When you are married and live in the State of Texas, there are rules that automatically apply to your marriage unless you enter into an formal agreement known as a premarital agreement (before marriage) or marital property agreement (after marriage). Here is a list of common rules spouses are often “surprised” to learn apply to them:
1. Spouses Have a Duty to Support Each Other.
That may seem obvious. But when the relationship is dissolving, couples often view this duty in a very different light. This legal “duty to support” has been interpreted by the courts to mean financially providing for necessaries, like food, clothing and a place to live. Debts (as discussed below) to pay for “necessaries” will likely be considered by the court as part of this duty.
2. Spouses owe each other legal duties of honesty and good faith.
When you fail to abide by your fiduciary duties (honesty and good faith), the other party may bring a claim for “breach of fiduciary duty” in divorce.
What kinds of activities constitute “breach of fiduciary duty”?
- Wasteful spending on activities that do not benefit the community property estate, e.g., paramours, gambiling, illegal drugs, high risk activities;
- Inducing the party to sign a document, such as an agreement or contract,
that misrepresents the nature of the document;
- Disposing of community property without the agreement of your spouse and to the detriment of the community property estate.
3. Just because you earned it, doesn’t mean it belongs to you.
When you get married, your rights and the property you acquire are determined by Community Property Rules, unless you have a premarital agreement.
In Texas, when you get married, everything earned during the marriage is deemed to be “community property.” Community property is owned by both parties, and is subject to being divided in divorce. Community property most often includes things like compensation, cash dividends from investments, rental money received, and interest earned. What is important to note – and confusing for many married people living in Texas – is that it doesn’t matter who earned the money.
Sometimes people think that if they earned the money, it should be theirs. So, for example, both parties work and earn money, and each put their earnings in separate accounts in their own names. However, the fact that it is set aside in an account in your name, and was money earned by you, doesn’t matter. If it was earned during the marriage, it is community property and will be subject to division between you and your spouse.
4. The Property You Own Before Marriage Is Your Separate Property – Protect It
Assets owned before marriage can be that party’s separate property, if they can prove that they owned it before marriage. “Proof” becomes critical to being able to show that an asset belongs to that party as their separate property.
So, if you are coming into the marriage with assets (money in bank accounts, retirement accounts, real estate, etc.), hold on to your records during your marriage. Also, don’t co-mingle these funds with community property funds; you may lose your ability to claim them as your separate property if you do.
5. During the Marriage, Property Given to You Or Which You Inherit Can Be Separate Property, If You Can Prove It
If your spouse gives you a set of golf clubs, or pair of diamond earrings, those assets are considered yours and not subject to division by the court – if you can prove it. Most of the time, people don’t argue about gifts. However, there are some types of “gifts” that create issues upon the end of a marriage. For example, a Husband presents his Wife with the car they had been intending to buy for several months, but it just so happens to coincide with Christmas. Is this a gift? Or, a couple buys a piece of investment art that the Wife really likes while they are on a cruise. Is this a gift, or an investment? As you acquire valuable items during your marriage, it’s good to be clear with each other about whether this is a piece of art we are investing in together as a couple, or something one of you intended to give the other as a gift.
Most of the time, divorcing couples won’t argue over personal property that was inherited, like your grandmother’s chest of drawers or the dining room table. However, if the couple actually purchased the personal property from the estate of the deceased relative, then it is likely not a gift.
6. The House That Your Partner Owns Before Marriage May Not Belong To You
Your partner owns a house before you get married. You move into the house, raise your children in the house, pay off the mortgage during the marriage with community funds, and make improvements to the house with community funds. It’s time to divorce, and you want to split or keep the house? Many people are disappointed to learn that they have no legal right to take ownership of the residence. You may be entitled to some limited reimbursement claims, but that likely won’t match the increase in equity gained over the marriage.
7. Before You Refinance the Mortgage – Know What You Are Signing!
The Deed of Trust is not the ownership deed!
Often, parties will elect to refinance the marital residence. If the residence was owned before marriage, both parties may be asked to sign off on the Deed of Trust. Unfortunately, many smart, well-educated people think that signing the Deed of Trust means they are “on the Deed” and have an ownership interest in the house. This is not true. The Deed of Trust is a financing document that secures the lien created by the mortgage on the house. When you sign the Deed of Trust, you are signing the document that evidences the debt – not the ownership of the residence. Be careful before you sign off on a debt for which you are now obligated, but that is secured by an asset that you don’t own. You don’t want to be stuck paying on a loan for a house that’s not yours.
8. You May Be Liable for Your Spouse’s Debts
You learn during divorce that your spouse has racked up a considerable amount of credit card debt. Or perhaps, they engaged in a high-risk business venture, and now the creditors are knocking at your door looking to collect on the debt. While there is no such thing as “community debt” in Texas, it is true that spouses can be liable for the debts of the other spouse. This can come as a very difficult lesson to learn, especially when you assumed your community property estate was worth far more than it is after you take into consideration the debts that piled up during the marriage.
9. These Rules Apply Upon Death.
You are about to say “I Do” to the person you will love until death do you part. For the marriages that do make it (and we are a big believer in marriage!), this means that these rules will apply when you die. These rules can impact the ability of your future heirs to inherit through your estate, and how you can disperse your estate upon your death, or your spouse’s death.
10. You Can Create Your Own Rules Through a Premarital Agreement
If you don’t like how some of the rules above may control how decisions are made in your marriage, then it’s important to know that you can customize how you will own property, manage property, dispose of property, and share in property, through a Premarital Agreement. Negotiating a premarital agreement at the beginning of a relationship, when you both care for each other, can be an important planning tool for starting your marriage off on the right track! In many cases, people wrongly assume that a premarital agreement simply means that “what is mine is mine” – and while sometimes, that may be the case, it’s also an opportunity to dig deeper and reach agreements about how you will manage the properties in your marital estate. Doing this in a constructive fashion can help avoid a lot of misunderstandings, and misaligned expectations, that can derail a marriage.
If you or someone you know is getting ready for marriage, it can be a good idea to go over the “rules” governing marriage and how they will apply to your specific circumstances. The attorneys at Hargrave Family Law are experienced is helping people in love prepare for the next step in their life – whether through a better understanding of the marital rules, or through helping negotiate a well crafted premarital agreement. We’re here to help you start your marriage with a clear understanding, free to focus on your life together.