What is a prenuptial agreement? It is an agreement which is signed by the couple prior to their marriage.
Is there really a need for one? Potentially, yes as the agreement would record how finances and other matters are to be resolved in the event of separation or divorce.
Here is something for you to consider – When people live in different jurisdictions or are from different jurisdictions and decide to marry, it is imperative that when contemplating whether to enter into a prenuptial agreement, they seek specific advice in respect of the validity and implication of any such agreements in their home jurisdiction. By way of illustration, for a British Ex Pat who is residing in Dubai and who will be marrying a future partner who is from another Country, advice should be sought on the potential impact of the prenuptial agreement in England and the proposed spouse’s home country, as well as in the UAE.
Although the English Courts may not recognise prenuptial agreements as automatically binding or enforceable under English divorce law, they have a broad discretion as to how to order the division of finances and property on the dissolution of a marriage. The Courts can take a prenuptial agreement into account as one of the factors affecting its decision on the division of the parties’ assets /wealth. In the United Arab Emirates, there are no specific laws regarding prenuptial agreements. Such an agreement is a contract between two parties. It is therefore, important to take great care when drafting prenuptial agreements because if they have not been properly thought out or executed, it can lead to costly litigation. In particular, care should also be taken to ensure that the wording of any contract drafted in UAE with a possibility of it being relied on in the UAE Courts, should not offend Sharia Law principles. There is also the potential advantage of a prenuptial agreement determining which jurisdiction and which law should apply in the event of separation and or divorce.
Ensuring Fairness in Prenuptial Agreements
In ensuring that the Court in any appropriate jurisdiction considers the agreement to be fair,
- The parties will need to confirm that the prenuptial agreement is made at least 28 days prior to the date of the wedding;
- They should set out their financial circumstances in full;
- They should both obtain, or be given the opportunity to seek independent legal advice on the agreement and its effects and
- They should sign the agreement before witnesses.
- The agreement should also reflect that the parties have not been placed under any pressure to sign the document.
Advantages of Prenuptial Agreements
As with all contracts/agreements, there will always be advantages and disadvantages but through a collaborative approach, we can advise you on the various advantages such as :
- In having a prenuptial agreement, the parties can avoid protracted arguments in the case of separation or divorce.
- The parties can agree the financial arrangements in advance i.e split of assets / who is to pay for what.
- The parties can protect their premarital assets such as any real estate or business interests.
- In a situation where one of the parties has significant debts, the prenuptial agreement can protect the other from having to assume the obligations of the debt once married.
Disadvantages of Prenuptial Agreements
There are also various disadvantages which may need to be considered :
- Starting a relationship with a contract that sets out the particulars of what will happen upon a future divorce may instil a sense of lack of trust in the parties.
- Initially, the agreement may require one of the parties to give up their right to inherit from the other’s estate when he or she dies, although this can always be changed during the marriage by recording the intentions in a supplementary agreement.
- Following acceptance of a proposal to marry, a party may agree to terms that are not in their best interest because they are ‘too in love’ to be concerned with finances and what the future may hold.
What to Include in Your Prenuptial Agreements
As the prenuptial agreement can cover nearly anything, this goes some way to allow you to feel at ease with regards to the contents. At James Berry & Associates, we are able to advise you on the issues that you may or may not want to include in your prenuptial agreement.
A starting point would be for you to list all your assets and belongings which you want to address in the agreement. For example, you may own a valuable family heirloom which you would wish to retain in the event of either a breakdown in the marriage or your death, so this could be mentioned in the agreement. Further, the agreement will allow you to specify your financial rights and responsibilities with your spouse. The nationality of you and your spouse is of importance as many countries have matrimonial regimes, in addition to the matters listed below. Matrimonial regimes are applied either by operation of law or by way of aprenuptial agreement. In Common law countries, the default and only matrimonial regime is separation of property. Countries which operate by a Civil Law jurisdiction have statutory default regimes whereby generally couples marry into some form of community of property by default. We will be able to advise you on these issues depending on your nationality.
With regards to your property/ assets, we can advise on issues such as:
- What would happen to any property that either of you brought into the marriage?
- Ensuring that your property/assets are not split against your wishes upon the breakdown of your marriage.
- If you own the family home in your sole name, what would happen to it ?
- What would happen to jointly owned assets including bank accounts/shares/policies etc?
- What would happen to any savings accumulated during the marriage ?
- If you receive an inheritance, what would happen to any property/assets (including any income that may be derived from these assets)?
- If you or your spouse have any pensions, how would they be split in the event of a divorce?
- If either of you have any debts, either in sole or joint names, how would they be dealt with?
- In the event of a breakdown of the marriage, what provisions, if any, should be put in place to pay or receive maintenance, including the level of maintenance and the duration of the same?
- When and why the prenuptial agreement should be reviewed; we can advise you on the types of triggering factors that can be considered for the prenuptial agreement to be reviewed, i.e., after five years, upon the birth of a child, upon a change of circumstance such as losing your job, becoming ill/disability, upon the acquisition of an asset, just to mention a few.
- When Wills should be put in place to protect your property/assets in the event of death.
Aside from the financial aspects, consideration for the family unit, including any children, should also be addressed. A prenuptial agreement cannot prejudice the interests of any children in the family. It is therefore important to build in provisions for a review of the agreement if and when you have children as stated above. The child/children’s needs should be considered and assessed at each relevant stage.
If you have children from a previous relationship, you should address them in the prenuptial agreement to ensure that they inherit your property/assets as per your wishes. You should be aware that in cases where the Court is involved and there is prenuptial agreement in place, the Court (in whichever country the litigation takes place) will look first at minor children to ensure that they have proper financial stability including a home to live in. If the prenuptial agreement is deemed to be unfair when it comes to the minor children involved, it may not be upheld by the Court. You should be aware that you/your spouse will not be able to contract out of giving financial support to or for a child/children.
The above are just some of the considerations that you need to think about in terms of the contents of your prenuptial agreement. Prior to your marriage, if you are thinking of entering in to a prenuptial agreement, remember that you should seek advice at least a few months before the date of the marriage to ensure that adequate legal advice is obtained. If an agreement is to be drawn up, ensure it is done so in sufficient time, i.e. ideally the marriage ceremony should take place at least 21 – 28 days following the signing of prenuptial agreement. If you require specific advice, please do get in touch with me.
For further information or advice in relation to prenuptial agreements or any family matters, please contact our family law department.
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Head of Family Law / Senior Consultant