I am a British Asian expat and am about to get married to my long time girlfriend who is also from the UK, but is not Asian. I work in an investment bank in Dubai, earning about Dh55,000 a month, plus annual bonus. I am financially well-off and have considerable savings, plus a fairly big property in London. Is it a good idea to have pre-nuptial agreement as most Westerners do? We Asians don't have this tradition and my parents are against it. But some friends are suggesting we do this. What are the pros and cons of a pre-nuptial agreement?
Answer: Marriage is, among many things, a financial commitment to each other, from who pays the mortgage, debts, and bills, to agreeing on savings and the guardianship of children.
The general advice to anybody entering into a relationship, irrespective of religion, is that you both need to have a full understanding of the expectations the other person has of the financial aspects of the marriage, and what happens if the relationship ends.
Pre-nuptial agreements or ‘pre-nups' are a relatively new legal way of setting out what the financial arrangements will be if a married couple decides to divorce. However, before seeking the help of a lawyer to draw up such a contract it is important to consider a number of key issues.
You mention that you have a high monthly salary, enjoy bonuses, and own property in London — suggesting that you are the wealthier person in the relationship and that the ‘pre-nup' would be designed to prevent your wife from claiming an ‘equal portion' of your combined wealth, as is legal under UK law.
Yet, you must consider that whatever you put in place now will hold true for the entirety of your marriage, and it is entirely possible that in the time you are married your wife could overtake you in the salary stakes, or come into wealth through inheritance or good fortune — leaving you the less well-off partner.
The drawing up of any pre-nup normally involves both parties declaring all current incomings, outgoings, debts and future funds, such as inheritance and trust funds to ensure the agreement remains fair. So, you must be prepared to disclose all your financial dealings if you go ahead with a pre-nup — any failure to declare all financial details accurately makes the contract null and void.
Another important point to determine is what the laws on pre-nuptial agreements are in the country where you plan to marry.
Furthermore, if you are living in the UAE when you chose to get divorced then, as an expatriate, the court will usually enforce the law of the country of your origin, which in your case will be the UK. But, the UAE courts also have a duty to consider all the circumstances at the time the parties come before it, and so may rule against the financial arrangement outlined in your pre-nup.
Although important, pre-nuptial arrangements are only part of a wider need for thoughtful financial planning when you decide to marry and start a family.
Seeking the help of an independent financial adviser can assist you in setting up these policies and investments.
Mark Nierada is a Solicitor and Senior Estate Planning Consultant with Nexus Insurance Brokers LLC, www.nexusadvice.com