Partition or Exchange Agreements

Property division can lead to heated arguments in divorce actions as parties will often disagree as to who should retain certain assets. There are measures married couples can take prior to instituting dissolution proceedings, however, that may prevent drawn-out disputes regarding property rights, should the marriage end. For example, many couples enter into partition or exchange agreements, which are essentially contracts that define the rights to community property. If you are interested in protecting your assets with a marital agreement, it is smart to speak to an attorney about your options. The seasoned Dallas family-law attorneys of McClure Law Group can assess your unique circumstances and help you to determine what measures are appropriate to help you protect your interests.

There are multiple reasons parties may choose to enter into partition or exchange agreements. For example, they may choose to develop such agreements if they separate in lieu of divorcing or may acquire substantial assets during the marriage that one party wishes to protect should the marriage end.

Under Texas law, spouses can enter into partition or exchange agreements in which one spouse transfers all or part of their present or soon-to-be-acquired community property to the other, thereby transmuting it into the separate property of the receiving spouse. Partition or exchange agreements can also establish that any earnings or income derived from the transferred property belongs solely to the spouse that receives the property. They cannot be used to transfer community property to third parties. Partition or exchange agreements must be in writing and signed by both parties in order to be valid. They do not require approval from the courts or consideration, however.

Typically, the courts will enforce petition or exchange agreements unless they are invalid or unconscionable and there was a lack of disclosure prior to executing them. The courts determine the issue of unconscionability as a matter of law. A court may deem an agreement invalid if it is not in writing or was not signed by the parties. Courts may also reject agreements that contain terms not permitted under Texas law.

A partition or exchange agreement may be set aside if it is deemed unconscionable and if one of the parties failed to provide the other with a disclosure of the property or their financial obligations, and the other party did not waive the right to disclosure or otherwise have adequate knowledge regarding the property of their spouse’s liabilities. If one party was coerced or defrauded into signing the agreement, it might be deemed unenforceable, as well.

Which party bears the burden of proof in cases in which the enforceability of a partition or exchange agreement varies depending on when the agreement was executed. For those agreements entered into before 1987, the party asserting the agreement should be enforced bears the burden of producing clear and convincing evidence that the agreement was not obtained through duress, fraud, or overreaching and was entered into with informed consent. For agreements drafted in 1987 or later, the party that seeks to avoid enforcement of a partition or exchange agreement bears the burden of proof.

Many Texas couples accrue significant assets throughout their marriage, and it is often practical for them to consider developing partition or exchange agreements to safeguard their rights in the event their relationship ends. If you have questions regarding the division of community property before or during a divorce, it is in your best interest to meet with an attorney. The trusted Dallas lawyers of McClure Law Group possess the skills and experience needed to help people navigate family-law issues, and if we represent you, we will work diligently towards your desired outcome. We help people with family-law matters in Dallas, Rockwall, Fort Worth, Frisco, Irving, McKinney, Richardson, and Garland. We also represent parties in family-law cases in cities in Dallas, Rockwall, Collin, Denton, Tarrant, and Grayson Counties. You can contact us by calling 214.692.8200 or via our online form to schedule a confidential consultation.