MANILA - Welcome to the "marrying" month of June. If your wedding date is this month or if you are in the planning stages, you are probably looking at the world through rose-colored glasses.
However, after the honeymoon, life continues in a normal fashion and as in life when you were single, you and your spouse will soon find yourselves facing the same old matters.
One of them is your finances. Not to burst your bubble or anything, but there are many ways that money can kill a relationship. If you’re about to get married, you should begin to think about how you will deal with finances as a couple. One way of settling money matters before taking the plunge is by having a prenuptial agreement. In a nutshell, a prenuptial agreement is a contract that discusses division of property, which is quite useful in the case of, but heaven forbid, a separation.
Jointly owning everything with your spouse may sound romantic and ideal, but we also know that in the real world, things can go wrong. In the instance that you and your partner may want to go your separate ways, and in the absence of a divorce law in the Philippines, you will have to go through the process of separating each other’s property. Since most break-ups are often not on friendly terms, imagine the legal and emotional complications of sorting out your property and assets if the marriage comes to an unhappy end.
There are pros and cons to having a prenuptial agreement. The biggest advantage of having one is that it sets parameters governing your property in the case of a marriage break-up. Conjugal ownership of all property may present issues in some unions, and sometimes, a prenuptial agreement is a good instrument to address those issues even before they arise. This is particularly true in the Philippines, where the Family Code provides that the husband and wife will jointly own all property upon marriage, unless there is a valid prenuptial agreement that stipulates otherwise. This covers property that is owned by either you or your partner at the time of the marriage, and everything else that you acquire after.
In some circumstances, having a prenuptial agreement is also practical, such as when you are getting married to someone of a different nationality, or when you or your spouse have children from a previous relationship.
On the down side, there is nothing very romantic about a prenuptial agreement, which is probably why few people think about having it. Prenuptial agreements are often seen as a sign of distrust, which is not exactly what you want to cultivate early in the relationship.
The need for a prenuptial agreement varies from couple to couple, and people will react differently to the thought of having to sign one. Your circumstances will determine if you and your prospective spouse will stand to benefit from signing a prenuptial agreement.
Here are some reasons to consider having a prenuptial agreement:
One of you owns a considerable amount of assets.
While it may be easy for you and your spouse to discuss how to administer assets that you have acquired together, you may have personal assets that you want to manage on your own, such as your inheritance. A prenuptial agreement ensures that you will continue to have sole ownership of this if and when you should separate from your spouse.
One of you is the co-owner of a business or an asset.
If one of you co-owns a business or a property, the co-owner may not welcome the entry of your spouse as a co-owner. Simplify matters with the use of a prenuptial agreement that delineates your spouse’s right to this business or asset.
One of you is a national of a country with a different set of rules governing property ownership.
Countries have different laws regarding the ownership and disposition of property, especially real estate. A prenuptial agreement can simplify issues by defining ownership of properties in different countries.
One of you has children from a previous relationship.
If this is a second or a third marriage for you or your spouse, there may be children who are heirs to property one of you has previously acquired. A prenuptial agreement will protect the interest of these children from past marriages.
Remember that a prenuptial agreement must be entered into voluntarily, in writing. This agreement should be properly notarized and recorded in the local civil registry. Note that prenuptial agreements may be challenged in court for lack of consent, fraud, coercion, mistake, undue influence, or bad faith.
Prenuptial agreements serve a good purpose for some couples but in the end, they cannot take the place of open communication with your partner regarding financial matters. What is important is that you see eye to eye on asset management, and hopefully this would help you be on your way to your "happily ever after."
Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.
Visit www.citibank.com.ph for more information.