Pre-nuptial Agreement | Why is it important?
Marriage is one of the most important and eventful milestone in one’s life. A couple’s union is not limited to the marriage contract signed but also in their goals & dreams, in finances & properties. When they say “two becomes one” in marriage, the same is true with the assets and properties owned by these individuals before getting married.
What is a Prenutial Agreement?
A pre-nuptial agreement is a conditional agreement regarding the ownership of assets and properties before marriage. It is a legal document prepared & signed before the wedding takes place and takes effect from the moment of celebration of the marriage.
Why is prenuptial agreement important?
Under the Family Code of the Philippines, Executive Code No. 209, signed into law by then-President Corazon Aquino, it states that all properties acquired before or during the marriage will automatically be considered conjugal properties for those who got married on or after August 3, 1988. This also means that all income that property owned prior to marriage will also be conjugal.
And in the event of legal separation, the property & the income it generated will be equally divided by both parties.
Now let us consider the marriage of Spouse A to Spouse B. They met one day in an event and they clicked. It was a “whirlwind romance” and both would say that they were madly in love with each other. Spouse A came from a middle-class earning family, recently graduated and just started working. Spouse B is from an affluent family and has worked for several years in one of their businesses.
If Spouse A marries the rich & successful Spouse B who do not have any prenuptial agreement in place. Spouse A, by law, has the right to half of the properties and money Spouse B has. And if they separate, Spouse A will get half of the property and money even if these were inherited or worked for by Spouse B.
Will the properties be considered conjugal property after marriage?
In the absence of a Prenutial Agreement, the Family Code will be followed, where all existing properties owned by an individual will become conjugal property with his/her spouse upon marriage.
Read: Property Ownership | Before, During and After Marriage
Why do you need prenuptial agreement?
Pre-nuptial agreements are generally entered for several reasons:
- Significant age difference
- Considerable difference in wealth & assets
- Co-owner of a business/asset
- To protect children from previous marriage/relationship
While conjugal ownership of all property is good in some cases, especially in handling and managing these. In some cases, it may present issues in some unions, and sometimes, a prenuptial agreement is a good instrument to address those issues even before they arise.
