What is Prenuptial Agreement?

Prenuptial agreement is an agreement or a contract entered prior to a marriage. It is also known as antenuptial agreement or premarital agreement. The substance of the prenup may vary extensively but it normally incorporates arrangements for division of property, spouses and children maintenance, and guardianship of children in the event of a divorce.

There is a misconception that a prenuptial agreement is not enforceable in Malaysia. However, the courts may consider prenuptial agreements when determining the distribution of matrimonial assets, so long as the agreement is not contrary to anything in the Law Reform (Marriage and Divorce) Act 1976 (“LRA 1976”).  As long as the terms and conditions of the prenuptial agreement is fairly drafted and parties sign the agreement with consent and do not in any way contradict the LRA 1976, there is no reason why the court cannot value and determine the prenup in deciding the division of the matrimonial assets on divorce.

Further, High Courts in Malaysia have the discretion to order for division of matrimonial property. Section 76(1) of the LRA 1976 provides the courts power to decide on division of assets/properties acquired amid the marriage by their joint endeavours and efforts, or to order the sale of such assets to which the proceeds shall be shared by the parties accordingly. Section 76(3) 1976 provides that the courts may order the division of any assets acquired during marriage. Section 56 of the LRA 1976 allows parties of a divorce to apply to the court to refer prenups drawn between them. The provision allows agreements to be referred to the court for consideration in determining matrimonial division of properties and assets.

It is found that couples may enter into prenuptial agreement before they marry. It is often used to formalise property division after the breakdown of marriage whether before or after divorce. Often times, prenuptial agreement deals with property that does not exist yet. Prenuptial agreements serve a valuable purpose. They enable the parties to preserve assets they bring into the relationship.

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