No matter what they say about the sanctity of marriage, if one of you is sitting on a goldmine of family wealth, there's a good chance the in-laws are going to insist you sign a prenuptial agreement before you tie the knot.
But what if, like most of us, neither of you is the scion of a billion dollar empire? There are still some very good reasons to sign a prenup, particularly to protect the party who is in placed in a worse financial position by the marriage. Granted, the courts aren't forced to enforce the prenup in many instances. But it can provide direction if your marriage should fall apart.
WHAT IS A PRENUP AGREEMENT?
A prenup, or a pre-nuptial agreement, is a contract that is drafted before tying the knot. It states how marital matters will be settled in the event of a divorce. It should balance abiding by Singapore law but yet fulfil what is acceptable to both of you. Usually, a prenup agreement is prepared by a divorce lawyer.
A prenup agreement is not to be used by either party to escape financial responsibilities to their spouse. Rather, it is to ensure that the division of assets is done in a systematic and cordial way.
Essentially, it works a little like marriage insurance. While not compulsory, it provides peace of mind as it minimises risk and reduces any uncertainty that your partner will pull a crazy stunt on you if your marriage does not end well.
HOW TO DRAFT A PRE-NUPTIAL CONTRACT?
Some of the aspects of a pre-nuptial contract that you can include are: property, maintenance and custody matters.
For instance, you may decide on a 20-80 ownership of a house, or state to divide liabilities and debts clearly. If you have multiple properties, you could also specify how they would be split in the event of separation, divorce or death of a spouse.
Do take note that while a prenup specifies how both of you would like to split your shared assets, there may be instances where it is not enforceable. The Singapore court will decide and ensure a just and equitable splitting of assets. So men, don't think of it as an amulet against paying maintenance after a divorce.
It's also worthy to note that in Singapore, the custody of children cannot be negotiated in a prenup, as they are usually not born at the point of the contract and rules regarding their custody are considered unenforceable.
If one of you is a foreigner whose home country recognises prenuptial agreements, you could choose to have your prenup governed under that legal system. For instance, some European legal systems recognise prenuptial agreements, and so Singapore courts will take them more seriously.
Like any other contract, a prenup must be mutually drafted and agreed upon.
3 GOOD REASONS TO DRAFT A PRENUP
In an ideal world, your life partner would appear before your eyes in a cloud of glitter and stardust, you'd build your dream home and live happily after after. In real life, however, marriage often leads to sacrifices being made.
Even if you're completely in love with your other half and cannot foresee any problems in the future, there are some good reasons to draft a pre-nuptial agreement.
1. ONE OF YOU WILL BE MAKING CAREER SACRIFICES WHEN YOU RELOCATE
With an increasingly mobile global citizenry, getting married could lead to one party relocating so that the other can pursue a career opportunity elsewhere.
If one of you is going to sacrifice career progress in order to make the marriage work, it's a good idea to address this in the prenup. If things don't pan out, one of you is going to lose out big time financially, and a prenup can help to ensure that that person receives the financial support they need to get back on their feet.
2. ONE SPOUSE IS PAYING FOR THE OTHER'S EDUCATION
When you're in a long-term relationship, the lines between who pays for what tend to get blurred. Suddenly, your partner's student loans become yours, since you envision a shared future together. I know more than one couple who weren't even married before they found themselves in the situation where one party was helping to pay for the other's university degree, whether as a loan or otherwise.
Should things fall apart, one of you will be left with a degree or other qualification that will boost his or her earning power moving forward. But the other will be left with nothing but huge regrets. If you find yourself in such a situation, a prenup can help to ensure that the party who's shelling out the cash gets duly compensated.
3. ONE OF YOU IS QUITTING YOUR JOB TO LOOK AFTER THE KIDS
This is the classic scenario where a person, usually the wife, gets financially screwed over by marriage. Although men tend to fear having to pay hefty alimony amounts to their ex-wives, if you're not wealthy it's likely the one who hasn't been working is going to be placed at a huge financial disadvantage, especially if he or she gets custody of the kids.
As much as you might not want to have to pay your ex-spouse maintenance, be aware that the children will suffer for it. Of course, the courts will try to figure out how much one party should be paying to the other. But a prenuptial agreement can set out in clearer terms what the couple considers a fair amount.
This article was first published in MoneySmart.