But Honey I Thought You Loved Me-What to do When a Premarital Agreement Isn’t an Option

I have been involved in many premarital agreement situations where the parties got upset and decided the negotiations were hurting their relationship, so they decide to drop it.  In Texas, there is an option, however, for the person of means to pursue that can be done without the knowledge or consent of their fiancee.

The moneyed fiancee can create a limited partnership and contribute the assets he or she wants protected to it.  This should maintain the separate property character of the assets contributed to the partnership during the marriage as long as the assets remain in the partnership.  Distributions from the partnership are thought to be community property, and the moneyed finacee should be aware that some assets, such as royalty payments, are separate property and contributing them to the partnership could convert those payments to community property.

The moneyed finacee also should be aware of the Jensen rule, and pay him or herself reasonable compensation for his labor and services rendered to the partnership to avoid a claim for community reimbursement.

While not as effective as a well-drafted premarital agreement, the use of a  limited partnership offers the moneyed finacee a way to provide significant protection if things don’t work out for better or worse.

About Grady Dickens

I created this blog to comment on items of current interest regarding trusts, estate planning, charitable planning and tax law, and share my knowledge and over thirty years of experience as an attorney practicing in Dallas, Texas.