CokerLegal, we do a lot of Premarital Agreements-"Prenups" and the post-marriage
equivalent-Marital Property Agreements. We almost always recommend them
to clients, especially clients going into a second or third marriage or
getting married later in life. However, the simple fact is that the vast
majority of our divorce clients do not have these types of agreements.
While Texas Law provides for how to divide the community estates of married
couples when no property agreements exist, one of the most common problems
we encounter is proving what the Separate Property estate of one or both
parties consists of at the time of divorce.
What is Separate Property?
In Texas, any property owned at the time of marriage, or received during
marriage by gift or inheritance, is considered a party's Separate
Property. As Separate Property, it is not divisible at the time of divorce
and is set aside for the party to whom it belongs.
How is Separate Property Identified?
It is the sole burden of the party claiming that property on hand at the
time of divorce is Separate Property to prove it. This is sometimes hard,
especially when couples have been married for a long time and records
from around the time the parties got married are long gone. Banks and
other financial institutions often dispose of records as soon as allowable
under law, which is most often seven years from the date they are created.
Accordingly, if a party in a divorce wants to prove how much he or she
had in the bank when the parties married 15 years earlier, it can be difficult
If the parties did a Premarital Agreement, each party's separate property
is usually identified at the time of marriage. However, without such agreement,
and without access to statements, parties often lose their right to have
property confirmed as Separate Property. This can cost tens or hundreds
of thousands of dollars and cause the property division to be very inequitable.
How Can you Protect Yourself Without a Marital Agreement?
While we encourage Premarital Agreements, if you are getting married and
don't plan to enter into such an agreement, it's a good idea to
print statements from all your existing accounts-bank, retirement, investment
and so on-and put those statements in a safe place. Financial professionals
encourage people to regularly print and save all their financial account
statements as, often, statements for the entire time of marriage or necessary,
or at least helpful, in determining what is separate and what is community.
Remember, if you do find yourself going through divorce, it's your
burden to prove what is your separate property and, if you don't,
your soon-to-be ex-spouse is likely going to get at least half of it.