Discussing finances can be a delicate matter for many couples, but making sure the parties are on the same side before getting married is crucial.
Here are 5 important things to know about marriage contracts before deciding whether they are right for you and your partner.
1. Pre-nups can help relieve a relationship
A marriage agreement, or “pre-nup” for short, is an agreement that couples have made before they get married to make financial arrangements in the event of the unfortunate event that the marriage ends. It is a topic that some couples do not discuss, but when discussed with caution and care, they can strengthen their relationship, manage their expectations, and provide financial security for both parties.
2. Pre-nups can help avoid bitter and costly divorce proceedings
A pre-nup clearly defines how the following people should be treated in the event of the end of the marriage:
- You and your partner’s respective assets / liabilities and income acquired before and during the marriage;
- You and your partner’s joint assets / liabilities and income acquired during the marriage;
- The gifts, inheritances, and trust interests that you and your partner received before or during the marriage.
A pre-nup can also set the financial provisions for the financially weaker party.
3. Pre-nups are not binding on the Hong Kong courts, but can be given full weight
Currently, pre-nups are not binding on the Hong Kong courts. The terms of a pre-nup cannot override the jurisdiction of the Hong Kong courts as the courts are bound by laws that regulate financial mandates in marriage proceedings.
Following significant developments in this area of law in the UK and Hong Kong over the past 10 years, pre-nups are now given full effect by the courts in the UK and Hong Kong where permitted by law:
- The parties entered into the preparations voluntarily and without undue influence or pressure. This is approached by having a period of reflection between signing a pre-nup and getting married. A minimum of 28 days is recommended.
- The parties had a full understanding of the implications of the pre-nup. In other words, they should have all of the materials needed to decide whether to sign the agreement before signing it so that they can fully understand the implications of the agreement. This is regulated by the fact that both parties receive independent legal advice and provide their respective financial information before signing a pre-nup.
- It has to be fair, given the circumstances, to keep the parties at the pre-nup. If the marriage agreement resulted in one party remaining in distress while the other party is comfortably cared for, it is likely unfair.
At the time of the divorce, the courts will consider whether it is appropriate, given the circumstances, to keep the parties to the pre-nup.
4th Custody and child support are usually not included in a pre-nup
You and your partner can express your consent to the care modalities for children in a pre-nup. However, it is not fair for a pre-nup to interfere with the reasonable requirements of children in the family, such as their needs and expenses. It would be premature to agree on the amount of child benefit before marriage.
5. Approach the topic of a pre-nup openly and as early as possible
Some people fear that a pre-nup could “kill” romance before marriage. Indeed, finance and asset disclosure issues can be sensitive. The reality, however, is that entering into a marriage is more than just romance. it requires openness and honesty. Healthy communication is the key to a happy married life. Discussing pre-nups with your partner as openly and as early as possible can therefore help to strengthen your relationship and avoid possible arguments, unrealistic expectations or misunderstandings in the future.