A prenup agreement is a contract signed by a couple before they get married and determines the ownership rights of their respective assets if the marriage fails later. Is there a way to safeguard your assets through a prenuptial agreement before your wedding? A prenup pact can help you only to a limited extent. This is because there is no formal legislation on prenuptial agreements in India.
LiveMint | 21st august 2023
A prenup agreement is a contract signed by a couple before they get married and determines the ownership rights of their respective assets if the marriage fails later. In case of a divorce, the division of assets and alimony payout to the spouse happens as per conditions laid down in the prenup agreement. Prenups are prevalent in countries like the US and Australia and slowly gaining ground among Indian couples. However, it is not legal in India.
“Pre-nuptial agreements have traditionally been perceived as being against public policy. While Indian culture continues to lay emphasis on the traditional nature of marriage, it is undeniable that the attitude towards marriage has been evolving. Today, spouses are more comfortable demarcating and protecting assets acquired by them prior to marriage,” said Jahnavi Dwarkadas, associate partner, SNG & Partners.
As there are no formal laws on prenups, the terms and conditions laid down in the contract are not legally binding and the validity of those conditions, in case of a dispute raised by either of the spouse, are finally decided in the courts. In any case, the prenup conditions cannot override the legal rights of a spouse, say legal experts.
“In the absence of any formal legislation governing pre-nuptial agreements, the law on the subject is largely judge-made,” Dwarkadas said. “All pre-nuptial agreements are tested against the touchstone of public policy as any contract against public policy is considered invalid. Any agreement that ignores statutory rights and obligations would be deemed invalid. For example, agreements that pre-determine aspects of custody of children, or deprive a spouse of the statutory right to maintenance and alimony, have been struck-off by courts as being against public policy and are therefore invalid.”
Adarsh Priyadarshi, advocate, Supreme Court of India, quotes another example and says: “As per Hindu marriage laws, a wife has a legal right to reside in her matrimonial house. So, any condition in the prenup agreement that says the wife cannot reside in the matrimonial house if the marriage fails is superseding the law and will be null and void. A prenup cannot supersede a person’s statutory rights.”
Priyadarshi, who specializes in criminal law including those arising out of matrimonial disputes, added that Hindu marriage laws consider marriage a sacrament and do not treat it as a contract, and hence, a prenup may not be useful in determining division of assets or the alimony amount in advance.
“So far, our learning from our experience in such matters has been that the pre-nuptial agreement should be seen to be one that promotes marriage as opposed to facilitating a breakdown,” said Dwarkadas.
Muslim laws follow mehr or dower that imposes an obligation on the husband to give money or property to his wife. A prenup can be useful in determining the mehr amount.
That said, Dwarkadas said, over time, the judiciary has been looking at such agreements more liberally, recognizing the personal rights and preferences of partners and encouraging the evolution of matrimonial laws.
People keen on a prenup agreement should lay down the conditions carefully after consulting their lawyers. The sole intent should not be to withhold assets from the spouse as that may result in a contract denying either of the spouse their rights.
“It is crucial that the agreement does not deprive either party of any statutory right available under law or pre-decide matters such as custody of children,” said Dwarkadas.
“The proposed agreement should record that it is being entered into to minimize conflict in financial matters. Further, the agreement should clearly identify and record individual and joint assets of both the parties as well as the rights that one spouse may have on the other’s assets in the event of a breakdown.”