A prenuptial agreement, often referred to as a “prenup”, is a legally binding contract entered into by a couple before they get married. This agreement in general outlines the financial and property-related terms and conditions that will apply in the event of a divorce, separation, or death. A concept evolved from the West, prenuptial agreements are designed to protect the individual rights and assets of each spouse and specify how the couple’s financial matters will be handled during and after the marriage giving each spouse a pre-defined terms for their relationship. In today’s world, prenuptial agreements are becoming more common and relevant due to the increasing number of divorces between individuals with significant assets or property.
What is a prenup agreement?
A prenup is a contract between the spouses that is signed prior to their marriages. This contract states the settlement of money between the parties in case of death, divorce or separation. In other words, it is an agreement for both the party’s proportion of property, money, assets and anything and everything that each of them will be receiving in case the marriage dissolves.
The objective of a prenup agreement
Despite being not so common in India, prenups have its own benefits too. In the cases of divorce and separation, a prenup saves both the parties from struggling with dates of hearing in the courts, facing those annoying acquisitions, blaming each other, or getting less payment as alimony or paying more as alimony. In such a scenario, the prenup is not only a time saver but easier to perform. We have to be ready for the beat anyway.
Undoubtedly, most of the maintenance and alimony laws support female spouses, and hence it somewhat lacks to consider the financial conditions of the male spouses. And as a result, the judgment is ultimately in favour of the female spouse. However, in case of a prenup agreement, the financial liabilities are pre-decided, so none of the partners gets prejudiced at the time of separation. A prenup agreement supports financial transparency and, as a result of which, both the partners know the financial condition of each other. This leads to no chance of any kind of fraud.
The clauses of a prenup agreement
- A disclosure of liabilities and assets of both the parties
- Financial and the monetary position of both the parties
- Real estate properties of both the parties
- An estate planning
- Sharing of the properties if the marriage gets dissolved
- Maintenance or the alimony between the parties, if the marriage gets dissolved
- The custody and maintenance of the child/children
- The financial status of both the party’s businesses(if any), and the partnership in business (if any)
- Monetary savings
- Credit card limits, debts, spending, payments
- Financial investments
- Retirement benefits and accounts
- The claims of medical insurances and life insurance
- The management of joint bank accounts or other accounts
- The management of household expenses, bills and other miscellaneous expenses
- Management of the jewellery
A prenup agreement is enforced only if
- The contract should be fair, transparent, in writing and mutually signed by both the parties.
- The contract should be signed by both the parties and should be executed before the marriage.
- The contract should be voluntarily made and signed. None of the parties should be forced, beaten, pressurised, etc.
- The contract must be notarised and certified.
- The contract should contain a particular clause which should mention even if any provision of the contract become invalid in future; the agreement will be still valid and in force.
- The contract should mention all the financial possessions, liabilities, assets, etc. owned by both the parties.
- The contract should not contain any information which is false or invalid.
- The contract should constitute all the provisions that have been known and discussed by both the parties
Validity of Prenuptial Agreements in India
In India, there are no specific legal provisions that govern prenup agreements. They are relatively uncommon in the country as they often run counter to traditional Indian customs and perspectives on marriage that is based on the personal laws based on which marriages are performed in India.
Marriages under the Indian personal laws are regarded as sacraments, and historically, any agreement that seemed to promote separation or contravene personal laws was deemed invalid.
Initially, the Courts were against prenups being executed between spouses and held that they run against the Indian Contract Act, 1872[1] for being against the Public Policy of India. The courts were of the view that prenups were the agreements/contracts that allowed parties to agree to let go of the rights were granted to them through the respective personal laws.
In the case of Krishna Aiyar v. Balammal, the husband had sought the restitution of conjugal rights after his wife refused to live with him, resulting in a compromise agreement. This agreement stipulated that the wife should return to her husband, with the provision that if she ever wished to live separately in the future, the husband would pay her Rs. 350. However, when the wife did not return, the husband initiated another suit for conjugal rights. One of the defences raised was the existence of this agreement, which was ultimately deemed invalid by the Madras High Court as it ran counter to Hindu law and public policy, rendering it unenforceable. Such a clause violates the right to conjugal rights of a spouse.
In another case in the Calcutta High Court, wherein the pre-nuptial agreement controlled the rights of the husband which were conferred upon him by Hindu law, the Calcutta High Court held that the agreement was in violation of the public policy of India.
Advantages of a prenup agreement
- A Prenup agreement eases the process of maintenance and legal separation and makes it speedy. Also, it helps parties to not to pay exorbitant fees to the lawyers.
- A prenup agreement protects both the parties from each other’s debts.
- A prenup contract makes both the parties financial secure, in case any of them dies.
- A prenup secures and protects the child, in case the parents opt for a divorce or a mutual separation.
- A prenup agreement financially secures the future of both the parties, as the monetary things are pre-decided.
- A prenup contract secures the custodial and re-marriage rights of both the parties.
- This contract prevents the business of the parties to get divided.
- A prenup contract guarantees maintenance, alimony and the actual spousal support needed.
- A prenup agreement is most helpful in preventing the messy situation in court proceedings at the time of a divorce or a legal separation.
- A prenup contract reduces the chances of any conflict between the parties, which leads to a better understanding between them.
Disadvantages of a prenup agreement
- Opting a prenup agreement is a difficult thing to do for both the parties, as they are constantly judged by society.
- In some or the other way, a prenup agreement impliedly declares that the marriage is not going to last forever, as it somehow encourages the dissolution of marriages.
- With all the pros of a prenup agreement, it also can affect the couple in unfavourable conditions post marriage.
- A prenup agreement can intensify the importance of money between the couple, instead of strengthening marriage and understanding.
- A prenup contract and unfavourably affect the lifestyle of both parties.
- A prenup can also enforce a ‘no child’ provision (depends upon both the parties).
Relevance of Prenups in India
- Asset Protection- Individuals often come into a marriage with significant assets, prenuptial agreements can protect these assets from being subject to division in the event of a divorce. This is especially important for individuals who have family inheritances, businesses, or valuable properties.
- Changing Marital Dynamics- As marriage dynamics evolve, with both spouses often contributing to household income and finances, prenuptial agreements can reflect these changes and provide a fair framework for wealth and asset management.
- Clarity and Transparency- Prenuptial agreements promote transparency and open communication about financial matters before marriage. Discussing financial expectations and responsibilities can reduce misunderstandings and conflicts during the marriage.
- Financial Independence- Prenups allow each spouse to maintain financial independence. They can specify how finances, including income, expenses, and assets, will be managed during the marriage, preserving financial autonomy for both parties.
- Alimony and Maintenance- Prenuptial agreements enable couples to predetermine the terms of alimony or spousal maintenance. This can prevent protracted and costly legal battles over financial support in the event of a divorce.
- Protection of Children’s Interests- In cases of second marriages, prenuptial agreements can ensure that assets are preserved for the children from previous relationships, thus safeguarding their financial interests.
Provisions of a prenup agreement that can be overruled by a court
- If the agreement or any provision of the agreement encourages divorce or judicial separation.
- If the agreement or contract or any provision mentions a spousal waiver.
- If the agreement or any provision of the agreement waives permanent or temporary alimony or counsel fees.
- If the contract or any provision of the contract waives child custody, child maintenance and support.
- If the contract or any provision of the contract mentions regulation of conduct during the marriage.
- If the agreement or any clause of the agreement mentions the religious upbringing of the children.
- If the contract contains a no child provision.
- If the contracts, limits or decides any ground of divorce.
- Severability
FAQs
What is a prenuptial agreement?
A prenuptial agreement, or prenup, is a legal contract entered into by a couple before they get married. It outlines the division of assets and financial responsibilities in the event of a divorce or separation.
Are prenuptial agreements legal in India?
Prenuptial agreements are not explicitly recognized under Indian law. However, they can be considered as legal contracts and may be enforceable under the Indian Contract Act, 1872, if they meet the requirements of a valid contract.