“Should I got for a prenupitial agreement” asked Shweta. “Don’t you love your husband to be? And why suddenly the question“, asked Ryan. “To be on the safe side, you never know! In 2014 Maneka Gandhi ,Union Cabinet Minister for Women and Child Development, wanted prenuptial agreements , a standard legal document in many Western countries ,to be recognized in India. I have built some wealth during my earning years and have some assets. The move could help both spouses especially women get their right.” The other day I heard of an impending marriage breaking because the husband to be was asking for financial details of his working wife-to-be and in another the wife-to-be was asking about property details.
But while the prenuptial agreement or a prenup as it’s commonly known has been quite the buzzword with the Hollywood, does it hold good back here, in India? Should we ignore the prenuptial agreement in India because it’s a western concept? Is there a need to talk on finances before marriage? What happens to money, assets is there is a divorce?
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Money talks before marriage
In Earlier times life was simple, husband worked outside, wife took care of the house and kids.People lived in joint family where decision about money were taken by elders. Now the times have changed there are nuclear families, husband and wife both working often earning similar amount of money. So the question gets complicated as there is my money,your money and then your expenses, my expenses, our expenses, our investments etc. A big advantage of having a prenuptial agreement is that it forces couples to have a financial discussion before marriage. Questions that one should have before marriage are given below, It is a great reality check.
- How much money do we have?
- How much income can we expect?
- How much debt do we have? It could be from a student loan, a credit card you use a little too often, or bills that have accumulated over time. Whatever you or your partner’s skeletons may be, it’s better to know.
- How much do we give to our family?
- What are our known and required expenses?
- How much do we frivolously spend each month?
- Will we combine our money? If yes who will manage money? Who will pay the bills ? Who will invest? How will other be updated?
It is recommended that both spouses establish a joint account where they transfer a percentage of their income used to pay for shared expenses like EMI and groceries, and keep separate accounts to pay for personal purchases like gifts and clothes. There are also other options like merging money and then allotting a monthly allowance, or separating expenses. Our article Money Issues in Marriage: Your,Mine and Ours discuss the topic in detail. There are many good ways to manage money in a marriage. Find one that works for you and be ready to change,after mutual discussion, if you find something better.
What is Prenuptial agreement?
Prenuptial agreement or prenup is a contract between two individuals who are about to get married and commonly includes provisions for division of property, guardianship rights and spousal support in the event of divorce or breakup of marriage. The agreement could also include specific terms for forfeiture of assets as a result of divorce on the grounds of adultery or lay down any conditions between the two adults.
Are Prenuptial agreement legally valid in India?
Marriage is treated as a religious bond between husband and wife and prenuptial agreements don’t find social acceptance. Only a nikah or a marriage under Islam is a contract but that is under the Muslim Personal Law and has its own rules related to Mehr and maintenance. Since marriage in India is not seen as a contract there are legal issues in enforcing it upon a married couple.
The prenuptial agreement is not legally recognized in India. Most couples, mainly those who are rich and influential, enter into an agreement under the Indian Contracts Act. The Indian courts take cognisance of a prenuptial agreement if both the parties mutually agree to it and sign it voluntarily, without any undue influence, force or threat. Besides, the agreement should be fair, clearly stating the division of property, personal possessions and financial assets of the parties, and should be certified by a separate lawyer for each.
Why are prenuptial agreement a good idea?
Finances have long been a trouble area in marriage. Our society is in transition, especially in urban areas divorce rates zoom and break-up parties become popular. Divorce has a huge impact on the finances of those involved. Sadly life goes on and Financial matters often get muddled with the emotional aspects of separation. But you need money to live.
The PreNuptial agreement clearly outlines a fair division of property, personal possessions and financial assets. Clarity of ownership of assets is also essential as the Indian law does not believe in the community of marital property. This means that any assets acquired during the course of marriage belong to the person in whose name they’re bought. An unscrupulous man/woman could buy assets with his wife’s/husband’s salary but in his/her name, and it would be virtually impossible for the woman to get anything in case of a divorce. The couple’s house is usually a major bone of contention. If the property has been purchased jointly and is in both spouses’ name, matters become more complicated.
In case of men, it protects them from exorbitant divorce settlements, in case of individual earners, it makes sure that nothing, not even a joint account, can become a point of dispute. And for a woman, it is an especially important document as it enables her to assert rights and ensure that she is not done out of her just dues. It also protects the interests of women who are in live-in relationships or marriage. The intention is that in the event that the marriage gets in to trouble, a woman should be able to get financial support without going through a lengthy, expensive process of divorce which may act as a drain on her resources and she may not end up with anything. Thus, an agreement is better than fighting over a favourite piece of furniture or pet in the process of dissolving the marriage.
Why are people against prenuptial?
Most of the people don’t like a prenuptial agreement.
- The concept of a prenup says you’re assuming trouble. Isn’t that a wrong premise to begin with as you’re making it about money from day one.
- If you need a prenup you shouldn’t be getting married at all. After all the couple must have a complete understanding of each other at the start. Isn’t marriage about adjustments,trust!
- It can take the romance,love,respect out of a relationship.
But let’s not forget One of the biggest causes of divorce is financial woes. The mindset we have makes us think that if the woman makes a move toward a prenup, she’s trying to extract money from her husband. But that’s not true. Sometimes, women don’t get what is due to them as their husbands don’t disclose income.
What happens to wealth and assets if there is a divorce?
In a divorce, what was once called “ours” gets divided into “his” and “hers.” While one can make up mind not to live together with spouse, what happens to assets and wealth both worked so hard to build. Marriages are said to be made in heaven, but divorce is most certainly a very earthly affair. Things become more complicated if the couple has children. For, in such a case, the priority of the settlement is to protect their interests.
If the divorce is happening by mutual consent, the problems of splitting in the assets in a manner fair to both parties can be resolved.
However, if it isn’t by mutual consent, the husband, who is usually the breadwinner in India society, can resort to concealing assets and income, so that the wife doesn’t get her rightful share. Men usually do this by stashing cash in lockers, showing low income and high expenses and unloading property to family and friends with the understanding they will get it back after the divorce settlement is final.
One needs to discuss about Property, Loans, Banks, Investments and Alimony and Tax Implications.
On separation, the wife has right to
Stridhan or StreeDhan and all jointly-held investments where she has made some monetary contributions. Stridhan refers to the woman’s personal wealth and encompasses all movable and immovable properties, gifts, and everything else received by her from her parents, relatives and and even from her in-laws at the time of her marriage. Our article StreeDhan : What is it? Why should one know about StreeDhan? covers it in detail.
Property: Rajya Sabha passed bill, regarding wife’s share in the husband’s inherited property after divorce. Wife share in property would be 50% in all her husband’s residential properties, no matter what and in other properties, her share will be decided as per the court decision. After separation the wife has no claim on the husband’s ancestral property or inherited wealth which may include a house/vehicle, valuable collectibles, household items and so on.
If not prenuptial agreement then
What are the plans for legalising prenuptial agreement?
Maneka Gandhi met with law minister Sadanand Gowda recently on the issue and now plans to hold consultation to get all points of view from stakeholders. The ministry of women and child development (WCD) has called for a consultation with experts in law, social work and others on November 23. Among those who have been invited for the consultation are former solicitor general Indira Jaising, representatives from law schools in Bangalore and Delhi, NGOs like Jagori and Action India.
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Spouses need to maintain the mindset that they are on the same team, otherwise consequences just turn into angry retaliation and war tactics. Just as we write on the need to buy adequate life insurance protection while hoping that the cover will never need to be invoked by the beneficiary, we wish all marriages will be blessed with everlasting love and happiness. What are your views on money in marriage? Should one go for the prenuptial agreement? Should one have a financial discussion before marriage? How do you handle your joint finances? What has worked for you? How have your finances evolved? What have been your financial mistakes in marriage? Please give your feedback, questions, comments.