Texas Same-Sex Couples and Marriage: Consider a Pre-Nuptial Agreement
Same-Sex Marriage has now been recognized by the Supreme Court of the United States. Many same-sex couples have been partners living happily together for many years. It is, in many cases, advisable to address the financial arrangements and substantial assets Same-Sex couples have acquired together during their relationship and what would happen to these assets if a divorce were to become necessary.
Many Same-Sex couples have lived together for years while, their estates are accursed without the benefit of a binding contract being in place. If the couple decides to marry and then divorces after a period of time, the only assets considered “marital assets’ and subject to equitable distribution would be the assets incurred during the marriage. Consider allocation of the assets acquired during the years of living together before the marriage?
A Pre-Nuptial Agreement is a very helpful tool in deciding how a couple wishes to treat various assets in the event of divorce. Many future spouses are not couples of financial inequality or of great wealth. They are rather couples who want to place their financial estate on the table before they walk down the aisle to avoid the expense of prolonged painful litigation should the marriage fail.
Once you have decided to enter into a Pre-Nuptial Agreement, now where and how do you begin? You need to seek out a knowledgeable attorney who can help you with the preparation and propriety of the agreement. Both partners need separate attorneys to make sure both are fairly represented in this marital contract. This is a very serious agreement and is a legal binding contract never to be taken lightly. Many Same-Sex couples will find this conversation concerning divorce and death very unpleasant. A pre-nuptial agreement will help the couple enter the new marriage with a defined and fair financial footing for each spouse. Same sex couples may have lived and developed their assets together, but a recognized marriage is a new legal frontier.
How to get started on your Same -Sex Pre-Nuptial Agreement?
- You both must decide what goals you wish to accomplish in this agreement and what will make this marriage and your other responsibilities work for you and your spouse. To what degree this agreement be confidential between the two parties involved in the agreement?
- Will this agreement be a deal breaker between the couple, if an agreement can’t be reached? As a couple, there should be a discussion on what is acceptable for each party before the attorneys are contacted. If an agreement cannot be directly reached between a couple, can an agreement mediated with the help and counsel of the attorneys?
- A pre-nuptial agreement should reflect the needs and expectations of a future married couple. Make sure that both your lists are included and negotiate with your partner on what is and isn’t important to each of you. One partner can’t be the winner and the other the loser! This is a true pathway to a future divorce! When you reach a reasonable agreement, the attorneys will provide the legal wording to establish a binding pre-nuptial contract.
- What about future earnings of each spouse? Most premarital agreements are set up to reduce the community estate. What is more important to the couple: salary or other income, such as stock dividends, income from a business, real estate rents, or bank interest?
- Many couples agree to give the non-monied or lower income party a signing bonus, such as a lump sum of money for giving up their right to future earnings that, without the agreement, would go into the community fund. This is an important feature of a pre-nuptial agreement that may help both parties more comfortable with the agreement.
- Many pre-nuptial agreement may also include an exit bonus in case of a potential contested divorce.
- The expiration clause is another feature that appears in a number of pre-nuptial agreements. The agreement would expire after a certain term or condition was met. Examples could be an anniversary date or birth of a child or anything that is important enough to change or terminate the terms of the marital agreement. This expiration could affect property rights and the characterization of property acquired after the term or condition. When setting up a pre-nuptial agreement, it must be decided if the law at the time of execution or the law at the time of dissolution or death will control.
- Many couples may use a financial structure of payments to the non-monied spouse in the premarital agreement that would relate to number of years married. Incremental Payments are used as an incentive for increased satisfaction of marriage goals during the marriage. This can also be used as a lump sum of money previously agreed upon in the event of a divorce.
- Many times there will be a Minimum Standard of Living Clause in the agreement. If there is little or no community property to support the party’s lifestyle, a contractual obligation of support during the marriage can be paid from the monied spouse’s separate estate. This would allow the non-monied spouse to live a very good lifestyle during the marriage by agreeing not to contest the property agreement in a divorce. Both spouses would enjoy an additional comfort level in the property agreement.
- A very important aspect of a Same-Sex couples pre-nuptial is what will happens if one spouse dies and there are other family members who expect to share in his/her assets. A will is very important and should be executed before the marriage and mention of the key points in the will should be addressed in the pre-nuptial.
Last but definitely not least…..
“The Poison Pill” Clause: What could this be? As an incentive to both parties, an “exit bonus “could be paid to the non-monied spouse in the case of divorce if the non-monied spouse would waive any contest of the agreement. The agreement would clearly state that if the non-monied spouse contests the validity of the agreement, he or she waives any and all rights to receive benefits under the “exit bonus” clause.
The combination of the “exit bonus” and “poison pill” clauses are additional incentive for both parties to abide by the terms of the agreement in the event of a divorce.