Planning for complete asset protection in Texas can be a varied process when strategy takes the place over form. Forming a prenuptial agreement in Texas and getting that together can be the first step in protecting assets on the relationship side of things. After forming a prenuptial agreement, the next natural question is straightforward: how can you break a prenuptial agreement?
To that end, it is best to think of this stage as having two components. At the 30,000 foot view, prenuptial agreements can get broken voluntarily by the parties involved or involuntarily by a court through litigation. There are some specific rules for voluntary dismissal of a prenuptial agreement in Texas, and we will get to that below. But the bulk of our time will go through the involuntary breaking of a prenuptial agreement.
There are two avenues for breaking a prenuptial agreement on the involuntary side. Litigation can focus on breaking the prenuptial contract itself or attacking the legitimacy of the marriage, which can invalidate a prenuptial agreement by extension. With these strategic avenues open even after a prenuptial agreement is signed by all the parties and the marriage goes through, asset protection should keep these attack outlets in mind.
1. Voluntarily agree to go separate ways
Breaking prenuptial agreements in Texas on a voluntary basis is the easiest of all options because it requires a basic agreement between both parties. Texas law requires the same thing if the plan after marriage is to amend or revoke a prenuptial agreement. Texas Family Law code states:
Sec. 4.005. AMENDMENT OR REVOCATION. After marriage, a premarital agreement may be amended or revoked only by a written agreement signed by the parties. The amended agreement or the revocation is enforceable without consideration.
The key here is that both parties have to revoke in writing. There cannot be a handshake or oral agreement between the spouses to cancel the prenuptial agreement. All amendments or revocations must be written, signed by both parties, and agreed to on every point.
The timing in the statute is also critical: a prenuptial agreement only goes into effect after a legal marriage has occurred. Before a wedding, a prenuptial is not active and has little legal applicability. The parties can amend it to their heart’s content. The main takeaway is this: if you do not agree to revoke in writing, a prenuptial agreement is still in effect even if the parties claim they want to cancel it. No testimony will change that reality.
A prenup is a contract with strict adherence to the written form at the most basic level. Everything else should fall into place as long as you think along those lines in Texas.Involuntarily breaking the prenup: attacking the agreement itself.
2. Attack the prenup’s formalities
As above, the very first form of attack on any prenuptial is ensuring the formalities are met. Texas Family Code states:
Sec. 4.002. FORMALITIES. A premarital agreement must be in writing and signed by both parties. The agreement is enforceable without consideration.
If any part of the prenuptial agreement is presented in non-written form, or something is not signed, or there is something outside the four corners of the document that matter, that will get attacked first. Any litigation will start here, because if you can throw a prenuptial agreement out on these grounds, you do not have to go any further.
Most litigation seeks the easiest avenue to win first. If you can win before considering any of the substance of the matter, typically you will take that path first. Asset protection in Texas, then, should start with nailing down the basics. Get things in writing, get a good attorney to make sure everything is squared away, and things should be set.
3. Show that the prenup wasn’t voluntarily signed
After the formalities, the next stage is examining two statutory requirements. Texas law requires that every prenuptial agreement be signed voluntarily and is not unconscionable. We’ll start with the voluntary signing part of the process. Texas Family Law states:
Sec. 4.006. ENFORCEMENT. (a) A premarital agreement is not enforceable if the party against whom enforcement is requested proves that:
(1) the party did not sign the agreement voluntarily;
To the layman, the word “voluntary” might sound straightforward — but there is no definition of that word in the statute. Courts can consider this on a case-by-case basis, which is why facts can matter here. Generally speaking, the key to voluntariness is considering whether there was a conscious decision to sign the document.
Did one party trick the other into signing the prenuptial agreement? You can imagine a Hollywood script where one spouse hands the other spouse some documents to sign without ever saying what those documents are, or lying about what the signature line is. In that kind of situation, the decision to sign was one of fraud, not a voluntary decision.
Texas case law is sparse when defining the element of voluntariness. But one case from 2012 sticks out, because the Texas appeals court listed out some factors for a court in Texas to consider when deciding this element:
“In determining whether any evidence of involuntariness existed, this Court has considered (1) whether a party has had the advice of counsel, (2) misrepresentations made in procuring the agreement, (3) the amount of information provided and (4) whether information has been withheld.” Moore v. Moore, 383 S.W.3d 190 (Tex. App. 2012).
In that case, the husband had made material misrepresentations as to what was in the prenuptial agreement. Also, the husband had lied to the wife, telling her that a final draft incorporated changes that her lawyer had approved. None of those things had happened, and the lawyer the wife had during the prenup was hired by the husband and had a conflicting interest.
The wife did sign the agreement, and there was a conscious decision. However, the court did not hold her to that document because the husband had so made it impossible to tell which document he had her sign, and holding her to a fraudulent process was against the court’s interests. We will return to this case when we get into some of the other statutory factors below, but the takeaway is this: the court struck down the prenuptial agreement and reverted to standard divorce law.
In another example, a Texas court ruled the opposite way on voluntariness when the wife alleged duress. Duress is a legal claim that can invalidate a contract. Texas courts have said, “For duress to be a contract defense, it must consist of a threat to do something the threatening party has no legal right to do.” Osorno v. Osorno, 76 S.W.3d 509 (Tex. App. 2002).
The duress the wife alleged was one relating to a child. Before getting married, the woman got pregnant from the man in the case. She did not want to get an abortion, as encouraged by the man. The man then offered to marry the woman if she signed a prenuptial agreement.
She argued after the marriage collapsed and the parties divorced the pressure of signing a prenuptial agreement when pregnant amounted to signing a prenuptial under duress. She used those facts to argue the court should strike down the prenuptial agreement in its entirety.
The court disagreed. The court said:
“In this case, aside from his moral duties, [The Man] had no legal duty to marry [The Woman]. His threat to do something he had the legal right to do is insufficient to invalidate the premarital agreement. [The Woman] was faced with difficult choices, but we cannot find her decision to sign the agreement was involuntary. Osorno v. Osorno, 76 S.W.3d 509 (Tex. App. 2002)
While you can call the man’s actions morally reprehensible, there was no legal duty to marry the woman. She could have declined to marry him or to sign the prenup. These were all choices made by free parties. Could the result changed if the man tried to get the woman to sign while she was in labor, or if this was on the wedding day? Potentially.
One more point on voluntariness — because it is so fact determinative, the goal of asset protection should be to ensure that the facts are beneficial to upholding the prenup. Do not spring a prenup on a party on a wedding day, put emotional pressure on one of the partners, or take any action that makes it seem like one party is strong-arming the other.
It is not uncommon for one party to the prenuptial agreement to have more assets or income than the other. If a court can see that both parties are reasonably on the same ground with competent legal counsel, the voluntary nature of the contract is more assured than not.
4. Show that the prenup was “unconscionable”
The next part of the Texas statutes on breaking a prenup deals with unconscionability. This is highly fact-dependent as well but has more described in the statute than the voluntary portion. Texas Family Code states:
Sec. 4.006. ENFORCEMENT. (a) A premarital agreement is not enforceable if the party against whom enforcement is requested proves that:
(2) the agreement was unconscionable when it was signed and, before signing the agreement, that party:
(A) was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;
(B) did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and
(C) did not have, or reasonably could not have had, adequate knowledge of the property or financial obligations of the other party.
(b) An issue of unconscionability of a premarital agreement shall be decided by the court as a matter of law.
(c) The remedies and defenses in this section are the exclusive remedies or defenses, including common law remedies or defenses.
Unconscionability is determined when the prenuptial agreement gets signed. Everything can be wrong before the prenup is signed, but the parties can get those problems squared away by the time of signing, and the agreement is not unconscionable. But once both parties sign the contract, the court starts its analysis.
There is no clear description of what unconscionable means. But generally, in law dictionaries, the definition is:
adj. referring to a contract or bargain which is so unfair to a party that no reasonable or informed person would agree to it. In a suit for breach of contract, a court will not enforce an unconscionable contract (award damages or order specific performance) against the person unfairly treated, on the theory that he/she was misled, lacked information or signed under duress or misunderstanding. It is similar to an “adhesion contract,” in which one party has taken advantage of a person dealing from weakness.
Like the voluntary signing aspect, unconscionable is a fact-dependent question. Texas courts look backward, weighing the listed factors against the facts presented. In a nutshell, the statute and the court is looking for evidence of unfairness or detrimental behavior that makes the prenuptial agreement unconscionable.
That said, prenups are a kind of contract, and Texas courts are leery of striking them down. Striking a prenuptial agreement down on unconscionability grounds is limited and rare. One Texas Supreme Court case stated:
We have repeatedly recognized that parties “shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts.” … We rarely find a contract unenforceable on public policy grounds. Premarital agreements are no exception. (“The legislature and the people of Texas have made the public policy determination that premarital agreements should be enforced. If we refuse to enforce [Husband’s] and [Wife’s] premarital agreement, we would thwart, rather than advance, our state’s public policy enforcing these contracts.”). In re I.C., 551 S.W.3d 119 (Tex. 2018).
We can move on to what constitutes an unconscionable prenuptial agreement with that under our belts.
Returning to the Moore case, where the court struck down the prenuptial agreement, the court looked at the factors listed in the statute. It summed them up as “(2) misrepresentations made in procuring the agreement, (3) the amount of information provided and (4) whether information has been withheld.” Moore v. Moore, 383 S.W.3d 190 (Tex. App. 2012).
The husband, in that case, who requested the prenuptial agreement, failed every factor. Some highlights of the utter disaster of that prenuptial agreement:
- The husband lied about when the last draft would get produced.
- The final version of the prenuptial agreement did not show up until 4-5 hours before the wedding.
- The husband lied about the wife’s attorney having reviewed the contract.
- The husband lied about and did not list his property, assets, or income.
- The husband continued to misrepresent the history of all the proceedings to the court.
There were other failings too, but that is the short version. The court struck the contract down on the grounds that it was involuntarily signed because the prenuptial agreement failed those factors too. But, unquestionably, the prenuptial agreement failed every element outlined in the Texas Family Code for unconscionability too.
A clever clause that avoided unconscionability claims.
Let’s hit one last point on unconscionability and designing a prenuptial agreement. The case In re I.C., 551 S.W.3d 119 (Tex. 2018) contained a clever prenuptial clause that was front and center in the litigation that is of note for anyone with asset protection in mind in Texas.
The prenuptial agreement offered a lump sum payment to the wife in the event of divorce, which allowed her to walk away with no questions asked. That is a common aspect of prenuptial agreements. But this contract had an additional clause in which the wife could forfeit the lump sum payment if she challenged the validity of the prenuptial agreement. In other words, choose a lump sum or lose that lump sum and roll the dice on litigation and potentially get nothing.
The clause, Section 31, is worth reprinting in full to show how it worked. Section 13(h) is a reference to the lump sum payment. The clause stated:
If either party brings an action or other proceeding to enforce this Agreement or to enforce any judgment, decree, or order made by a court in connection with this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees and other necessary costs from the other party. If either party seeks to invalidate some or all of this Agreement, or seeks to recover property in a manner at variance with this Agreement, then such party shall be liable to the other party for all reasonable and necessary attorney’s fees and costs incurred by such other party in defending this [sic] or her rights under this Agreement. In addition, if BECKY seeks to invalidate some or all of this Agreement, or seeks to recover property in a manner at variance with this Agreement, then BECKY shall forfeit the cash payment set forth in Section 13(h).
Emphasis is mine. In this case, the wife, Becky, struggled to get the husband, James, to pay out according to the terms of the prenuptial agreement and various issues in the divorce. She tried to argue that this clause should get struck down because she could not recover money from him. She claimed it was unconscionable to uphold this clause if the husband was not following the terms of the agreement.
The court disagreed and said:
In this case, the Agreement provided Rebecca with regular monetary support, and she was separately promised a large sum of cash if she did not contest the Agreement. We find no sound basis for holding the Agreement unconscionable or otherwise against public policy. In sum, the Agreement as written is not unconscionable and should not be modified by court-manufactured exceptions.
The clause is ingenious in terms of asset protection because it allows the parties to declare, upfront, what an easy separation will be in the end. You can express your losses at the end of the marriage without touching a single part of your assets. But further, that lump sum payout is protected too, because if the prenuptial agreement gets attacked in any way, one party could walk away with close to nothing if they lose the court case.
It is a triggering clause that invalidates a lump sum protection fee. The clause incentivizes behavior by encouraging the easy walk out. If making a breakup as predictable as possible, this clause could be crucial for an asset protection plan. It may be seen as Machiavellian, but it also covers all bases.
5. Show that the marriage itself was invalid
Finally, attacking the marriage could be a viable alternative if striking the prenuptial agreement is not an option. A prenuptial agreement goes into effect when the legal marriage begins. The prenuptial agreement could theoretically not apply if the union can get invalidated.
Texas Family Code governs this avenue of attack. It states:
Sec. 4.007. ENFORCEMENT: VOID MARRIAGE. If a marriage is determined to be void, an agreement that would otherwise have been a premarital agreement is enforceable only to the extent necessary to avoid an inequitable result.
One Texas firm explains this as, “A judge decides whether the result of the prenup is inequitable, which mean fair. Without a valid marriage, there is also no community property because the parties were never married to each other.”
When examining this clause, Texas courts have said:
A trial court may annul a marriage if “(1) the other party used fraud, duress, or force to induce the petitioner to enter into the marriage; and (2) the petitioner has not voluntarily cohabited with the other party since learning of the fraud or since being released from the duress or force.” … Fraudulent inducement is established by proving that a false material misrepresentation was made that (1) was known to be false when it was made; (2) was intended to be acted upon; (3) was relied upon; and (4) caused injury. … In re JA.D.Y. (Tex. App. 2018)
Many of these words are similar to the prenuptial agreement discussion above. Marriage is a form of a contract, and forming a contract under duress, using fraud, or forcing someone to do something against their will can invalidate a marriage.
There is not much information on how exactly this would play out in a court. If this is the sole avenue to attack a prenuptial agreement, seeking out competent family law counsel is imperative because facts will play a decisive factor. Texas Family Code includes a section that lists out, in detail, all the ways that a marriage can get invalidated — which is beyond the scope of this article — but the prospect is possible, if highly unlikely.
Hopefully, this overview gives you a cursory overview of the main avenues to attack a prenuptial agreement. Getting competent legal counsel in Texas to avoid pitfalls and other DIY mistakes can go a long way towards ensuring a solid asset protection plan in Texas.
LEGAL DISCLAIMER: Information in this article is provided free of charge and purely for informational and educational purposes only and is not offered as legal advice. No attorney-client relationship is created by the offering of this article. TexasAssetProtection.org is not a law firm, does not represent clients, and is not representing you or anyone else. Although every effort is made to keep information up-to-date, laws may change. Retaining legal counsel for your individual case and circumstance is advisable before taking any action that has legal consequences. Consult a tax advisor or financial consultant as well, as this is not offered for any tax or financial service or advice.