ML Prenuptial Agreements

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What are pre-nuptial agreements?

Pre-nuptial agreements (“prenup”) are an agreement signed between a couple who are about to get married, and sets out what will happen in the case the parties are divorced. How detailed a prenup is completely depends on the couple. Some common issues highlighted in a prenup are how to divide assets in a divorce, what assets to not include into asset division (often assets accrued before the marriage), and describe what assets after the marriage would be considered as shared assets.

Enforceability of prenups

Being trained in law in Hong Kong, I can only comment on the law in Hong Kong, and UK, where Hong Kong draws much of its case law from. The case of Radmacher v Granatino [2010] 3 WLR 1367 suggests that a Court is NOT bound to follow a prenup, but that unless there is reason to depart from it, it would follow the terms as set out in the prenup. Some reasons to depart from a prenup include duress when signing the agreement, lack of understanding of the terms (usually remedied by seeking legal advice), or a change of circumstance during the marriage.

The basis of prenups is based on contract. Two individuals enter an agreement, to restrict their freedom of choice in the future willingly to each other.

Why can ML make use of prenups?

I do not think it is appropriate for there to be 50:50 asset division in ML, as is the starting point in the courts in Hong Kong.

However, what does happen often in ML marriages is that couples often share equipment and gear. If a couple shares int gear, who should get it after a divorce?

A prenup can help to identify which assets between a couple are shared, and set down rules to consider how future assets can be categorised as personal or shared assets. After this clarification, the prenup can decide how these assets are distributed after, or if they should be liquidated and shared.

Prenups can also be used to define how gifts are to be considered, whether certain assets are just considered long terms loans, or if there is intended change in legal ownership as a gift.

How would prenups be enforced?

ML already makes use of many concepts from contract law. For example, in roll scamming, the concept is that both parties enter into an agreement to roll, with the loser paying a fee. If the loser does not pay, then you can report them, and they would be subject to the heavy hand of the law (aka Nise).

The basis of this is that a contract has been broken. There is no reason that this concept cannot extend to an agreement made before a marriage in ML, as it is still based on the concept of contract.

Further considerations

How can you be sure that the parties who sign the agreement are truly the parties who are getting married on ML?

We can make use of blockchain technology and non-fungible tokens (“NFTs”), which give a strong degree of certainty about the identity of the parties signing a contract.

While the purpose of this post is not to look at this topic, this can be further explored when prenups become more common in ML (don’t tell me it’s not going to become common, I’m not listening).


Conclusion

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Template Prenup

Please see a template prenup here: https://docs.google.com/document/d/1xH-yHkRxgPHg0HYan6Z_nU9985rTQ6ds8zLDbB-uUGM/edit?usp=sharing