A separate-property business does not stay entirely separate, and an inheritance meant for your children can be quietly absorbed by the community presumption. Both problems have contract solutions.
Bustos Family Law PLLC | Austin, Texas
Two groups get more value from a Texas premarital agreement than almost anyone else: people who own a business, and people entering a second marriage with children from a first. In both cases, the default rules of Texas marital property produce results that clients rarely intend and often do not see coming.
For business owners: the company is separate — its growth is the fight
If you owned the company before you married, it is your separate property under § 3.001(1). That is the easy part, and it is not what gets litigated.
The dispute is over what happened to the business during the marriage. In Vallone v. Vallone, 644 S.W.2d 455 (Tex. 1982), the Texas Supreme Court held that increases in the value of separate-property corporate stock do not automatically become community property, even when community labor contributed to the growth. But a right of reimbursement arises when community time, talent, and labor enhance a spouse’s separate estate “beyond whatever care, attention, and expenditure are necessary for the proper maintenance and preservation of the separate estate.”
Two years later, Jensen v. Jensen, 665 S.W.2d 107 (Tex. 1984), fixed the measure: the community is reimbursed for the value of time and effort expended to enhance the separate estate, other than effort reasonably necessary to manage and preserve it, less the remuneration received for that time and effort in the form of salary, bonus, and dividends. That framework is still applied. Our own Third Court of Appeals affirmed a reimbursement award to the community estate for enhancements to a spouse’s separate property in Marin v. Marin, No. 03-22-00013-CV (Tex. App.—Austin Apr. 5, 2023).
The practical translation: a founder who pays herself below market while building enterprise value is generating a reimbursement claim in favor of the community estate. A prenup is where that is addressed before it becomes an expert-witness fight over ten years of compensation data.
And the income is community by default
Separately from growth, distributions and income produced by a separate-property business during the marriage are community property under § 3.002, because community property is everything acquired during marriage that is not separate. Section 4.003(a)(1) allows a premarital agreement to characterize that income as separate; for couples already married, § 4.103 does the same job.
Four provisions business owners should ask for
- Characterization of the entity and its future growth. “Property” under § 4.001(2) expressly includes future and contingent interests, income, and earnings — so the agreement can reach growth that has not happened yet.
- An express treatment of reimbursement. Waive it, cap it, or define how it will be calculated. Silence leaves you with Vallone and Jensen and a valuation expert.
- A valuation method and date. Agreeing in advance on methodology removes the most expensive disputed issue in a business divorce.
- Transfer restrictions. Section 4.003(a)(2) reaches the right to transfer, assign, or encumber property. Coordinate the agreement with your company’s buy-sell provisions so a divorce does not hand your former spouse an ownership interest alongside your partners.
For blended families: separate property stays separate only if you can prove it
Property acquired during marriage by gift, devise, or descent is separate property under § 3.001(2). An inheritance you receive while married is yours.
The difficulty is proof. Section 3.003 presumes that property possessed during or on dissolution of marriage is community, and requires clear and convincing evidence to establish that it is separate. Once inherited funds pass through a joint account or help buy a jointly titled house, tracing becomes an accounting exercise — and testimony alone will not carry it. In Nalbach v. Nalbach, No. 04-11-00802-CV (Tex. App.—San Antonio Apr. 17, 2013), a spouse’s testimony that accounts had been designated separate in a premarital agreement was held insufficient without deposit slips or bank records. Documentary evidence carries real weight: in In re Marriage of Nash, No. 06-21-00013-CV (Tex. App.—Texarkana Mar. 4, 2022), a separate-property recital in a deed to which the other spouse was a party was conclusive as to one tract.
Coordinating the agreement with your estate plan
This is where blended-family planning succeeds or fails. Section 4.003(a)(3) permits agreement on the disposition of property on death. Subsection (a)(5) permits provisions requiring “the making of a will, trust, or other arrangement to carry out the provisions of the agreement.” Subsection (a)(6) reaches ownership and disposition of life insurance death benefits — frequently the cleanest way to provide for a new spouse while preserving other assets for children of a first marriage.
A will alone is not sufficient in a blended family, because Texas law gives a surviving spouse rights that a will does not displace. The premarital agreement, the will or trust, and beneficiary designations have to be drafted as one coordinated plan. Our firm handles both sides of that work, which is why we usually recommend doing them together rather than years apart. See our estate planning services.
What the agreement cannot do for your children
It cannot affect their support. Section 4.003(b) provides that “[t]he right of a child to support may not be adversely affected by a premarital agreement,” and any support agreement submitted to a court under § 154.124 is enforceable only if the court finds it in the child’s best interest — and even then is not enforceable as a contract. See Williams v. Patton, 821 S.W.2d 141 (Tex. 1991). A premarital agreement also does not drive the child support calculation; in In re J.M.W., No. 14-14-00135-CV (Tex. App.—Houston [14th Dist.] July 23, 2014), an obligor’s attempt to use a premarital agreement to characterize his current spouse’s income was resolved instead under the Family Code’s net-resources provisions.
Precision is the whole game
Texas courts read these agreements by their plain language, In re Marriage of I.C. & Q.C., 551 S.W.3d 119 (Tex. 2018), and construe them narrowly in favor of the community estate, refusing to rewrite or add to the language the parties chose, Jimenez v. Jimenez, No. 01-23-00087-CV (Tex. App.—Houston [1st Dist.] Apr. 22, 2025). A generic form agreement that never names your LLC, never addresses reimbursement, and never mentions the inheritance you expect is not protection.
If you own a business or are marrying with children from a prior relationship, we would welcome the chance to build an agreement that reflects your actual situation — and to coordinate it with the estate plan that has to work alongside it. Schedule a consultation with Bustos Family Law PLLC.
Authorities Cited in This Post
Every link below was verified to resolve to the cited authority. Statutory links go to public.law; case links go to Justia, FindLaw, CourtListener, or the Texas courts website.
- Texas Family Code § 3.001 — texas.public.law
- Texas Family Code § 3.002 — texas.public.law
- Texas Family Code § 3.003 — texas.public.law
- Texas Family Code § 4.003 — texas.public.law
- Texas Family Code § 4.103 — texas.public.law
- Texas Family Code § 154.124 — texas.public.law
- Vallone v. Vallone, 644 S.W.2d 455 (Tex. 1982) — justia.com
- Jensen v. Jensen, 665 S.W.2d 107 (Tex. 1984) — justia.com
- Marin v. Marin, No. 03-22-00013-CV (Tex. App.—Austin Apr. 5, 2023) — justia.com
- Nalbach v. Nalbach, No. 04-11-00802-CV (Tex. App.—San Antonio Apr. 17, 2013) — justia.com
- In re Marriage of Nash, No. 06-21-00013-CV (Tex. App.—Texarkana Mar. 4, 2022) — findlaw.com
- Williams v. Patton, 821 S.W.2d 141 (Tex. 1991) — courtlistener.com
- In re J.M.W., No. 14-14-00135-CV (Tex. App.—Houston [14th Dist.] July 23, 2014) — justia.com
- In re Marriage of I.C. & Q.C., 551 S.W.3d 119 (Tex. 2018) — findlaw.com
- Jimenez v. Jimenez, No. 01-23-00087-CV (Tex. App.—Houston [1st Dist.] Apr. 22, 2025) — justia.com
This article is provided for general educational purposes by Bustos Family Law PLLC and is not legal advice. Reading it does not create an attorney-client relationship. Texas marital property law is fact-specific, and statutes and case law change. Please consult a licensed Texas attorney about your own circumstances.