals court affirmed the trial court’s judgment.
If you are facing a divorce involving a prenuptial agreement, an experienced Dallas divorce attorney can assist you. Call McClure Law Group at 214.692.8200 to set up a consultation.
Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.
Originally published by Family and Criminal Law Blog.
Essentially, a prenuptial agreement is a legal contract between two people who are planning to get married. While there are those who have an adverse reaction to the mention of a prenuptial agreement and think of it as, not a preparation for marriage but preparation for divorce, a prenuptial agreement can set and manage expectations for marriage. It can also bring peace of mind to the parties to the agreement knowing that certain assets will be protected in the event of divorce or, should divorce occur, they will already know how certain things will play out. Of course, the full extent of what can be accomplished by a prenuptial agreement will largely depend on what the parties choose to include in the agreement itself.
One of the best, and most popular, uses of a prenuptial agreement is to address the issue of marital property and how it will be distributed in the event of divorce. In this case, the prenuptial agreement should specify the assets and liabilities that each party are bringing into the marriage. It should then set forth the property rights of each throughout the marriage and what will happen to property rights, should the parties ever divorce. The agreement can accomplish this by distinguishing what property will always be considered separate property and which property will be considered marital or communal property. In divorce, marital property is subject to division between the parties.
A prenuptial agreement can also be used to manage financial expectations for a couple during the marriage. The agreement can set forth future financial goals and how these goals will be accomplished by certain investment strategies, among other things. The agreement should also address if, and how much, income should be paid into any joint or separate bank accounts. If there will be spending allowances distributed to a party, this should be included as well. The agreement can also include budgetary restrictions. For example, it can specify the way household expenses will be managed, who will pay which bills, and how much each party will financially contribute in general to the payment of household expenses.
A prenuptial agreement can also set forth financial expectations for the parties should the marriage end in divorce. The agreement can establish the fact that one spouse will not be liable for certain debts of the other spouse should the two divorce. This will protect the spouse from assuming financial liability for debts of the other party. Additionally, the prenuptial agreement can establish whether or not alimony, or spousal support, will be paid in the event of divorce. The agreement can also state how much alimony will be paid. It is important to note, however, that a court will not enforce an agreement that it determines to be punitive or will leave one spouse without any financial resources.
A prenuptial agreement can also work to protect inheritance rights. For instance, if you have children from a previous marriage, the prenuptial agreement can make sure that these children still have property rights. It can help ensure that they will still inherit a portion or all of your property as outlined by the prenuptial agreement.
While many view a prenuptial agreement as a plan for divorce, it can actually be of great help in working to help a marriage succeed. Setting forth and managing expectations of a marriage is a great way to start off the marital journey. For all of your prenuptial agreement help, Navarrete & Schwartz, P.C. is here for our clients. We are proud to serve the residents of Midland, Texas. Contact us today.
Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.