Understanding Inheritance Rights in a Texas Prenup

 Posted on October 21, 2022 in Prenuptial Agreements

In many cases, spouses enter into marriages without even considering the potential benefits or usefulness of a prenuptial agreement (also called “premarital agreements” in some jurisdictions). In the popular imagination, prenuptial agreements are “tools of the rich,” used almost exclusively by wealthy couples in order to selfishly guard their premarital assets. Or, other people feel that a prenuptial agreement necessarily lowers the amount of trust in a relationship. The truth, however, is that prenuptial agreements are simply contractual agreements that spouses can use to predetermine how certain property will be distributed. Prenuptial agreements allow spouses to predetermine certain outcomes which would otherwise be left up to the courts. And, as we know, sometimes courts don’t always render decisions that are fully consistent with a person’s desires. 

In this post, we will go over how prenuptial agreements can impact inheritance rights. Spouses need to be aware of how the “default” inheritance rules operate so that they can determine these default rules may be adequate, or if a prenuptial contract is necessary.

Texas is a Community Property State

The State of Texas is a “community property” state, as opposed to an equitable distribution state. What this means is that all marital property is divided in a just and right manner after a divorce, unless there is a compelling reason for this not to happen. In other words, practically speaking, property is typically divided equally absent circumstances that justify a disproportionate division.  One of the key issues here, however, is that only marital property will be divided after a divorce. There is a popular misconception that a community property state will divide all property after a divorce; this is not true. Only property which is classified as “marital property” is eligible for division. 

One of the critical questions, therefore, is figuring out which property classifies as marital, and which classifies as separate. This analysis can often be complex, depending on what kind of property a spouse possesses, but in general the timing of the acquisition is critical. Property which is acquired during the marriage is marital, and property acquired before is separate.

Prenuptial Agreements Trump the Default Inheritance Rules

If a spouse dies during the marriage, and the spouse doesn’t have a will, then Texas uses certain “default” rules to determine the inheritance rights to the estate. If there is no will, then all separate property either goes to the surviving spouse, or to the surviving spouse and any surviving children. The marital property, on the other hand, normally is assigned to the surviving spouse in its entirety, even if there are children from the marriage. The only situation in which this doesn’t happen is when the decedent has surviving children from another relationship; in this case, the surviving other children take half of the marital property.

If the decedent spouse did have a will, then the surviving spouse is entitled to half of the marital property even if the will doesn’t include the surviving spouse at all. This is referred to as the “right of election” for surviving spouses.

The key point to take away here is that prenuptial agreements will basically trump these default rules. If spouses create a prenuptial contract, then this will supersede the default rules, which means that spouses can potentially be cut out from property they might ordinarily receive. Consider an example: if a spouse has separate property which generates income during the marriage, then the income generated during the marriage is marital property. But, if a prenuptial agreement determines that all the income generated by the separate property also remains separate, then this will have ramifications if the spouse dies during the marriage. The surviving spouse could potentially lose the property which might otherwise be obtained through the default rules. 

Contact The Ramage Law Group for More Information

As we can see, prenuptial agreements can have important potential consequences when it comes to property division and inheritance. If you’d like to explore more about prenuptial agreements, please contact The Ramage Law Group today by calling 972-562-9890.