What Is A Prenuptial Agreement And Why Do We Need Them?
A prenuptial agreement is an arrangement entered into before marriage to deal with issues that commonly arise after the dissolution of marriage. It is often needed to safeguard the interests of the spouses in a certain type of marriage. A prenup may or may not be enforced, depending upon the fairness of its terms.
Written by: Swati Shalini
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Published on 27-Aug-19
Marriage has always been considered as a sacred union and an unbreakable social institution, but with the rising rates of divorce in the West, this belief in the institutions of marriage and an indivisible family has begun to waver. It has even become the belief of many millennials that marriage is an institution of the past and one that needs redefining. In this state of social flux, where marriage is being replaced by impermanent dating, the concept of live in relationship in India (i.e. a living arrangement in which an unmarried couple lives together in a long-term relationship that resembles a marriage) have gained much importance, especially for those who do not believe in the institution of marriage but believe in a different sort of commitment.
At the same time, the institution of marriage has not been completely demolished yet, and there still exist romantics who believe in the beauty of married life. However, the concept of marriage has not remained the same. Since the trust in marital life has been somewhat shaken by the increasing number of failed marriages (for whatever reasons), the couple of the newer generation have started opting to settle certain issues that may arise at the time of separation even before embarking upon their married journey together. It is for this reason that the concept of pre-nuptial agreements arose.
What is a Prenuptial Agreement?
A prenuptial agreement (more commonly known as a “prenup”) is a type of contract created by two people before entering into marriage. It refers to an arrangement that establishes the rights to property and support, and the division of financial assets and responsibilities in the event of the dissolution of the marriage or the death of either spouse. This agreement could also lay down the responsibilities and property rights of the spouses for the duration of their marriage.
A couple can enter into a prenup for several reasons, for example,
To determine how the wealth of a spouse will be divided after the dissolution of marriage, in case that particular spouse is wealthier than the other;
To determine the share of children from prior marriages and of other family members, should a spouse pass away without leaving a will;
To ensure that the non-working spouse and children get adequate maintenance after divorce or separation;
To not allow the family issues to be taken to court, they are often speculated and settled in a prenup itself;
and so on and so forth.
While prenups have become common in Western countries, India is yet to catch up. Therefore, it is important to understand the concept and the legal implications of the same before embracing it or turning it away.
What Is The Need For Prenups?
It is often believed that prenups are for the glamorous Hollywood celebrities, and out of place in the marriages of the commoners. But nothing could be farther from the truth. Although it is not a compulsion, there are many couples out there who may need a prenup, for a variety of reasons (some of them stated above). And a prenup hardly ever means that you do not trust your partner enough to deal with things maturely after your marriage gets dissolved, or that you are destined to get separated once you sign a prenup. It rather means that you wish to avoid problems after you separate so that your relationship remains amicable and does not become litigious.
While prenups are often used by the rich and the famous, many of us commoners also need them for the following:
Pass property to the children from prior marriages.
Clarify the financial rights of each spouse, especially determining what will result in marital property.
Get protection from the debts taken by the other spouse.
Get protection from false prosecutions or accusations under Section 498A of the Indian Penal Code, 1860 or the Domestic Violence Act, 2005.
However, one of the things to keep in mind about a prenup is that although you can include all possible terms and conditions in it, the enforcement of the same will depend on the court. If the court thinks that the terms are unfair or one-sided at the time of enforcement, irrespective of the intent at the time of making, the terms may not be enforced, or such and other terms may be modified to be made neutral or favourable towards the disadvantaged spouse. Therefore, it is essential that the agreement has terms which are fair in the context of the particular relationship, and that one spouse is not getting an undue advantage over the other.
Common Rights And Responsibilities In A Prenup
Prenups create certain rights and liabilities on the part of both spouses, which may pertain to the duration of the marriage or the stage where the marriage has been dissolved. These are contained in the clauses of the agreement and are enforced under the national contract laws. Although each prenup differs in its clauses, as per the circumstances under which the couple is tying the knot, there are certain clauses that are common and can be found in almost every such agreement:
Separate Property
It is to be understood that all property acquired and owned in the duration of the marriage, irrespective of the spouse in whose name it has been so acquired or owned, belongs to both spouses, and will be considered marital property. Due to this characteristic, this property will be liable to be divided between the spouses in case of dissolution of marriage. To avoid this, the spouses can enumerate certain properties or classes of properties which will be considered their separate property and will remain in their sole possession even after the dissolution of the marriage.
Shared Property
Similarly, the spouses are free to enumerate the property or the types of property which will be considered to be co-owned and hence, marital property. Such property will be liable to the division on dissolution of marriage since each spouse has a share in it.
Earnings in the duration of the Marriage
The earnings of the spouses in the duration of marriage are generally shared to fulfil the expenses of the household, and therefore, after the marriage is dissolved, the earnings may be ordered to be shared with each other. To avoid this scenario, the spouses may enter a clause in the agreement stating that all their earnings will be considered their separate property of each spouse, subject to the responsibility towards alimony and maintenance.
Maintenance, Alimony and Support
Often, the prenups provide for alimony and maintenance for the spouses and the children born in wedlock, respectively. This is considered a very important clause, in view of the following issues:
Whether both spouses are earning, and if not, what is the support or alimony, to be given to the spouse needing such support?
What will be the situation when the spouse who is not earning now starts to earn in the future?
This clause is included to relieve the courts of the burden to determine alimony and maintenance matters and to ensure a non-litigious resolution of disputes relating to the dissolution of marriage.
Wills/Transfer of Property
Either spouse to the agreement can include a clause that any will or codicil thereto, or any transfer of property made by them will remain enforceable notwithstanding their obligations under this agreement. However, this clause should be given effect to cautiously, as the spouses can use it to find a way out of their obligations towards each other. Moreover, the spouses may include clauses which determine the disposition of all their property, upon their death, under this agreement, thereby creating a will therein.
Custody of Children
This is another clause which can reduce the burden of family law litigation in the courts, as it will definitively determine the custody of the children borne out of the marriage. However, the clause may not be enforced if the circumstances under which the agreement was made can be shown to have changed. For example, the spouses were both sober at the time of making the prenup, and the custody was decided to be with the husband; however, the husband has become a drunkard now at the time of enforcement of the agreement. In such a scenario, the court will be duty-bound to grant custody to any person but the husband.
Maintenance of Prior Children and Parents
Another clause that is commonly included in case of second marriages, or if the spouse has living parents, is that a part of their property, whether marital or separate, will be used to maintain their children from prior marriages, and their parents, respectively.
Applicable Law
The agreement may further provide the law that will be applicable on the agreement, and in the absence of such specification, the rule of lex loci contractus or lex loci celebrationis may be applied by the court, at the time of enforcement.
Validity and Enforceability of a Prenup in India (with Precedents)
Since marriage in India is governed by the personal laws of every religion and is not considered to be a contractual bond, but a sacred bond between the spouses, and an unbreakable social institution, divorce is looked down upon, and a contract that stipulates the same is considered against public policy.
Therefore, although a prenup would be enforceable under the Indian Contract Act, 1872 (“ICA”), just like any other agreement (unless it falls under any of the categories specified therein for voidable and void marriages), the concept of prenups is foreign to the Indian marriage culture and the Indian judiciary, and hence, neither are there any laws in this regard nor are they enforceable in a court of law. Moreover, the government has also recently declared that prenups are an “urban concept” and it is “too early” to give it a legal backing in India.
In general, there are four views prevailing in India regarding the legal status of prenups:
That they are governed by the contract laws and not matrimonial laws and require the same conditions as for any other contract under Section 10 of the ICA.
That such agreements are against public policy and hence, void under Section 23 of the ICA.
That prenups are nothing more than Memoranda of Understanding (MoU) between the spouses and therefore, not overtly binding.
That under the Special Marriage Act, 1954, a prenup can be granted legally binding status, provided it is submitted along with the necessary documents as required under the Act for the declaration of marriage and then, duly registered with the Registrar.
Although prenups are invalid in India, they may be used for the purpose of evidence and reference. For instance, in the case of Sunita Devendra Deshprabhu v. Sita Devendra Deshprabhu, the Bombay High Court considered the terms of the prenup to reach a conclusion regarding the separation of assets. However, prenups are allowed under the Portuguese Civil Code that is still applicable in Goa, in respect of the personal laws relating to family matters.
Conclusion
In view of the above collective observations, it has to be understood that the concept of prenups, although common in the West, will take time to become acceptable in Indian society. It has already found its place in the capitalist metropolitan cities, although such agreements cannot be taken to court for a breach, i.e. if one spouse breaches the terms of the agreement, the other spouse will have no direct legal relief.
Thus, the pros and cons of this concept have to be kept in mind while implementing it in a diverse and yet unified society of India. However, it is not too far-fetched to hope that the Indian Government and the Parliament will take steps in the right direction to introduce this idea and implement it gradually, as per the needs of our country, although the question remains:
