Beneficiary Requirements for Premarital Retirement Assets

[gopher]

My question involves marriage law for the State of: TX

We are getting married in mid 2013 and will have a pre-nup to protect (old) separate property retirement assets obtained prior to marriage. I understand that TX law requires the spouse to be the beneficiary of (new) common property retirement assets unless the spouse agrees otherwise. I will also select my spouse to be the beneficiary of the separate property retirement assets worth about one million dollars. These assets consist of a 401K, IRA, etc. They will be kept separate from new contributions and not commingled.

Does the law allow me to select anyone as the beneficiary of the premarital assets without the spouse's consent?

Since I am selecting my spouse as the beneficiary, can I legally change the beneficiary of the separate property assets at any time during the marriage without her consent?

Does the pre-nup need to state such to be protected?

I know that anyone can contest anything in court, but I desire to establish some basic protection and a reasonable defense on the front end.

Thanks for the advice.

[Mr. Knowitall]

When you enter into a prenuptial agreement with your spouse it's best to have it clearly described and understood as a prenuptial agreement. As a matter of good practice, both there should be full disclosure of assets and debts by both parties, and both parties should be represented by independent counsel in association with negotiating and approving the terms of the agreement. Read the statutory provisions pertaining to premarital agreements (Sec. 4.001 et seq.) and marital agreements (Sec. 4.101 et seq). in the Texas Family Code. When both parties are represented by independent counsel of their choosing (even if the wealthier party pays the legal fees) it becomes much less likely that there will later be claims that a party didn't understand the agreement, wasn't acting voluntarily, was coerced or tricked, or that the agreement is otherwise unconscionable.

(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; or

(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.

Prenuptial agreements normally relate to the division of assets in divorce. You appear to want to include some estate planning provisions, given your discussion of beneficiaries. If you divorce and forget to change your beneficiary from your (then former) spouse, subject to some enumerated exceptions, Texas Family Code Sec. 9.302 will render the beneficiary designation of the former spouse ineffective.

Even in relation to a premarital retirement plan, absent a binding agreement to the contrary, appreciation of the assets in the plan during the marriage are part of the marital estate.

What would you hope to gain by changing the beneficiary from your spouse?

[gopher]

Thanks Mr. Knowitall.

I am still confused about a key question so I will ask it another way.

The pre-nup will be vetted as you described and should protect the balance of retirement assets that existed prior to marriage if my lawyer and her lawyer handles this properly. That is both our wishes. As a matter of law before separation and divorce heaven forbid, how does a beneficiary enter into the equation? For these specific assets, under TX law, can I legally change the beneficiary to a non-spouse for whatever reason after I initially named the spouse as the initial beneficiary? My fiancée is ok with this, but I want to ensure the legality of such.

For clarification on the matter and what it is worth, we both have a signed personal agreement that covers expectations beyond what the pre-nup can address (to some degree that are subjective and almost impossible to handle in the courts) and the ability to alter the beneficiary if ever necessary is comforting.

Should this question be addressed in the estate section of expertlaw?

Thanks again.