Interviews — 5 Min Read

Validity of Prenuptial Agreements in Malaysia

by Shamila Nair – 7th June 2020

Insights — 5 Min Read

Validity of Prenuptial Agreements in Malaysia

Marriage is so much more than love. It is commitment, respect, trust, understanding, and faith in your relationship and your partner. Nobody plans to hit rock bottom, and last we checked, nobody can predict the future.

It is a good idea to plan for the bad times while things are still good. To protect yourself and all who may be affected in case your marriage does hit rock bottom due divorce, separation, or the death of your spouse, it would be comforting to know that you had built a solid foundation that would allow you to rebuild your life.

What is a Prenuptial Agreement?

Prenuptial Agreements are contracts you enter into between you and your spouse before marriage. The terms of a Prenuptial Agreement provide predominantly practical solutions that predetermine your rights over marital assets. It addresses your financial responsibilities and entitlements concerning your matrimonial assets in the event of a separation, divorce, or death of your spouse.

What is a Prenuptial Agreement?

Prenuptial Agreements are contracts you enter into between you and your spouse before marriage. The terms of a Prenuptial Agreement provide predominantly practical solutions that predetermine your rights over marital assets. It addresses your financial responsibilities and entitlements concerning your matrimonial assets in the event of a separation, divorce, or death of your spouse.

Who needs a Prenuptial Agreement?

  • Those who want to protect their wealth, especially if it is built on their sole hard work.
  • Those who acquired multiple assets before marriage.
  • Those who are involved with family businesses.
  • Those who have gained immense or considerable wealth through family inheritance before marriage.
  • Those who are remarrying.
  • Those who have children from a previous marriage.

What are the requirements of a Prenuptial Agreement?

Like any other contract, a Prenuptial Agreement must satisfy the elements in the formation of a contract. For the Court to deem a Prenuptial Agreement valid and binding, its terms must arrive at voluntarily. The Court will also examine if the Prenuptial Agreement was signed in oppressive surroundings, in a situation where the counter party can exercise his/her will freely and if it was signed under duress.

Are Prenuptial Agreements Valid in Malaysia?

The validity of each Prenuptial Agreement will be determined accordingly on a case-to-case basis by the Courts when the Prenuptial Agreement is filed and presented in Court.

Section 56 of the Law Reform (Marriage and Divorce) Act 1976 (Act 164) (“the Act”) provides that the Courts may refer to any agreement or arrangement made by the spouses.

To assist, here is an excerpt of Section 56 of the Act (in part):

“Provisions may be made by the rules of Court for enabling the parties to a marriage, or either of them, on application made either before or after the presentation of a petition for divorce, to refer to the Court any agreement or arrangement made or proposed to be made between them… if any, in the matter as it thinks fit.”

In short, the Court holds the discretion to scrutinise the Prenuptial Agreement and determine if terms of the agreement are valid and would be applicable. If the Court upholds it to be valid, the terms would be enforceable, binding, and applicable.

In the case of Lim Thian Kiat v Teresa Haesook Lim Nee Teresa Haesook Dean & Anor [1997] 5 CLJJ 358, the court held among others that the High Court has sufficient jurisdiction to enable parties in a matrimonial dispute to refer to the court any agreement or arrangement they have entered for consideration as provided under Section 56 of the Act. Thus, the court had sufficient authority to entertain the application on the validity of the Deed of Separation which consisted terms governing parties’ separation. Upon scrutinization, the Court found the Deed of Separation to be valid and had referred it in the course of the Proceedings by virtue of Section 56 of the Act.

What happens if there is not a Prenuptial Agreement?

Where a Prenuptial Agreement does not exist or if the Court finds the Prenuptial Agreement to be invalid, Section 76 (1) of the Act will apply to the division of matrimonial assets. It provides the Courts power to order the division of matrimonial assets.

Section 76 (2) of the Act sets out factors the Court must consider in deciding the division of matrimonial assets:

  • The direct financial contributions made by each party in acquiring the assets or payment of expenses for the family’s benefit.
  • The indirect contributions (caring for family or looking after the home) made by the party who may not have contributed financially towards the assets.
  • Any debts incurred for spouses’ mutual benefit.
  • The needs of any minor children (person below the age of 18) of the marriage.
  • Duration of the marriage.

Can a Prenuptial Agreement contain terms relating to child custody, care and control and access of a child?

You have the right to include any terms you wish to have in the Prenuptial Agreement. However, when it comes to the child, The Courts pay close attention to many other factors to determine the issues of child maintenance, custody, and care and control, which will potentially render your terms in a Prenuptial Agreement on this issue purposeless.

Benefits of Prenuptial Agreements 

  • It protects premarital assets acquired by spouses
  • It protects the inheritance rights of a spouse from family or previous marriage
  • It assigns liability for debts
  • Reduces the possibility of future conflict in case of a divorce or separation
  • Time saving in addressing ancillary issues in case of a divorce or separation
  • It protects the financial stability of children in case spouses choose to hold assets in their names for the future benefit of their children
  • It simplifies a divorce or separation process.

Disadvantages of Prenuptial Agreements 

  • In some scenarios, it may be unnecessary. Terms relating to child maintenance issues may not be held valid and left to be dealt with by the Court.
  • Spouses may agree to terms that are not in their best interest as he/she may be compromising on the financial aspects when everything is well and good.
  • Future issues may not be entirely addressed in a Prenuptial Agreement rendering it useless in the future where spouses have to come to different agreements and terms depending on the future scenario
  • For spouses who eventually contribute to the success and growth of the other spouse’s business may not be entitled to claim their share of contribution towards the business it was agreed otherwise in the Prenuptial Agreement

Regardless of whether you have or do not have a Prenuptial Agreement, the Law Reform (Marriage and Divorce) Act 1976 (Act 164) has provisions governing matters of division of matrimonial assets, maintenance of a spouse, child custody, child maintenance, and child access.

Therefore, before deciding on signing a Prenuptial Agreement, you need to weigh its benefits and disadvantages. You should also determine if a Prenuptial Agreement is necessary in your case. It is always best to seek legal advice in advance. Our lawyers would be able to assist you in drafting terms that would protect your rights and interests that are specific to your circumstance upon reviewing various legal considerations.

If you find it uncomfortable to speak to your intended spouse on this matter, you can choose to appoint us as a mediator to assist you in this process.

2020-07-03T04:24:36+00:00