How to Prepare a Pre-Marital Agreement and What to include in

Last updated on July 19,2016 - - In Lawyer

 

A majority of laymen would consider the act of drawing up and signing a prenuptial agreement between couples, to be an attempt to vilify the sanctity of marriage. Whilst it may be construed as a rather stringent approach to adopt, if done with impartiality, a pre-nuptial agreement could more probably than not, aid in the avoidance of disastrous discussions between spouses pertaining their assets and finance.

  1. What Is A Pre-Nuptial Agreement?

Such agreement makes reference to a written contract between two people who are about to get married, dictating the terms of possessions of assets, treatment of future agreements, control of the property of each, and potential division should the marriage dissolve, or in a case of one spouse’s death.

It is vital that both parties who are about to get married must disclose all of their assets.

1.1       What a pre-nuptial agreement can deal with?

  1. Property division upon divorce;
  2. The ownership of the marital residence;
  3. Responsibility for the settlement of pre-marital debts;
  4. Property distribution upon the death of one party (this would have to be coupled with an updated version of the documentation concerning the estate of the deceased party);
  5. Obligations pertaining to the averment of alimony;
  6. Financial responsibilities that accrue during the marriage;
  7. The methodology to resolve disputes that may arise from the pre-nuptial agreement (an example would be via an alternative method dispute resolution such as mediation or arbitration);
  8. Sunset clause – such a clause would elucidate that the pre-nuptial agreement would be rendered as not being effective once the parties have been married for a particular number of years as specified in the clause.

1.2       What a pre-nuptial agreement cannot deal with?

  1. The custodial arrangements of the children (this would include matters such as the right religion that the child should be raised, the child’s schooling arrangements, etc)
  2. Visitation to the children;
  3. Child support;
  4. Any form of illegality;
  5. Any term that is contrary to public policy.
  6. Advantages of A Pre-Nuptial Agreement
  7. May act as prevention from unnecessary overspending which may lead to the encumbrance of a budget deficit
  8. Where Muslim women are concerned, in a situation whereby a Muslim man takes a second or third wife, will not render the first wife will not be held responsible or forced to share her assets and property with the co-wives.
  9. Should the marriage dissolve, the pre-nuptial agreement would assist by negating any mess or confusions with regards to the division of property and/or financial assets.
  10. Disadvantages of A Pre-Nuptial Agreement
  11. A drawback with the existence of a pre-nuptial agreement would be that, circumstances may deviate in the future which would therefore require for a departure from the terms set out in the agreement per se.
  12. When Should You Consider Signing A Pre-Nuptial Agreement?
  13. You acquire assets that may be in the form of properties, stocks or retirement funds, etc;
  14. You want a clear definition as to how the savings in the joint account between you and your spouse should be used;
  15. There is a likelihood of you accruing an inheritance that can only be used by your family bloodline;
  16. You have children from an earlier marriage;
  17. You have loved ones that require care and supervision, such as elderly parents;
  18. You are doing a risky business and want to acquire a form of protection for your spouse and children(s) from being affected should your business be unsuccessful thereby consequently rendering you a bankrupt;
  19. The wealth between both parties are not on a balanced platform (One of you is much wealthier than the other);
  20. One of you will be financially supporting the other for either education or business purpose(s).
  21. Is A Pre-Nuptial Agreement Valid In Malaysia?

In Malaysia, matters pertaining marriage and divorce are governed by the Law Reform (Marriage and Divorce) Act 1976 hereinafter referred to as ‘LRA 1976’.

5.1       Matrimonial assets

The court’s jurisdiction in deciphering the division of matrimonial assets amongst parties would be made pursuant to Section 76 LRA 1976 which in summary provides that, prior to the grant of such an order, the court shall have regard to the following:

  1. The extent of the contributions made by the parties
  2. Debts due and owing by the parties
  3. The needs and necessities of the children

The terminology ‘matrimonial assets’ pursuant to Section 76 LRA 1976  would include  ‘assets owned before the marriage by one party which have been substantially improved during the marriage by the other party, or by their joint efforts ,and is not solely restricted to assets that the parties had acquired during the marriage only.’

It is pertinent to note that properties gifted preceding the marriage, as well as properties that have been gifted to a spouse via a third party during the marriage, will not fall within the ambit of the definition of the words ‘matrimonial assets’.

5.2       Courts retention of powers over maintenance agreements

The Malaysian Courts acquire a vast power over approving agreements for payment in settlement of future claims for maintenance.

The assessment of spousal maintenance is made pursuant to Section 78 LRA 1976 which provides that the court shall make reference to the needs and means of the parties.

‘An agreement for the payment, in money or other property, of a capital sum in settlement of all future claims to maintenance, shall not be effective until it has been approved, or approved subject to conditions, by the court, but when so approved shall be a good defence to any claim for maintenance.’ (Section 80 LRA 1976)

In addition to that, Section 84 LRA 1976 stipulates that the court may at any time and from time to time vary the terms of any agreement as to maintenance made between husband and wife, whether made before or after the appointed date, where it is satisfied that there has been any material change in the circumstances.

With regards to maintenance for children, Section 97 LRA 1976 provides that ‘The court may, at any time and from time to time vary the agreement relating to the custody or maintenance of a child, where it is satisfied that it is reasonable, and for the welfare of the child.

5.3       Referral of all Agreements to the Court

Whilst the LRA 1976 does not contain an express provision that elucidates a mandatory need for courts to place consideration upon pre-nuptial agreements prior to the make of financial provisional orders, Section 56 LRA 1976 provides that, any agreement made between parties to a marriage which relates to, or arises out of divorce proceedings may be referred to the court for their contemplation as to the validity of such agreement.

  1. Conclusion

Its tendency is to be a measure of guidance to the Court in formulating a more modest award, by scrutinizing the conduct of both parties leading up to the prior agreement, as well as their subsequent conduct in consequence of it.

Notwithstanding the fact that the courts may not regard a pre-nuptial agreement as a primary consideration, an evoked perception is that the existence of such an agreement may be a form of persuasion and assistance, leading the Court to the arrival of a fair determination of the intention of the parties to the marriage.

What Happens if You Die Without a Will
Share