In February – the month of love – we explore seemingly unromantic but practical legal tools that clarify parties’ rights and obligations towards each other as they contemplate a lifetime together. As family lawyers with front row seats to the breakdown of many relationships, we believe that these legal instruments are the ultimate expression of love and respect for your partner and they should be seriously contemplated throughout the course of your relationship.
Since happily-ever-after is no longer guaranteed, Pre-Nuptial Agreements (“PNA”) have become an increasingly popular tool for soon-to-be newlyweds to record their intentions on how their financial and childcare disputes should be resolved in the event of a divorce. For most couples, a PNA provides a clear roadmap to the end insuring against a potentially costly and acrimonious divorce.
Legal Considerations in PNAs
To promote the validity and ultimate enforceability of PNAs in Court, the couple should bear in mind the following considerations in the preparation of their PNAs:
(i) Mutual Consent
Since PNAs are private agreements signed by both parties, the voluntary and mutual consent of both parties is of paramount importance. Any unilateral declaration of intent by one party to the exclusion of the other party will likely mean that the Court will grant little or no weight to the terms of the PNA.
(ii) Reasonableness
The terms of the PNA must be drafted in a manner that is fair and reasonable to both parties. The Court may also accord little to no weight to the PNA if the terms are drafted in a manner that is unfairly weighted against one of the spouses or does not comply with the law.
(iii) Validity of PNAs
Since PNAs are a creature of contract, any vitiating factors such as duress, undue influence or misrepresentation (for example, due to lack of full and frank disclosure of each party’s assets) will likely render the PNA unenforceable at the option of the innocent party.
(iv) Inheritances and Spousal Gifts
If one spouse is likely to inherit substantial assets or if a spouse intends to give a generous gift to the other spouse that is intended to be excluded from the matrimonial asset pool, these should be stated clearly in the PNA to avoid any arguments about co-mingled funds later on.
(v) Changes in Circumstances
There may be supervening life events that may change the complexion of the agreement set out in the PNA, for example the birth of a child or one spouse’s decision to start a business or to pursue further studies. These life events and their financial impact upon divorce should also be provided for in the PNA.
PNAs under Singapore Law
PNAs are often viewed as a lack of commitment or an intention to divorce even before the marriage has begun. We beg to differ. We encourage PNAs as a realistic and practical communication of the couple’s financial expectations towards each other before they take the plunge. Even if parties have signed a PNA prior to being married, the terms of the PNA may be amended or superseded through a Post-Nuptial Agreement to account for any material changes in circumstances. Some parties may even choose for their PNA to be voided after a certain length of marriage.
It is important to note that unlike other jurisdictions, PNAs executed under Singapore law are not strictly binding and may not be enforced in its entirety. The ultimate power resides in the Courts to divide the matrimonial assets in a just and equitable manner, and to make orders for custody, care and control of the children that are in the children’s best interests. Nevertheless the terms that the parties have agreed to in their PNA serve as a helpful reference point for the Court to assess their intentions, especially if the terms also contemplate changes of circumstances during the marriage.
In short, Pre-Nuptial Agreements are an invaluable tool that may be used by parties to proactively communicate, openly and clearly, regarding their respective financial expectations towards marriage and the breakdown of their relationships. The existence of a PNA allows parties to build on the strengths of their relationship, while giving them peace of mind in the wake of a potentially costly and acrimonious divorce.
If you or your soon-to-be spouse may wish to explore a Pre-Nuptial Agreement, please schedule a Consultation with our lawyers today.