Am I protected without a prenup in this scenario?

[shwing2345]

What is the name of your state (only U.S. law)? Texas

I live in a community property state. By law, I understand that anything we own before we're married is considered as separate assets. But I would like for someone to clarify. For example: If I had 100k in the bank. If I married without a prenup and used that 100k to buy stocks or investments under my name, would all of it end up as community property or only the profits?

 

[mistoffolees]

What is the name of your state (only U.S. law)? Texas

I live in a community property state. By law, I understand that anything we own before we're married is considered as separate assets. But I would like for someone to clarify. For example: If I had 100k in the bank. If I married without a prenup and used that 100k to buy stocks or investments under my name, would all of it end up as community property or only the profits?

Only the profits - IF you didn't commingle.

For example, if you bought the stocks in a brokerage account that had no other funds, you'd probably be OK. If, OTOH, you bought and sold stocks in a brokerage account that you used for other marital transactions, it would be harder to call it separate property. It MIGHT be possible, but not quite as straightforward.

 

[LdiJ]

Only the profits - IF you didn't commingle.

For example, if you bought the stocks in a brokerage account that had no other funds, you'd probably be OK. If, OTOH, you bought and sold stocks in a brokerage account that you used for other marital transactions, it would be harder to call it separate property. It MIGHT be possible, but not quite as straightforward.

I am not sure that I agree that the profits would be marital property. A separate brokerage account, that remained completely separate during the marriage might not have any elements of community property. Why, because no marital funds would be used to maintain the account.

A house (for example) usually has a community property element because marital property usually makes the house payments and/or maintains the house. However, if someone used premarital funds to make the house payments or maintain the property the house could also be a separate asset.

 

[shwing2345]

So, as long as i buy it with pre-marital funds and under my name then there should be no risk of divisions? Thank you so much for clearing this up.

 

[mistoffolees]

So, as long as i buy it with pre-marital funds and under my name then there should be no risk of divisions? Thank you so much for clearing this up.

And as long as you never mingle it with marital assets.

 

[shwing2345]

If I purchase an investment property with my premarital funds, would that consider as community property? When I go to the title company, they automatically assume that it is a community property and says that the wife have to sign the closing papers. How would I go about in keeping the investment property as separate property?

 

[mistoffolees]

If I purchase an investment property with my premarital funds, would that consider as community property? When I go to the title company, they automatically assume that it is a community property and says that the wife have to sign the closing papers. How would I go about in keeping the investment property as separate property?

Talk with the title company to see if there's any way for you to sign on your own since you're using pre-marital funds. It they say you can't do it, you may need an attorney.

One way I can see would be to set up an LLC to handle it. This might make things easier because you want to make sure that you don't mingle any expenditures or revenues with marital funds, anyway.

 

[shwing2345]

Would creating an LLC during marriage be community property?

 

[LdiJ]

Would creating an LLC during marriage be community property?

An LLC started during the marriage could possibly be community property. I wouldn't do that without checking with a local attorney.

Here is the thing about buying investment property. As long as you can buy it, maintain it, make all payments regarding it out of separate property, no element of it will become marital property.

However, what are the odds that you will never have to use any marital funds on the maintenance/payments towards the investment property? Over the long term, the odds are pretty slim.

If I had premarital savings that I wanted to stay separate property, I would either leave those savings in savings, or invest them in something else that was not real property that would require maintenance and upkeep.

 

[mistoffolees]

Would creating an LLC during marriage be community property?

Probably not - as long as you can prove that all the money that ever goes into the LLC is separate. But, as Ldij says, check with an attorney.