Prenuptial Agreement: The Other Marriage Contract

It’s close to December, the peak month for weddings in the Philippines. Budding newlyweds would be in the thick of wedding preparations, making honeymoon travel plans, house-hunting perhaps, or picking out baby names. But in planning a new life together, one very important subject is often regarded by engaged couples as taboo –- that of prenuptial agreements.

A prenuptial agreement, or a prenup, is an accord in which a couple sets the rules to govern their property, debts, income and expenses.

Most couples reject the discussion of prenups for fear of raising notions of distrust. The fact remains that a marriage isn’t just a union of hearts, minds and bodies, but a union of assets as well. Making an effort to respect that fact is crucial to a healthy marriage.

All in the family

Prenuptial agreements are not just for the wealthy. Filipino values command respect for hard-earned family resources, which we count among our most jealously guarded assets. Money and property matters concern every Filipino home.

Drawing a prenup has been made even more essential for Philippine marriages by the provisions of the Family Code of 1988, as discussed in this article excerpt:

“In 1988, changes in the Family Code stated that married couples are to be bound by “absolute community” in terms of money and property. That bit of jargon means your partner will have an equal right to everything you owned before the marriage.

Moreover, the Family Code also says that in cases of disagreements, the husband’s decision is law. This is very different from the pre-1988 version of the Code that requires couples to be ruled by the concept of “conjugal property,” where partners bring into the marriage only the fruits of their labor, and not their actual properties.

Lovebirds may say absolute community is fine. But if you are in any of the following situations, the family wealth planning group of Sycip, Gorres & Velayo says you better sit up and take notice:

• If you have assets that your grandfather or another ancestor has transferred to you as part of a family wealth planning exercise, and would want to keep within the family
• If you have children (or grandchildren for that matter) from a previous marriage that you want provided for by certain assets
• If you have a business that you want to keep within your family
• You have assets such as a home, stock or retirement funds you have worked for all your working life
• You may be receiving an inheritance
• You have loved ones who need to be taken care of, such as elderly parents

There are other unique situations that may warrant a prenuptial agreement but in the Philippine setting, these are the particular cases that spell what could be extremely tricky issues between husband and wife.

Think about it, a prenuptial agreement can save you from using properties you have saved for your ailing father to pay for your spouse’s debts contracted long before you met!

“If you can’t agree on something that is very important to you before the marriage, then perhaps there is something wrong. A prenuptial agreement is nothing more than a simple contract that clarifies these things,” says Eleanor M. Montenegro, a director at SGV.

Just like any contract, it needs to be signed by both parties. You cannot surprise your partner with a prenuptial agreement when you think things are getting a bit out of hand.

It is also important that the date is way before the wedding to ensure that both parties had ample time to agree or disagree.

Third, it must be accurate. Any indication that the list of assets is anything but honest might nullify the agreement.”

Don’t wait

Bankrate.com offers pointers on how to approach the subject. First, do it as early as possible, ideally before the engagement. Let your intended know early on that you believe in the importance of a prenup. It’s wedding bells you want to follow, not alarm bells.

Second, have an honest and open discussion. Be candid about your reasons for wanting a prenup. Respect and appreciate each other’s concerns. Agree on the points you want included in your contract.

Next, hire separate lawyers to ensure you have a valid and enforceable agreement that’s fair to both parties.

Take heart. A prenup isn’t meant to kill the romance. Instead, it helps to not let money get in its way.

- Excerpt taken from “Prenuptial Agreements: When love means having to say ‘This is mine’” by Ma. Salve Duplito, published on http://money.inq7.net

[tags]Philippines prenuptial agreement, prenup, weddings, marriage contract[/tags]

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