If you or someone you know is getting married, talking about marital property laws is probably not high on the list of wedding planning, but it probably should be. Aimee Key went on The Jennifer Hargrave Show to talk all things Assets, Marital Agreements, and Divorce. Aimee is a partner with a statewide law firm of Goranson, Baine, Ausley. She is well respected by her peers often receiving recognitions from Texas Super Lawyers, THE magazine, and The Best Lawyers.
Aimee Pingenot Key:
Hi. Thank you Jennifer for having me today.
Jennifer Hargrave:
So, one of the things I want to start off asking you is what do you find people are most often surprised to learn about Texas marital property law?
Aimee:
I think a lot of times people don’t understand the idea of what is separate property and what is community property. They come into our office, especially when they’re getting ready to get divorced, and after years of marriage, have no idea how things are titled, inception of title. How inheritance works, how interest on separate property assets work, and what belongs to both themselves as their separate ownership or to themselves as a family.
Jennifer:
One of the things I found and maybe this is true for you too, is that sometimes people think that just because I earned the money, it belongs to me and my spouse doesn’t get any of it or that’s my 401k so I don’t have to share it with them or if we bought a house and I put it in my name, that it’s my house and my spouse doesn’t have an interest in it. And I mean, these are often things that are just not correct and we as divorce lawyers have to talk about the fact that no, sorry, it doesn’t work that way. How have you found premarital agreements to be helpful for people who are entering into marriage? One of the things I hear is that it’s like, why should we be planning for our divorce when we’re getting married, but there really is more to it than that. So I’d love to hear your perspective.
Premarital Agreements and Premarital Counseling go hand-in-hand
Aimee:
Sure. I think a lot of times, I see premarital agreements as an extension of premarital counseling. It is the first discussion of how both husband and wife or the parties themselves, see money and see how what is earned or spent during marriage? How it’s titled? How it’s acquired? How they’re going to save it? How they’re going to spend it? And what belongs to each of them? So it’s really a powerful tool just to discuss finances before getting married and certainly, before 20 years down the road, if a marriage doesn’t work out or in the event of death, just how it’s treated and what’s going to happen.
Jennifer:
You’re exactly right. I think for so many couples who jump into marriage without having those important conversations, the finances become a very source sore point in the marriage. You know, one of the things I find that often comes up when we’re negotiating a premarital agreement, that the couple hasn’t really discussed yet, is roles. Like if we have children, are we both going to continue to work and contribute, or will one of us stay home and negotiating a premarital agreement is one of those things that we can really have a frank conversation about at the onset.
Aimee:
So much so, and a lot of times when clients come in and I’m bringing that up with them, I realize it’s the first time they’ve thought about it or talked about it, when we say, okay, if you’re going to have kids, maybe one of you is going to stay home and that’s going to impact your retirement. That’s going to impact your ability to save or to invest. How are we going to treat that? How are we going to compensate for that? And what are we going to do? And I see light bulbs going off in people’s heads because they haven’t thought about it. And now, all a sudden it’s something that they and their future spouse can talk about and plan for, now, instead of again, down the road, if things go south.
Jennifer:
What you and I know as a divorce lawyer is marital property lawyers, is that there’s a whole system of laws that overlays the marriage relationship and people enter into this relationship, really. This partnership without knowing what those laws are and a premarital agreement afford them the opportunity to be able to customize it. If you don’t like the way the law says it has to be handled. You can change that. Right?
Aimee:
Well, and the good thing is also, I think that you are agreeing at the beginning of your marriage, the laws that are in effect today that we now understand and agree to are going to be the ones that control our divorce. If that happens in the state of Texas or wherever we move. You’re kind of putting that plan in place, if and when marriage were to dissolve down the road, no matter where you are. So you can understand the laws and it can be clear for everyone at the very beginning.
Jennifer:
And that’s true even if the couple were to move outside of the state of Texas that marital property agreement, the premarital agreement can actually that contract between you and your spouse can still govern wherever you end up.
Aimee:
Absolutely. Because different states have different laws in Texas’ laws are very different than many states across the United States. So if you contract together, that are laws in Texas are going to be what controls if you get divorced or one party predeceases the other, you have so much more security and control than just giving control to a court or Probate Court later on in life.
Jennifer:
And much better to be having these discussions and negotiating this contract, these terms when you are still in love with the person. So I think there’s a lot more goodwill, I think that goes in at the time when you’re negotiating a premarital agreement, you just mentioned predeceasing because I think that’s another important point. A marriage is going to end, right?
Aimee:
One way or the other, they all do.
Jennifer:
And so it’s also important for people, especially, I think for second marriages where you have children from a prior marriage to have this conversation about what happens in the event of death and really preserve your children from having to have in a state of war of the heirs.
Money is the hardest thing for couples to discuss
Aimee:
I think that’s really true. I find for most couples, money is the hardest thing for people to discuss. And it’s even harder when either someone is in the midst of a divorce or there is a death. So discussing it at the very beginning and planning, and especially like you said if it is a second marriage and each side or one side wants to look out for their kids from a prior marriage or relationship, it is so much better to have that open discussion when the lines of communication are clear rather than at the end of a marriage or at the time of death and no one’s ever talked about it.
Jennifer:
That is such a good point because both a divorce or death are such emotional times and people are making such emotional decisions and so really in negotiating the premarital arrangement, you’re in a place of love and in a place of goodwill, and in a place of clear thinking, where you’re not overwhelmed by emotions.
Aimee:
And creativity too, because the two of you can come up with your own customized agreement, rather than just letting it be guided by the laws. And that’s why I really think of it as a type of premarital counseling because you’re having discussions and you’re crafting something that’s customized and personal for you and for your family.
What is premarital counseling?
Jennifer:
Okay. So talking about it as premarital counseling, I’m going to get to that in just a moment but let’s talk about the traditional way that the premarital agreement gets brought up and we know because we see it for so many of our clients. That is, if you’re the one who’s on the receiving end of the premarital agreement, it can feel like you’re getting punched in the gut.
Aimee:
Oh absolutely. And it often comes like a week or a month. Right before marriage, you’ve been given a contract, a very dense 40-page contract full of legalese that we as lawyers have crafted and you’re being told or asked to sign this and the clock is ticking.
Jennifer:
That is such heartache and if that has happened to you we just want you to know we get it. It is hard to be on the receiving end of that and I also think for the spouse who’s proposing it that way you need to understand it just sets up a very almost, an adversarial relationship at a time when it shouldn’t be. You’re not adversaries, you’re coming together to form a union.
Aimee:
Exactly. It’s just it’s so much harder that way because everyone is tense. The one who presenting the agreement, often their attorney has said, here’s what we do, and here’s what you should ask for. And the receiving side is taking this agreement to an attorney saying, I’ve been told, this is what I’m supposed to have. And there’s so little communication between them.
Jennifer:
And it’s such a hard way to start a marriage. So we certainly understand why a lot of people are opposed to the idea of a premarital agreement because I think so often it gets started on the wrong foot. All right. That’s their traditional way of doing it. How have you seen it done in other ways that actually make for a better marriage?
Aimee:
Well, I think the number one way is start early. So the time clock is not just taking down and you’re trying to plan for your wedding and negotiate a premarital agreement. I think also if you can have open discussions with your future spouse about your expectations, your views on money, what you’re coming into your marriage with assets and debt wise, just be able to have an open, frank discussion, you are going to have a much easier time working through and negotiating your agreement rather than just coming into it from a place of uncertainty. And also if you can do it collaboratively, which I know we’re going to talk about. It can be so much better.
Jennifer:
I think you’ve just given some really important tips there. I think that timeliness is so important, hitting your spouse, your intended spouse with a premarital agreement the weekend before the wedding, is a terrible way to start it off. So, as much advance planning as possible. All right, let’s talk about the collaborative process and how that can benefit people who are thinking about a premarital agreement.
Aimee:
Well, the great thing about the collaborative process itself to me is that it is customized from the very beginning. Each side is still represented by a lawyer, which is important, but you also have some additional players in the mix who are there to help guide uncomfortable discussions. Because again, money is the hardest thing to discuss. And having that neutral financial professional, be able to help everyone figure out; number one, this is what we reach coming into this with assets and debts wise, and to start having discussions about, here’s what we do in the state of Texas. Here’s what the law says. Now, what did the two of you want to do?
Jennifer:
I love that. You know, I found and we’ve done a collaborative premarital agreement. One of the great things is really being able to bring all the wisdom from the various professionals to the table to talk about the way we’ve seen different scenarios play out. And so, the couple can really have an opportunity to talk about in a possible situations that are likely to arise. And how do they want to address that and to do it again at a time when they’re filled with goodwill and it’s a much better conversation.
Aimee:
And it’s a safe environment.
Jennifer:
And it’s safe and that’s so important. And typically it’s not unusual for one party to come in with more assets and more sophisticated understanding and the other party may not. And this is a place where the party who isn’t accustomed all of the wealth and understanding what that means can really ask good questions and get good advice.
Aimee:
And I think also, what’s really empowering is when you have a concern about a provision in the agreement, like you said, if one of these future spouses knows, hey, maybe I’m not going to be working. So, my income stream is going to stop. I am really concerned about how this affects me. If we were to get divorced, five years, 10 years, 15 years, down the road, it is a safe place to be able to ask those questions to your spouse, to the neutral financial advisor. And also to the mental health professional who can help us talk about it in a safe way that’s not defensive or antagonistic, and then you can really talk about what you each feel, and how you see things and be more open and honest, rather than us as attorneys, just sending our no, I don’t agree with this provision. Yes, I want this and neither side gets to talk and it’s taken the wrong way.
Jennifer:
Exactly. I mean when we are sending premarital agreements back and forth in sort of the traditional way of doing it, it can really feel offensive because you’re asking, you’re denying, there’s no conversation that’s happening about the common goals. One of the things I love about the collaborative process is it is focused on goals and interests and so often people share common goals when it comes to marriage and how they want the finances to be handled and what kind of lifestyle they want to live. And so it’s really helpful to start off with that common ground.
Aimee:
And to discuss it too, because again, so many of our families that we see coming into our office is for divorce, have never had those discussions. And they’ve never had the discussions about expectations on spending and if it’s a second marriage, how they’re each going to take care of their children and what their responsibilities are. It’s just, it’s a taboo subject, a lot of times I think for couples because it’s hard and they don’t discuss it and it becomes a problem in their marriage. If you can tackle it like you said when everyone is happy and in love and they have support and wisdom to be able to talk about it, just get it out there and figure out what you’re going to do for your family ahead of time.
