Partition and Exchange Agreements

A marital property partition is an agreement between spouses that allows them to convert community property into the separate property of one spouse. This agreement must take place after the couple is married.

The Texas Family Code states that, “At any time, the spouses may partition or exchange between themselves all or part of their community property, then existing or to be acquired, as the spouses may desire. Property or a property interest transferred to a spouse by a partition or exchange agreement becomes that spouse’s separate property. The partition or exchange of property may also provide that future earnings and income arising from the transferred property shall be the separate property of the owning spouse.”

Texas case law has held that once a property interest is transferred to a spouse pursuant to a partition and exchange agreement, it becomes that spouse’s separate property. As far as formalities are concerned, a partition or exchange agreement must be in writing and signed by both parties, and no consideration is required for it to be enforceable.

A partition or exchange agreement is not enforceable if the party against whom enforcement is requested proves that:

• There was not a voluntary signing of the agreement by the party
• The agreement was unconscionable when signed and, before signing the agreement, that party:
  • Was not given a fair and reasonable disclosure of the property or obligations of the other party
  • Did not waive, in writing, a right to that information
  • Did not have, or reasonably couldn’t have had, adequate knowledge of the property or debts of the other party

  Partition agreements happen during a marriage, and spouses owe a fiduciary obligation to one another. Before they were married they were strangers. After they’re married, they are supposed to treat each other fairly.

  With this area of law, the details count, not just in the preparation of the agreement, but also in the way the parties treat their finances and property after the agreement is executed. The experienced attorneys at Orsinger, Nelson, Downing & Anderson can help you draw up a well-crafted document and provide helpful advice on how to live your financial life to make the agreement count when it actually matters.