Discussions around finances can be sensitive, but early conversations can pave the way for a smoother path in the long run. Kajal Aswani offers advice on the benefits of a pre-nup.
What is a pre-nuptial agreement?
A pre-nuptial agreement, in short a ‘pre-nup’, is an agreement entered into by couples before their marriage to deal with their finances and assets in the unfortunate event of the breakdown of their marriage. It generally deals with how assets will be divided or retained by the parties, including gifts and inheritance which either of them receives before or during their marriage.
How can a pre-nup protect me as I enter into my marriage?
While no one enters a marriage thinking that their marriage will break down some day, having a pre-nup can protect you greatly as it can simplify the divorce proceedings, avoid acrimonious and costly disputes and reduce stress and unrealistic expectations. You can control the financial landscape of your divorce by expressly stating how you would like the assets to be divided and what financial support you should receive in the event of divorce.
Does getting a pre-nup mean there is no trust in our relationship?
Open discussions and healthy communication are key to a happy married life. Topics around finances and disclosure of assets can be sensitive. Couples who approach the subject of pre-nups often do so with the comfort of knowing that they can trust their partners and have open and transparent discussions on important issues such as financial matters and matters relating to children. Even if couples do not end up signing pre-nups, sometimes conversations around pre-nups can strengthen their relationship as it can avoid potential arguments or misunderstandings in future, as well as manage both parties’ expectations. It is best to start such conversations early during your relationship so that both parties feel valued and heard. After all, these discussions are to do with real issues and expectations of each party’s role in a marriage.
Do I have to be wealthy to get a pre-nup?
Pre-nups are traditionally associated with wealthy couples seeking to preserve their wealth in the event of divorce. However, couples with modest means are also looking to sign pre-nups. This is particularly true for couples who are getting married at later stages of their lives and have accumulated assets without the other party’s contribution or in the case of second marriages, where parties are seeking to ringfence assets for their children from prior marriages. A pre-nup is also relevant where a party to the marriage is expected to receive gifts or inheritance during marriage and wish to ringfence such assets from sharing.
Are pre-nups enforceable in Hong Kong?
Pre-nups are not binding on the Courts of Hong Kong and the terms cannot oust the jurisdiction of the Court. In other words, Courts in Hong Kong are bound by legislation governing the making of financial orders in divorce proceedings. However, with the recent development in law, Courts in Hong Kong now give ‘full weight’ to pre-nups when dealing with financial claims in divorce proceedings, provided that parties enter into a pre-nup at their own freewill without undue influence and pressure and with full understanding of the terms and implications of signing a pre-nup. Further, the terms should be fair to hold the parties to the pre-nup at the time of divorce considering all the circumstances. Couples are also advised to seek independent legal advice and produce financial disclosure, which is clearly desirable and they should have sufficient time to consider and negotiate the terms (usually leaving at least 28 days between the signing of the pre-nup and the wedding date).
Kajal Aswani, Partner—Gall